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MERS still plunges S. Korean tourism account deep into red

September 2, 2015

Tourists wear masks as a precaution against MERS, Middle East Respiratory Syndrome, virus as they visit Gyeongbok Palace, one of South Korea’s well-known landmarks, in Seoul, South Korea. (AP Photo/Lee Jin-man)

SEOUL (Yonhap) — More than a month after its announcement of a de facto end to the Middle East Respiratory Syndrome (MERS) outbreak, South Korea remains gripped by the devastating blow that the disease has dealt to the country’s tourism and retail sectors.

First confirmed in late May, the MERS outbreak claimed 36 lives here and sparked a severe health scare, prompting Chinese and other foreign tourists to cancel their planned trips to South Korea in droves out of fear of contracting the disease.

The largest outbreak outside Saudi Arabia also caused South Koreans to avoid shopping centers, theaters, restaurants and other crowded places, making a big dent in the country’s consumer spending.

Though foreign tourists have started to return to the once-empty streets of Myeongdong, one of the capital’s most popular shopping districts, newly released economic data have come as a painful reminder of the fallout from the respiratory illness.

According to the data by the Bank of Korea, the deficit in the travel account, which is part of the bigger service account, reached US$1.45 billion, widening from a $1.05 billion shortfall in June.

While the travel account has mostly been in the red as South Koreans’s rush to travel and study abroad, the July reading marks the biggest deficit in seven years following a $1.65 billion travel account deficit posted in July 2008.

“The number of inbound visitors reached 751,000 in June but it declined to 630,000 in July. It marks quite a substantial fall from 1,355,000 in July last year,” said Park Seung-hwan of the BOK’s Monetary and Financial Statistics Division.

According to a tally by the state-run Korea Tourism Organization, 1.38 million foreigners visited South Korea in June and July, down a whopping 47.5 percent from the same period a year earlier.

In July, the number of foreign tourists tumbled 53.5 percent on-year, with that of Chinese tourists nose-diving 63.1 percent.

“We think that the (MERS) impact will continue on to August and possibly impact the September figures as well. It isn’t easy for foreigners who canceled visits to (immediately) reschedule their travel plans,” Park said.

Striking a sharp contrast to the downturn in the number of inbound travelers, a growing number of South Koreans are heading abroad, raising concerns that the country’s travel account will likely remain deep in the red down the road.

This means that an increase in South Koreans going abroad for travel or study may widen the country’s tourism account deficit, unless the growth in amount they spent abroad is smaller than the amount foreigners spent in Korea.

Industry data showed that Hana Tour and Mode Tour, two of the country’s biggest travel agencies, reaped their biggest profits for the month of August this year as people postponed their early- to mid-summer holidays to late summer due to the MERS outbreak.

Nearly 210,000 people booked trips for August through Hana Tour, up 20.5 percent from last year and the second-highest figure following a record 256,000 people in January.

Mode Tour also saw its outbound customers spike 39.4 percent from the previous year to 126,000, its record high for the month of August.

“While MERS was a major woe for July, it’s encouraging that we saw record outbound trips in August. The trend is expected to continue as the Chuseok holiday falls in September.”

The Chuseok holiday, one of the country’s three-day holidays along with Lunar New Year’s Day, falls on Sept. 26-29 this year. Family gatherings are conventional, but demand for overseas trips during that period has been increasing, mostly among the younger generation.