Travel & Tourism - South Korea

South Korea

By 2024, it is projected that the revenue in the Travel & Tourism market of South Korea will reach US$13.66bn.
Furthermore, it is expected that the revenue will show an annual growth rate (CAGR 2024-2029) of 4.58%, leading to a projected market volume of US$17.09bn by 2029.
The largest market in South Korea is the Hotels market, which is predicted to reach a market volume of US$8.21bn in 2024.
It is also estimated that the number of users in Hotels will amount to 23.49m users by 2029.
In addition, user penetration is projected to increase from 48.5% in 2024 to 59.2% by 2029.
The expected average revenue per user (ARPU) is US$543.90.
Moreover, it is estimated that 87% of the total revenue in the Travel & Tourism market of South Korea will be generated through online sales by 2029.
In a global comparison, United States is expected to generate the most revenue, with US$214bn in 2024.
South Korea's Travel & Tourism industry is heavily impacted by the COVID-19 pandemic, with a sharp decline in international tourist arrivals and a shift towards domestic travel.

Key regions: Malaysia, Europe, Singapore, Vietnam, United States

Definition:

The Travel & Tourism market encompasses a diverse range of accommodation services catering to the needs and preferences of travelers. This dynamic market includes package holidays, hotel accommodations, private vacation rentals, camping experiences, and cruises.

Structure:

The market consists of five further markets.

The Cruises market covers multi-day vacation trips on a cruise ship. The Cruises market encompasses exclusively passenger ticket revenues.
The Vacation Rentals market comprises of private accommodation bookings which includes private holiday homes and houses as well as short-term rental of private rooms or flats.
The Hotels market includes stays in hotels and professionally run guest houses.
The Package Holidays market comprises of travel deals that normally contain travel and accommodation sold for one price, although optional further provisions can be included such as catering and tourist services.
The Camping market includes bookings at camping sites for pitches using tents, campervans, or trailers. These can be associated with big chains or privately managed campsites.

Additional Information:

The main performance indicators of the Travel & Tourism market are revenues, average revenue per user (ARPU), users and user penetration rates. Additionally, online and offline sales channel shares display the distribution of online and offline bookings. The ARPU refers to the average revenue one user generates per year while the revenue represents the total booking volume. Revenues are generated through both online and offline sales channels and include exclusively B2C revenues and users for the above-mentioned markets. Users represent the aggregated number of guests. Each user is only counted once per year. Additional definitions for each market can be found within the respective market pages.

The booking volume includes all booked travels made by users from the selected region, independent of the departure and arrival. The scope includes domestic and outbound travel.

Prominent players in this sector include online travel agencies (OTAs) like Expedia and Opodo, as well as tour operators such as TUI. Specialized platforms like Hotels.com, Booking.com, and Airbnb facilitate the online booking of hotels and private accommodations, contributing significantly to the market's vibrancy.

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Market

Region

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Currency

Analyst Opinion

South Korea has seen a steady growth in its Travel & Tourism market in recent years, driven by various factors that have shaped consumer preferences, market trends, and local special circumstances.

Customer preferences: Travelers in South Korea are increasingly seeking unique and experiential travel opportunities. They are drawn to destinations that offer cultural immersion, outdoor activities, and culinary experiences. Additionally, there is a growing interest in sustainable and eco-friendly travel options among South Korean tourists. These preferences have led to a rise in demand for personalized and authentic travel experiences, driving the development of niche tourism offerings in the country.

Trends in the market: One prominent trend in the South Korean Travel & Tourism market is the popularity of domestic travel. With the rise of the "staycation" trend and a greater emphasis on exploring local destinations, more South Koreans are opting to travel within their own country. This trend has been further accelerated by government initiatives to promote domestic tourism and support local businesses in the wake of global uncertainties. As a result, there has been a notable increase in investments in infrastructure and tourism development within South Korea.

Local special circumstances: South Korea's unique geographical position as a peninsula surrounded by water has influenced its tourism landscape. The country boasts a diverse range of attractions, from bustling cities like Seoul to serene natural landscapes like Jeju Island. This diversity allows South Korea to cater to a wide range of traveler interests, making it a versatile destination for both domestic and international tourists. Additionally, South Korea's rich cultural heritage, including its traditional cuisine, historical sites, and festivals, adds to the allure of the country as a tourism destination.

Underlying macroeconomic factors: The South Korean Travel & Tourism market is also influenced by macroeconomic factors such as exchange rates, government policies, and global economic conditions. Fluctuations in currency exchange rates can impact the affordability of travel for South Koreans, influencing their travel decisions. Government policies that promote tourism, such as visa facilitation measures and infrastructure development projects, play a crucial role in shaping the growth of the industry. Moreover, global economic trends and geopolitical events can affect consumer confidence and travel behavior in South Korea, highlighting the interconnected nature of the country's tourism market with the broader global landscape.

Methodology

Data coverage:

The data encompasses B2C enterprises. Figures are based on bookings, revenues, and sales channels of hotels, vacation rentals, cruises, package holidays, and camping.

Modeling approach:

Market sizes are determined through a bottom-up approach, building on a specific rationale for each market. As a basis for evaluating markets, we use financial reports, the Global Consumer Survey, third-party studies and reports, data from industry associations (e.g., UNWTO), and price data of major players in respective markets. To estimate the number of users and bookings, we furthermore use data from the Statista Consumer Insigths Global survey. In addition, we use relevant key market indicators and data from country-specific associations, such as country-related GDP, demographic data (e.g., population), tourism spending, consumer spending, internet penetration, and device penetration. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, ARIMA, which allows time series forecasts, accounting for stationarity of data and enabling short-term estimates. Additionally, simple linear regression, Holt-Winters forecast, and exponential trend smoothing methods are applied. A k-means cluster analysis allows for the estimation of similar countries. The main drivers are tourism GDP per capita and respective price indices.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change.