As South Korea prepares to host the 2018 Winter Olympics, its expanding tourism sector is driving change across the hotel spectrum. Tourism has been identified as a key engine of economic development as South Korea seeks to tap into the rising demand for travel by the expanding middle class of its neighbours. Despite the setback caused by the Middle East Respiratory Syndrome (MERS) outbreak last year, investment in tourism infrastructure and proactive destination marketing is predicted to support sustained growth.

Inter-governmental resources are also being combined. The 2018 Winter Olympics in PyeongChang commences a triumvirate of Olympic events in North East Asia, followed by the 2020 Summer Olympics in Tokyo, and the 2022 Winter Olympics in Beijing. In November 2015, the leaders of South Korea, Mainland China and Japan held their first trilateral summit since 2012 in Seoul, as part of coordinated efforts to boost tourism flows between the three countries before, during and after these three high profile sporting events.

In the east of the country, the scenic mountainside town of PyeongChang is a popular destination for winter sports, and the surrounding Gangwon province attracts spring and summer vacationers to enjoy its forested national parks. In advance of the Winter Olympics, significant investment in tourism and transport infrastructure – including a new high-speed rail link – should further enhance the province’s tourism potential. The southern island of Jeju combines volcanic rock formations, hiking and museums appealing to leisure tourists and domestic and regional Meetings, Incentives, Conventions and Exhibitions (MICE).

South Korea’s tourism sector was badly affected by the 2015 MERS outbreak, but the nation’s tourism authorities responded proactively by launching new promotional campaigns, notably in Mainland China. In efforts to attract eight million Chinese arrivals in 2016, up from around six million in 2015, South Korea has eased visa rules and exempted visa fees for group travellers.

South Korea’s hotel sector is also adjusting to a distinctive shift in lodging preferences as Chinese visitation outpaces Japanese arrivals. The recent drop in Japanese tourist numbers, widely attributed to the reduced value of the Yen, has affected upscale and luxury hotels. The surge in Chinese visitation, however, has altered the market profile, as Chinese tourists to South Korea tend to stay in budget and midscale accommodation, rather than top-end hotels, and price competition and discounting is increasingly evident.

Moving forward, the changes in visa policy, which now allow multiple entries for Chinese visitors who fulfil certain criteria, means this dominant source market continues to support visitor arrivals into Korea. The growth in arrivals, following the end of MERS, is further supported through government initiatives undertaken to elevate the country as the destination of choice for business and leisure travellers.

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