Foreign Visitors Spend 2 Trillion Won, but Travel Industry Contracts... The "Selective K-Tourism Boom"

Inbound Visitors Up 19%, Accommodation Spending Up 17.5%
Travel Agency Spending Down 4.2%, Airline Spending Down 24.6%
Domestic Industry Misses Out as FIT and Overseas OTA Usage Grows
Tourism Prices Soar 14.7%... Gap Widens Between Perceived and Real Benefits

The number of foreign visitors to Korea nearly reached 2 million, and for the first time ever, their card spending in the country surpassed 2 trillion won. On the surface, this appears to be a clear tourism boom. However, in the same month, production in the tourism and travel industry fell by 8.8%, and credit card sales for travel agencies and airlines also declined. While foreign tourists' spending increased in shopping, medical services, and accommodation, the domestic travel distribution network has not significantly benefited, making the so-called "selective tourism boom" more apparent.

Foreign tourists are browsing cosmetics at the Shinsegae Duty Free Myeongdong Store in Jung-gu, Seoul. In May, foreign spending on domestic credit cards surpassed 2 trillion won for the first time, but traditional travel industry indicators such as travel agencies and airlines have actually declined. Shinsegae Duty Free

According to the "Monthly Cultural, Sports, and Tourism Trends for June 2026" by the Korea Culture and Tourism Institute released on the 21st, the tourism and travel services production index dropped by 8.8% year-on-year in May. This is in stark contrast to the overall services production index, which rose by 4.9% during the same period. The overall production index for culture, sports, and tourism service industries also fell by 3.5%. The service industry production index measures industrial production activities by applying a value-added weight to sales in related sectors.

Looking only at total spending, the tourism market has grown. Credit card spending in the tourism sector for May reached 595.33 billion won, up 6.4% year-on-year. However, the fortunes of each segment diverged sharply. Expenditures in the tourism accommodation sector rose 17.5% from 426.1 billion won to 500.7 billion won, but expenditures at travel agencies declined by 4.2% from 49.2 billion won to 47.1 billion won. Airline spending also fell by 24.6% from 348.8 billion won to 263.1 billion won.

Despite the Surging Inbound Visitors, Travel Industry Production Falls Back

Even in the online market, only the travel sector lagged behind. In May, online travel and transportation service transactions totaled 2.7593 trillion won, a 3.4% decrease from a year earlier. During the same period, total online shopping transactions increased by 10.3%, and transactions in cosmetics soared by 36.6%.

In contrast, the inbound travel market saw an unprecedented boom. According to the Korea Tourism Organization, the number of inbound foreign visitors in May was 1,945,809, an increase of 19.4% compared to the same month last year. This is about 131% of the figure recorded in May 2019, prior to COVID-19.

Foreigners’ spending habits also changed dramatically. According to Korea Tourism Data Lab, foreign card spending in Korea hit 2.1222 trillion won in May, a 67.1% rise from the previous year. It was the first time monthly foreign card spending exceeded 2 trillion won. Chinese tourists’ spending surged by 214%, and by sector: shopping increased by 77.8%, transportation by 70.6%, medical and wellness by 65.8%, and food and beverage by 64.9%.

This increase in foreign spending did not translate directly into domestic travel industry revenues. Korea Tourism Organization statistics include foreigners’ online spending in Korea, whereas Korea Culture and Tourism Institute estimates the entire market based on both domestic and foreign credit card approvals but excludes online sectors such as e-commerce and payment intermediaries.

Foreign tourists are entering through Incheon International Airport. Photo by Yonhap News Agency

The Fall of the 'Trickle-Down Effect' in the Era of FIT and Overseas OTAs

Changes in travel patterns are cited as another factor widening these gaps in numbers. Recently, 8 out of 10 inbound travelers are individual tourists (FIT), signaling a shift from group tours to free independent travel in the Korean market. As more foreigners directly book flights and accommodation in advance through overseas online travel agencies (OTAs) or platforms in their own countries, the link between rising inbound visitors and card sales at domestic travel agencies or airlines is weakening.

This disparity is even more pronounced in the airline market. In May, international air passenger numbers were 8,246,834, up 8.1% from a year earlier, and the number of international flights also increased by 7.3%. Nevertheless, card spending at airlines fell by 24.6%. While passenger numbers increased, more transactions were prepaid through overseas airlines and OTAs, and thus do not appear fully in domestic credit card approval data.

The rapid shift of foreigners’ spending preferences from traditional travel products to shopping, medical and wellness, and food and beverage is also further reducing the domestic travel industry's perceived benefits. Although accommodation services benefitted from the surge in inbound visitors, travel agencies that design and sell tourist packages and the ticket distribution segment did not see comparable growth.

Tourism Prices Up 14.7%... Larger Apparent Scale, Lower Real-World Benefit

Rising prices have also inflated the apparent size of tourism spending. In May, the tourism and travel consumer price index climbed 14.7% from the previous year. This increase is about 4.7 times the overall consumer price inflation rate of 3.1%, representing the largest gain in any culture, sports, or tourism sector. International airfare, overseas group tour expenses, domestic airfare, and car rentals all surged in price.

In the same month, card spending growth in the tourism sector was only 6.4%. Although the composition of these indices differs, the fact that tourism prices increased much faster than overall consumption shows that much of the perceived boom in tourism is being driven by price effects. Even though the number of inbound tourists and nominal spending soared, the sense of recovery on the ground in the tourism sector has not kept pace.

Ultimately, the number of inbound tourists and total spending alone can no longer explain the overall boom in the tourism industry. Foreign wallets opened widely for shopping, medical and wellness, food and beverages, and accommodation, but card spending at travel agencies and airlines, online travel transactions, and tourism and travel production indices all moved in the opposite direction. As the fruits of increased tourist arrivals become concentrated in certain segments and platforms, polarization within the tourism industry is intensifying.

Kim Sookyung, Senior Research Fellow at the Korea Culture and Tourism Institute, commented, "The increase in inbound visitors and nominal spending is clear, but we must also consider the effects of rising tourism prices and the divergence across sectors. To accurately assess real recovery, we need to look at how the benefits from the increase in inbound tourists are distributed across various tourism sectors including accommodation, travel agencies, and airlines."

This content was produced with the assistance of AI translation services.