"Who Uses Packages These Days?" Market Turns Upside Down as Money Flow Shifts for Travel Agencies

As Overseas Packages Lose Steam, Agencies Ride the K-Wave

Outbound Operators Face Downturn in Core Package Business

FIT Trend Spreads, Deepening Earnings Slump

Rising Interest in Travel to Korea Spurs a Search for Solutions

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Major travel agencies, which previously focused on overseas travel packages for Korean customers, are now turning their attention to the inbound tourism market, targeting foreign visitors to Korea. This shift comes as demand increases for free independent travelers (FITs)—who design their own destinations and itineraries—rather than for group packages, which combine flights, accommodation, and sightseeing at a lower price. This growing interest in K-brands and Korean tourism is seen as an opportunity for agencies to capture this demand and offset declining financial results.

Incheon International Airport Terminal 1 is bustling with domestic and international arrivals. Photo by Yonhap News Agency

According to industry sources on September 23, Hana Tour, the leading outbound tour company in Korea, posted an operating profit of 5.4 billion won in the second quarter of this year, down 43.6 percent year-on-year, and sales reached 115.4 billion won, a 3.8 percent decrease. During the same period, Modetour recorded a 6.3 percent increase in sales to 42.2 billion won but swung to an operating loss of 860 million won. Yellow Balloon Travel also returned to an operating profit of 773 million won in the second quarter compared to the previous year, but its sales dropped 21 percent to 19.299 billion won.

Industry watchers attribute the poor performance of the major travel agencies to a slump in the package tour business. For example, Hana Tour’s number of outbound package travelers in the second quarter was 447,953, a 2 percent decrease year-on-year; Modetour saw a sharper decline of 13.7 percent to 168,603 during the same period. A travel industry official noted, “Travel demand has generally shrunk due to higher fuel surcharges resulting from the Middle East war between the U.S. and Iran, and sustained high exchange rates in the first half of the year.” The official added, “The rapidly shifting trend toward FIT has also reduced demand for group packages.” In fact, the number of FIT customers utilizing products such as individual flight tickets and overseas hotels through Hana Tour rose by about 10 percent year-on-year in the second quarter of this year to around 1.11 million.

In response, these agencies are seeking a breakthrough in inbound tourism products. Traditionally, inbound business consisted mainly of overseas-based travel agencies recruiting group tourists and setting destinations and programs for Korea, with Korean agencies collaborating on specific parts and taking commissions. Now, however, the strategy is shifting to more proactively planning and directly selling domestic tourism packages. With the number of inbound tourists to Korea surpassing 10 million in the first half for the first time ever this year—and the government and industry setting an annual inbound target of 30 million visitors—agencies cannot afford to ignore the market's robust growth.

Hana Tour recently appointed Jwa Jin Jo, former CEO of Lotte Card, as its new Chief Executive Officer and defined premium themed travel expansion, AI-based digital innovation, and K-culture-focused inbound business as its three key growth drivers. Specifically, it is launching sports-themed travel products for foreign visitors in partnership with its sports travel platform ‘Cl2’ and local governments, and is developing a K-medical platform involving over 100 Korean medicine clinics in collaboration with HanaTour ITC, an inbound-specialized subsidiary, and the global travel platform WAUG.

Furthermore, joint ventures are being established with local travel agencies in major Southeast Asian countries such as Indonesia, Vietnam, Thailand, Malaysia, and the Philippines, with plans to channel travelers from these regions wishing to visit Korea and Japan into HanaTour ITC and HanaTour Japan’s inbound pipelines—a strategy known as global bound, which expands inbound tourism to third-country flows.

Yellow Balloon Travel, in collaboration with the chicken franchise Kyochon Chicken that originated in Gumi, North Gyeongsang Province, is developing inbound packages allowing domestic and international travelers to experience K-chicken and explore major local attractions and foods. Modetour, through its subsidiary Modetour International, is also expanding its inbound business beyond the Chinese-speaking market to the Americas, Europe, and Southeast Asia, targeting group demands such as corporate meetings and incentive tours.

In addition, Kyowon Tour’s ‘Travel Easy’ is considering developing inbound products utilizing the hotel chain assets owned by the group. An industry insider remarked, “The strong growth in the inbound tourism market is impossible for travel agencies to overlook, especially as package tour demand dwindles. The share of products and operators participating in this market will continue to rise moving forward.”

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