Crackdown Targets 'Price Gouging' at Rural Homestays... Rates Must Be Reported and Honored in Advance

'Act on the Promotion of Mutual Exchange Between Urban and Rural Areas' to Be Promulgated on 27; Take Effect a Year Later

Amendment Incorporates Anti-Price-Gouging Measures

Surcharges May Be Imposed for Unilateral Rate Hikes

Starting in October next year, rural homestay operators will have to report their accommodation rates in advance and charge the reported rates. They may face surcharges if they raise their rates unexpectedly. The measure follows an amendment to the relevant law incorporating key provisions of the anti-price-gouging measures announced in February this year, amid growing public concern over unfair business practices, such as accommodation providers sharply raising prices during peak seasons and major events.

The Ministry of Agriculture, Food and Rural Affairs said on October 26 that a partial amendment to the Act on the Promotion of Mutual Exchange Between Urban and Rural Areas, which passed the National Assembly plenary session on October 1, will be promulgated on October 27. The amended law will take effect on October 28 next year, one year after its promulgation.

Exterior view of a traditional Korean guesthouse in Buyeo. Buyeo County.

The ministry said the amendment transfers provisions on rural homestays from the existing Act on the Maintenance and Improvement of Agricultural and Fishing Villages to the Act on the Promotion of Mutual Exchange Between Urban and Rural Areas. It also eases regulations to promote rural homestays, while focusing on strengthening oversight and supervision to ensure safe accommodations and crack down on price gouging.

* Accommodation rates must be reported in advance to local governments...aimed at curbing price gouging = First, the amendment establishes new obligations and strengthens penalties to crack down on price gouging. Rural homestay operators must report their accommodation rates to the head of the relevant local government and charge the reported rates. They may not unilaterally cancel or change guests' reservations without just cause. Violations may result in administrative penalties, including fines and business suspensions. In particular, penalties for unfair business practices have been strengthened. Operators may face surcharges if, without just cause, they unilaterally cancel or change a guest's reservation, raise the rate for that accommodation, and resell it.

* Residency and homeownership requirements abolished; rural homestay requirements, including housing size, eased = The prior-residency and homeownership requirements will be abolished to reduce barriers to entering the rural homestay business. Local governments will also be allowed to set different standards by ordinance for the size of homes used for rural homestays, taking local conditions into account and within the criteria prescribed by ministerial decree. However, to prevent damage to rural landscapes and conflicts among residents caused by excessively expanding the standards, a ministerial decree will set a limit on the number of guest rooms. In particular, a special provision will allow areas experiencing population decline to set a different guest-room limit by ordinance, within the range prescribed by ministerial decree.

An MAFRA official said, "The prior-residency and homeownership requirements have restricted people moving to rural areas from entering the rural homestay business. The uniform limits on home size have also made it difficult to reflect local conditions and diverse tourism demand." The official added, "We expect this amendment to ease barriers to entering the rural homestay business and enable operations tailored to local needs, contributing to the growth of rural tourism and revitalizing local economies."

* Legal framework established for vacant-home homestay businesses; inheritance protections and meal options expanded = The amendment establishes a legal framework for rural homestay businesses that use vacant homes in rural areas, creating a basis for diversifying how rural homestays are operated. It defines eligible operators of vacant-home homestay businesses that are corporations or organizations as local governments, village enterprises, social enterprises, social cooperatives, and nonprofit corporations. The actual-residency requirement will not apply to vacant-home homestay businesses, but they must appoint a manager to ensure guest safety and facility maintenance. Violators may be sentenced to up to six months in prison or fined up to 5 million won.

A measure has also been introduced to protect heirs when an operator dies. Under the previous system, heirs had to file a new report to continue the rural homestay business after the operator's death, and in some cases it was difficult to continue operating because of factors such as changes to the property's location. Under the amended law, when a rural homestay operator dies, an heir residing at the business premises may succeed to the operator's status, subject to requirements set by law. The measure is intended to ensure business continuity and protect the heir's livelihood.

The range of meals that rural homestays may provide to guests will be expanded from breakfast to include lunch and dinner. In addition, when meals other than breakfast are served, the relevant food sanitation laws and regulations will apply to ensure proper hygiene management as meal options expand.

* Oversight and supervision of rural homestays strengthened, including shift from a notification system to a registration system = Alongside regulatory easing, oversight and supervision of rural homestay businesses will be strengthened. The notification system will be replaced with a registration system, and registrations may be revoked if operators fail to meet registration requirements or if certain circumstances arise, such as violations of laws and regulations, making business-site management more effective. The amendment also introduces disqualifying criteria barring people with certain criminal records, including sex offenders, from operating rural homestay businesses. To ensure effective inspections of illegal or unfair business practices, operators will be prohibited from refusing or evading entry or inspections by relevant public officials without just cause. The amendment also requires rural homestay businesses to be identified as such in online booking and promotional materials so consumers can readily recognize them and book with confidence.

Jeon Hanyeong, director general of rural policy at MAFRA, said, "This amendment improves the business conditions for rural homestays to support the growth of rural tourism, while strengthening institutional safeguards to protect guests and foster a fair accommodation market." He added, "We will do our utmost to take follow-up measures, including drafting subordinate regulations, so the intent of the amendment can be smoothly realized in practice."

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