Why Korea suffers record travel deficit despite K-culture boom

Shoppers pass by a duty-free store in central Seoul on Aug. 19. (Yonhap)

A growing number of foreign travelers are visiting Korea amid the global popularity of K-culture. But many more Korean nationals are traveling abroad, leading the nation’s travel deficit to a six-year record in the first six months of this year.

According to a recent joint report by the Bank of Korea and the Korea Tourism Organization, the country recorded a travel deficit of $6.48 billion in the first half. The figure represents the largest deficit since the $8.74 billion recorded in 2018.

Industry sources say that an increasing number of Koreans are opting to travel abroad amid the shifting travel trends of younger generations, coupled with rising costs at home.

"Rising prices and the lingering effects of the pandemic have prompted more Koreans to travel abroad," noted a local travel industry official who requested anonymity. "Moreover, there is a generational shift in preferences, with traditional entertainment and uniform tourism products becoming less appealing. Today’s travelers seek unique and novel experiences, which has led to a surge in overseas travel and increased spending on international trips."

Likewise, in the first half of this year, the number of Koreans traveling abroad surged to 14.02 million, a significant disparity to the 7.7 million foreign tourists who visited Korea. This figure represents 93.4 percent of the number of Koreans who traveled internationally in the first half of 2019, just before the pandemic. Meanwhile, the number of foreign tourists visiting Korea reached 91.3 percent of pre-pandemic levels.

Despite these signs of recovery in both inbound and outbound travel, spending patterns have shifted notably. Spending by Koreans abroad surged by 89.2 percent compared to the same period in 2019. Conversely, expenditure by foreign tourists in South Korea amounted to only 75.4 percent of pre-pandemic levels, indicating a decline in per-visitor spending. Foreign tourists' spending in Korea amounted to $7.84 billion, while Koreans spent $14.32 billion on travel abroad.

The country's travel deficit decreased from $8.74 billion in 2018 to $5.66 billion in 2019 and further dropped to $2.92 billion in 2020.

However, the deficit increased to $3.48 billion in 2021, $3.5 billion in 2022 and $5.76 billion last year, with the trend continuing upward.

Incheon International Airport's flight terminal bustling with passengers on Aug. 5. (Yonhap)

According to a local duty-free industry official here, the decline in Korea's travel income can be attributed to a shift from group-oriented to individual tourism.

"The rise in individual travel has led to a decrease in shopping at duty-free stores and large malls," the official explained on condition of anonymity. "Chinese group tourists, once known as 'big spenders' here, are now seeking out everyday malls and restaurants frequented by Koreans that they see on social media and K-content. They are seeking more personalized and affordable cultural experiences rather than high-end goods, which has significantly affected overall travel revenue."

As South Korea navigates these shifting travel dynamics, the government and the tourism industry are adapting their strategies to meet the changing preferences of domestic and international travelers.

For example, in response to years of operating losses, the duty-free industry has begun to attract tourists by setting up pop-up stores and distributing vouchers in Myeong-dong, a popular commercial district frequented by travelers.

By Kim Hae-yeon(hykim@heraldcorp.com)