Sungchae Jung Managerial Implications of Korea s International Travel Market Demand Prof. Sungchae Jung, Ph.D. Dept. of Tourism Management, Honam University, Korea 59-1, Seobong-dong, Gwangsan-gu, Gwangju, Korea scjung@honam.ac.kr Abstract To establish tourism development, policy and the promotion of travel destination, it is necessary to achieve a clear profile of the travel behavior and trends of effective, differed and potential demand. This study attempts to analyze the changing patterns of Korea's inbound and outbound travel demand. The aim of this study is to determine the probability of being tourist as a function of characteristics. In considering the outlook for growth in international travel demand of Korea, it seems to be recognized that the potential markets with continually sustained historical, political, and highly developed economical relationships, other social relationships are still considerable. Proximity and accessibility also are of consideration, as in the case of Asia and America. A more active travel behavior is made by males, pleasure travelers and professors/students groups throughout the geographical district of Asia and America than in other regions. In the point of marketing and political views, specific market segments need to be addressed in marketing by the enlargement and diversification of new markets such as Africa and South America in all segments. Especially, growth of the Oceania and European markets was significant considerable. Although the effectiveness of the tourism benefits of Oceania and African tourism remains doubtful, the phenomenon can be predicted to be bright. The results of this study will provide a valuable resource for tourism practitioners and policy makers, and a set should be available in every tourism management. Keywords- Inbound and Outbound Tourism, Korea, Managerial Implications 1. INTRODUCTION The largest change of both Korea s tourism supply and demand is considerable. The outbound was reached more than ten million in 2005 and the inbound was recorded about 9 million in 2010. Until the end of 1950s, tourism, for a small part, contributed to the growth of Korean economy. The one millionth annual visitor arrival was recorded in 1978, two million in 1988, three million in 1991, four million in 1988, and more than five million in visitor in 2000. In 2010 the inbound reached about 9 million and outbound was recorded more than 12 million. During 15 years from 1995, the inbound and outbound were increased about 3 times. Under the prediction the high level of annual increases, tourism in Korea has been growing so fast and soared past its 1995 benchmark of 7 million tourists two years early. In the year of 2010, Korean travelers has increased to 12,488364 which was overwhelming increase rate of change. On the other hand Korea is treated as a motor of intraregional travel generator, since the complete liberalization of Korean citizens overseas travel in 1989 it rose 30.3% to 3,154,326, surpassing the 3 million only two years after it reached 2 million. 44
Managerial Implications of Korea s International Travel Market Demand The Korean tourism industry has been developing faster than ever while overcoming the economic crisis. This twelve million outbound has a special significance in the international tourism market. It symbolizes the significance of the Korean tourism industry in the comparison of inbound and outbound demand. The increment rates of outbound are very significant. In year 2000, the increment rate of outbound was 85.6 % comparing increment rates of inbound 41.8%. From year 1988, the Korean government relaxed its ban on overseas travel. Now Korea has become a motor for international travel. The number of arrivals was increased steadily, however an unbalanced situation was observed, before and after the Olympic Game double digit growth was experienced and since 1990, the growth rate was decreased. It is implicated that the Olympic game contributed to increase Korean international travel demand. Some other factors which influenced Korean tourism such as designation of Visit Korea Year, extension of visa free status for ese and Chinese tourists(to Jeju Island), designation of Special Tourism Zones are considered. Air Transport Agreement and abolition of some restrictions on the tourism industry was changed the increase demand of international tourism in Korea. TABLE 1 CHANGING PATTERNS OF DEMAND(UNIT : %) Year Inbound Outbound Increasing Rates Inbound Outbound 1995 3,752,976 3,818,740 - - 2000 5,321,600 5,508,241 41.8 85.6 2005 6,022,752 10,090,143 45.4 83.2 2010 8,797,658 12,488,364 46.1 23.8 Source: Annual Report on Travel Demand, Korea Tourism Organization, 1995-2010 This study attempts to analyze the changing patterns of Korea's inbound and outbound tourism demand. The aim of this study is to determine the probability of being tourist as a function of characteristics. This study examines how Korea's tourism evolves based on the structure of arrivals and departures. It discusses problems and proposes solutions to improve the nation's inbound and outbound tourism standing, and it explains what causes this situation. The analysis will contribute to the establishment of future tourism planning and management. 2. METHODS This study was an empirical investigation, utilizing travelers inbound and outbound data from the annual tourism statistical report, Korean Tourism Organization. The analysis was a two-stage procedure that examined two types of data: 1) the traveler's demographic characteristics of sex, age; 2) travel attributes including destination, travel purpose, and mode of transportation. The difference between the two stages was methodological. The first stage employed methods of frequency using the statistical report of KTO. The comparison analysis was used for the demographic characteristics and travel patterns of the Korea Tourism Organization sub-sample with each of the two other groups of travelers such as arrivals and departures. 3. CHANGING PATTERNS OF DEMAND BY GEOGRAPHICAL BOUNDARY As can be seen in Table 2, the main demand of inbound and outbound is concentrated in Asia. The rates were developed from 67.8% of inbound and 64.1% of outbound in 1955 to 77.7% of inbound and more about 90% of outbound in 2010. Next higher demand of inbound and outbound is accounted in America and Europe. Probably proximity and historical background might be influenced the travel demand. The considerable significant inbound and outbound is appeared in Europe and Oceania. The increase rates were higher than other areas in both inbound and outbound. International Journal of the Computer, the Internet and Management Vol.19. No.2 (May-August, 2011) pp 44-49 45
Sungchae Jung TABLE2 CHANGING PATTERNS OF DEMAND INCREMENT RATES BY GEOGRAPHICAL BOUNDARY(UNIT: %) Year Asia America Europe Oceania Africa In Out In Out In Out In Out In Out 1995 67.8 64.1 11.1 19.2 10.9 8.0 0.9 8.0 0.3 0.7 2000 74.9 60.4 10.0 15.4 8.5 6.7 1.0 4.8 0.3 0.5 2005 74.5 72.7 10.6 8.1 8.4 5.8 1.4 4.5 0.3 0.3 2010 77.7-9.3-7.3-1.7-0.4 - In Asia, was one of the main inbound and outbound country, those are marked about 45% of inbound and 26,2% of outbound to 2000, but from 2005 is emerged as an important inbound and outbound country recorded as about 30% of total demand. and are important origin and destination countries, followed countries are Brazil and in America. Although the demand is accounted for only 0.1% and 0.2% both increment rates of inbound and outbound were very high. Especially, United Kingdom and were established as the main sources of tourists in Europe. Although is recorded below 1% in outbound, but it is increasing more than 1 % in outbound. Whereas the numbers of tourists from the Europe were highly increased, was higher ranked than United Kingdom in outbound from year 2000. The demand of inbound and outbound of Oceania and Africa were accounted for still less than 1%, but those of and South Africa were very significant. TABLE 3 COUNTRY BASED DEMAND INCREMENT RATES(UNIT %) Year Asia(ranking) America Europe Oceania Africa Inbound Outbound Inbound Outbound Inbound Outbound Inbound Outbound Inbound Outbound 1995 (44.4%) (4.7%)) Philippin es (4.3%) 2000 (46.5%) (8.3%) Philippin es (4.3%) 2005 (29.4%) (17.3%) Taiwan (5.8%) 2010 (20.0%) (18.8%) Taiwan (4.6%) (26.2%) (10.6%) Thailand (8.6%) (20.0%) (18.8%) Thailand (6.4%) (29.4%) (17.3%) Thailand (6.6%) (9.6%) (0.9%) Brasil (0.2%) (8.8%) Brazil - (7.4%) (17.2%) (1.6%) Brazil (13.1%) (1.9%) (6.6%) ( (1.3%) (1.3%) (1.3%) (0.6%) ( (1.0%) (0.6%) (1.6%) (1.5%) (1.6%) UL (1.0%) (0.2%) (0.2%) (3.2%) (2.4%) (0.8%) (2.0%) (0.4%) (0.5%) Outstanding increment rates of pleasure travel were recorded to 353.4% of inbound education and 322.0% of outbound pleasure travel. The total increment rates were 89.5% in inbound and 320.1% in outbound in Asia. The most increment rates are appeared in 46
Managerial Implications of Korea s International Travel Market Demand Africa education inbound, the increment rates are 439.6% and 384.4% education purpose travel from Europe. In the case of pleasure purpose outbound, 322.0% of increment rates in Asia were increased 382.9% of education travel in Africa. But the business travel were decreased 36.2% inbound in America and 34.2% of official travel in Oceania were also decreased. Purpose /Continents TABLE 4 INCREMENT RATES OF TRAVEL PURPOSE(UNIT : %) Asia America Europe Oceania Africa In* Out In* Out In* Out In* Out In* Out Pleasure 169.0 322.0 59,9-9.5 46.6 146.0 182.7 43.6 67.8 86.1 Business 84.3 160.8-36.2 25.4 20.4 67.3 114.9 40.6 262.5 112.6 Official 37.8 127.4 40.8-2.3 80.9 10.6 74.9-34.2 90.9-26.6 Education 353.4 65,2 48.9 48..6 384.4 22.4 22.1 62.2 439.6 382.9 89.5 320.1 53.4 11.4 24.9 90.9 139.2 49.9 40.9 0.09 *Inbound data is from 1995 to 2010 **Outbound from is from 1995 to 2005 Education travel was accounted for 353.4% increment in inbound, business(84.3%), and official travel(37.8%) are followed by pleasure travel(169.0%) in Asia. However, 139.2% of inbound and 49.9% of outbound increment was accounted in Oceania. Inbound was increased 182.7% in pleasure travel and of business trip was followed by 114.9% The most significant inbound was from ese travelers The ese pleasure travel at 3,504,327, business 203,981 and officials 7,399 and education 31,915 in 2005. By American pleasure travel accounted for 390,771, business for 28,819, officials 29,479 and education 1,675, showing a comparatively higher proportion of pleasure and official travel segments than other countries. The ratio of female visitors has been increasing gradually every year. From 1995 to 2010, women have increased 53.6% of the total visitors from 31.2%, while men represented 46.4% from 68.8% in 2010. The significant increase was appeared in Oceania, female travelers have changed from 28.9% to 42.4% in inbound. Outbound female travelers have also increased from 25.2% to 43.4% during same years. In 2010, female comprised more than male. 3,942,757 female visitors comparing 3,863,396 male visitors in inbound were appeared.. The phenomenon was highly changed from male to female increase rate, for example the increase rate of female was higher than male in both inbound and outbound. TABLE 5 CHANGING PATTERNS OF DEMAND BY SEX, PURPOSE(UNIT: %) Continents/Sex Male Female 1995 2010 1995 2010 Asia In 68.8 46.4 31.2 53.6 Out 64.2 61.4* 35.8 38.6* America In 65.4 60.2 34.6 39.8 Out 56.9 52.8* 43.1 41.2* Europe In 76.7 71.3 23.3 28.7 Out 64.8 59.9* 35.2 40.1* Oceania In 71.1 57.6 28.9 42.4 Out 49.5 46.4* 50.5 53.6* Africa In 78.4 77.6 21.6 22.4 Out 74.8 56.6* 25.2 43.4* *Data from 1995 to 2005 International Journal of the Computer, the Internet and Management Vol.19. No.2 (May-August, 2011) pp 44-49 47
Sungchae Jung The principal inbound market was generally shared by males, aged 31-40 and 41-50. Most of them were concentrated in the age groups of 21-60. A lower rate was appeared in the age bracket of 0-20 and 61+. They travel from/to Asia. The increase was appeared in Europe, Oceania and Africa, while Asian and European market declined steadily in the age group of 21, however, under 20 it was concentrated in purpose of travel. Especially the Oceania and European markets increased greatly, but the Asian and American market was decreased. Departures increased to Europe, Oceania and Africa during the research period, it has been eroded by the decreased participation of Asia and America. Age /Continents TABLE 6 INCREMENT RATES BY AGE(UNIT : %) Asia America Europe Oceania Africa In Out In Out In Out In Out In Out -20 0.4 4.7-3.4 5 1.9 1.9 1.8 9.2-0.3 6.2 21-30 -1-3 -1.3-5.1 0 0.5 1.6-4.6-1.2-7 31-40 2.6-5.7-5.3 2.5-3.5 4.1-2.1 4.0 3.1-7.7 41-50 -3.8 3.7 0.6 2.8-1.0-2.7-3.6-0.2-1.2 4.4 51-60 0.6 0 2.2-1.7 0.9-0.2 0.5-5.5-0.4 2.5 +61 1.9 0.2 4.3 3.0 2.2 0.3 1.7-2.6 0 1.6 *Data from 1995 to 2005 Source : Korea Tourism Organization The mode of transportation indicated that nearly 90-95% of the arrivals as compared to 99,9% for the departures by airplane. Nearly 100 percent of the departures had obtained more than 99% except Asia, which is accounted 84.1 of Asia and 74.1% of European arrivals. In Asia about 10-15% were used the ship in arrivals and departures. These findings suggest that European arrivals relatively were more inclined to depend on ship such as 25.9% than other continents in 2010. Departures seemed to rely more on airlines. TABLE 7 INCREMENT RATES BY MODE OF TRANSPORTATION(UNIT : %) Continents/Mode of Airport Habor Transportation 1995 2010/2005 1995 2010/2005 Asia In 93.1 84.1 6.9 15.9 Out 89.8 * - 10.2* America In 97.9 88.8 2.1 11.2 Out - 99.9* - 9.1* Europe In 90.0 74.1 10.0 25.9 Out - 99.7* - 0.3* Oceania In 95.1 91.8 4.9 8.2 Out - 99.9* - 0.1* Africa In 97.1 85.7 2.9 14.3 Out - 99.5* - 0.5* *Data from 1995 to 2005 Source : Korea Tourism Organization 4. CONCLUDING REMARKS As a result of rapid growth of economic growth and an increasing amount of disposable income, advanced travel environments were more considerable in the Korean outbound tourism market. Until 1988, the application of pleasure travel was 48
Managerial Implications of Korea s International Travel Market Demand limited to people 50 years of age and above in 1983, 40 in 1987, and 30 in 1988. The Korean government eliminated all age restrictions in 1989. The volume of outbound Korean travelers showed a steady increase during the 1970s, In 1987, outbound travel again began to increase due to the partial liberalization of the Government's travel restrictions. In 1989, following the complete liberalization of Korean overseas travel, outbound travel began to increase remarkably and exceed one million travelers, reaching two million in 1992. In 2010, departures rose to 12,488,364. In considering the outlook for growth in Korean travel demand, it seems to be recognized that the potential markets with continually sustained historical, political, and highly developed economical relationships, other social relationships are still considerable. In fact, the discussion of the spatial patterns of outbound and inbound travel from/to Korea showed that they were numerically and spatially concentrated in a few destinations, particularly in Asia and America. Proximity and accessibility also are of considerable in the case of Asia and America. A more active travel behavior is made by males, pleasure travelers and student groups throughout the geographical district of Asia and America than in other regions. In the point of marketing and political views, specific market segments need to be addressed in marketing by the enlargement and diversification of new markets such as Africa and South America in all segments. Especially, growth of Oceania and European markets was significant considerable. Although the effectiveness of the tourism benefits of Oceania and African tourism remains doubtful, the phenomenon can be predicted to be bright. If specifically targeted, it could contribute to the goal of Korean tourism growth. Another perspective on the performance of the Korean tourism industry merges the concentration of special regions in the context of global trends in both inbound and outbound travel. Especially, the performance of the Korean tourism industry is clearly outstanding when judged in terms of tremendous outbound market trends in international travel. In contrast to the trends in the level of international visits to Korea, the growth is relatively descending as can be revealed in the above described results, growth in travel by foreign travelers over the past few years has been somewhat less spectacular, but it is steady. The causes an imbalance of receipts and expenditures in tourism, and extends to serious tourism deficit problems. REFERENCES [1] Korea Tourism Organization, Annual Statistical Report on Tourism, 1996-2010, [2] EIU, Korean National Tourism Authorities edited by (KTO), 1995, p.54. [3] EIU, "Pacific Travel Forecasts to 2005", Korea Tourism Organization, 1995, p.49. [4] Korea Tourism Organization, Annual Statistical Report on Tourism, 1995-2010. [5] EIU, Korean National Tourism Authorities edited by (KTO), 1995, p.54. [6] EIU, "Pacific Travel Forecasts to 2005", Korea Tourism Organization, 1995, p.49. [7] World Tourism Organization, "Outbound Tourism of the Republic of Korea Market Profile", Market Intelligence and Promotion Section, Special Report No. 4.", Madrid, Spain, 2000-2010. [8] World Tourism Organization, "WTO s", 1992-2010. International Journal of the Computer, the Internet and Management Vol.19. No.2 (May-August, 2011) pp 44-49 49