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Struggling travel businesses now facing fourth wave
2021-07-28
Hope for a summer tourist boom has faded with the fourth wave of the pandemic, and hotel and travel businesses are preparing for another holiday season of paltry revenues.  
 
As the country implements Level 4 social distancing restrictions — the toughest in a four-tiered system — more Koreans have become reluctant to go on trips and have even canceled reservations they made for summer vacation.
 
“Since the Level 4 measures, there are almost no customers at all,” said a man who runs an accommodation business in Seodaemun District, western Seoul. “I expected that the country would ease the restrictions and more customers would come.”
 
“But now there’s nothing more I can do.”
 
On Onda, a Gangnam-based accommodation service provider, more than half of the reservations made for July have been canceled since the implementation of Level 4.
 
“We expected sales would increase at least two-fold during the summer vacation,” said a spokesperson for Onda. "But many customers are canceling their reservations."  

According to data from Onda, sales by accommodation businesses in greater Seoul between July 5 and July 18 fell 9.1 percent compared to two weeks earlier. The company analyzed the sales data of about 36,000 accommodation businesses across the country.
 
In Seoul city, sales declined 19.4 percent, while sales of businesses in Incheon decreased 12.7 percent and Gyeonggi 7.2 percent.
 
During the same period, sales of accommodation businesses in Gangwon rose 16.5 percent and North Chungcheong grew 20.5 percent.
 
Small- and medium-sized travel agencies are also being hit hard.
 
“The company has not been making money for about one year and half since the Covid-19 outbreak,” said a 61-year-old man who runs a small-sized travel agency. “There’s no way we can expect profit.”
 
His agency has only one employee, down from five. He had no other choice but fire the other four due to severe financial difficulties.
 
“With the travel bubble, many companies have expected that consumer spending will go up at least after the Chuseok holiday,” said Kwon Byung-kwan, head of Woori Travel Association, a group of small- and medium-sized travel agencies.
 
According to a recent survey by the Korea Federation of SMEs of 300 accommodation and restaurant businesses, 57 percent said they are considering either “shutting or temporarily closing” their businesses.
 
Around 67 percent of respondents said sales during July-to-August period will be down more than 40 percent compared to the normal summer vacation period.
 
Small- and mid-sized businesses on average earned 42.34 million won ($36,700) during the July-to-August period last year, down 47 percent compared to same period the previous year.
 
“Sales by the self-employed and the small- and mid-sized business owners will inevitably drop due to the tightened social distancing measures amid the fourth wave of Covid-19,” said Chu Mun-gab, head of the division of economic policy at the Korea Federation of SMEs. “Financial support for them is urgent.”
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