[Edaily Reporter Park Sun-Yeop ] Forecasts indicate that the upward trend in foreign tourists visiting South Korea will continue into the second half of the year. This is because, while Japan and Thailand are raising tourism-related costs such as departure taxes and passenger service charges, South Korea is continuing its policy of deregulation to attract foreign tourists. Analysts note that the combination of a weak won, the spread of K-culture, and policy changes in neighboring countries is creating a favorable environment for the domestic inbound consumer goods sector as a whole.
Ji In-hae, an analyst at Shinhan Investment Securities, maintained an “Overweight” investment rating for the leisure sector in a report released on the 26th. Analyst Ji stated, “With Japan and Thailand having decided on significant increases in departure taxes, South Korea—which is maintaining its policy of easing regulations on inbound tourism—is expected to see its inbound tourism boom strengthen.”

According to the Korea Tourism Organization’s Tourism Knowledge Information System, the number of international visitors to South Korea in May reached 1.95 million, a 19% increase compared to the same month last year. This marks the highest figure ever recorded for the month of May. Cumulative international arrivals from January through May this year rose by 21% year-over-year. Compared to the government’s target of 23 million visitors for this year, the progress rate through May stands at 29.4%.
By nationality, the number of Chinese visitors in May was 560,000, a 16% increase compared to the same month last year. The number of Japanese visitors was 360,000 (up 23%), Taiwanese visitors were 190,000 (up 28%), and visitors of other nationalities totaled 830,000 (up 19%). In terms of their share of total visitors to South Korea, Chinese tourists accounted for 29%, Japanese for 18%, Taiwanese for 10%, and other nationalities for 43%. Notably, the number of Chinese visitors in May of this year recovered to 113% of the level seen in May 2019.
Shinhan Investment Securities assessed that the weak won and the spread of K-culture continue to underpin the inbound tourism sector. It also noted that policy changes in Japan could have a positive spillover effect on South Korea. Japan had enjoyed a structural boom in inbound tourism since 2013, but the trend has reversed this year. In May, the number of inbound visitors to Japan stood at 3.56 million, a 4% year-over-year decrease, and the cumulative total for January through May was 17.94 million, down 1%.
The decline in Chinese visitors to Japan is particularly notable. The report explains that, due to the fallout from the South Korea-Japan dispute that erupted last November, the number of Chinese visitors to Japan has continued to decline by approximately 60% year-over-year. Chinese tourists were a major source of demand, accounting for 21% of Japan’s inbound tourism last year.
The Japanese government’s fee hikes are another factor. Starting on the 1st of next month, Japan will triple the departure tax included in airfares from 1,000 yen to 3,000 yen. Visa issuance fees will also increase fivefold: from 3,000 yen to 15,000 yen for single-entry visas and from 6,000 yen to 30,000 yen for multiple-entry visas. Since South Korea, Taiwan, and the United States are exempt from visa requirements for short-term tourism stays of up to 90 days, the burden is likely to fall primarily on Chinese tourists.
Thailand has also decided to raise its passenger service charge by 53%, from 730 baht to 1,120 baht. Both Japan and Thailand aim to use the funds to address overtourism, expand tourism infrastructure, and alleviate congestion at airports and tourist sites.
In contrast, South Korea is maintaining policies aimed at attracting more foreign tourists and encouraging them to spend more. The government has set this year’s inbound tourism target at 23 million visitors and aims to reach 30 million by 2030. The visa-free measure for Chinese group tourists has also been extended through December of this year. Shinhan Investment Securities believes there is a high likelihood of further extensions and an expansion of the measure’s scope in the future.
Analysts suggest that the boom in inbound tourism could lead to investment opportunities across the entire domestic consumer goods sector. Analyst Ji explained that the benefits of inbound tourism should be viewed as a combination of “increased visitor numbers” and “growth in per-capita spending.” This means that if more foreign tourists enter the country and the amount each spends domestically increases, related sectors such as department stores, casinos, and apparel could see significant gains.
However, the report pointed out that supply and demand have become heavily concentrated on major department stores in the recent stock market. Reflecting expectations that major department stores could benefit from both the increase in inbound tourism and the expansion of domestic consumption, their stock prices and valuations have already risen. Accordingly, the report advises broadening interest to alternative beneficiaries, such as foreign-owned casinos and apparel stocks.
Shinhan Investment Securities also highlighted that the drop volume and revenue of the three foreign-owned casino operators— PARADISE(034230), Grand Korea Leisure(114090), and LOTTE TOUR DEVELOPMENT CO., LTD(032350)—are continuing their recovery trend. The firm believes that if the increase in visitors to South Korea, the recovery of Chinese tourists, and the rise in foreign tourists to Jeju Island all align, the casino sector could also directly benefit from the recovery in inbound consumption.
Researcher Ji stated, “We need to maintain our focus on consumer goods, which stand to benefit significantly from the inbound tourism boom,” adding, “With the stock returns and multiples of major retail stocks having risen in advance, we need to fully leverage alternative sectors such as foreign-owned casinos and apparel.”