[Edaily Kang Gyeong-rok Travel Reporter] #For every tourist they bring in, a domestic travel agency receives 150,000 won from an overseas sales agency. The cost of accommodations, transportation, and guides totals 200,000 won. If the agency receives a 50,000-won shopping commission from the retailer, they break even. If the commission drops to 20,000 won, they fall short by 30,000 won for each tourist.
This is an example illustrating the profit structure of low-cost group tour packages to South Korea. It has long been a common practice among some inbound travel agencies to cover the shortfall in domestic expenses—which cannot be fully covered by the payments received from overseas tour operators—with shopping commissions. This is why the government is seeking to regulate these commissions. However, even if commissions are reduced, if overseas tour operators do not pay the full cost for accommodations and transportation, the domestic travel agency must absorb the shortfall.
Accordingly, the Ministry of Culture, Sports and Tourism will hold a public hearing at 2:00 p.m. on the 13th at the Seoul Garden Hotel to discuss amendments to the Enforcement Rules of the Tourism Promotion Act. The focus of the discussion will be the commission rate paid by sales outlets used by group tourists visiting Korea to their designated travel agencies. The Ministry plans to draft the amendment based on the opinions gathered at the hearing. However, specific commission rates have not yet been disclosed.

◇Why Cheap Travel Packages Include So Many Shopping Stops
Customers booking group tours to Korea from overseas can easily compare package prices. On the other hand, it is difficult to know how many hours of the itinerary will be spent at retail stores or how much extra they will have to pay once they arrive in Korea. Packages that accurately reflect accommodation and transportation costs appear expensive from the booking stage. This structure gives an advantage to designated travel agencies that offer low quotes, anticipating shopping commissions, when attracting group tours.
Once a group arrives in the country, the travel agency’s revenue depends on the tourists’ purchasing activity. The more goods they buy, the easier it is to cover budget shortfalls, creating an incentive to spend more time at retail stores rather than visiting one more tourist attraction. Reducing excessive commissions also limits the travel agency’s ability to offer quotes below cost through shopping itineraries. For travel agencies that reflect legitimate operating costs in their quotes, this helps mitigate the disadvantage they face when competing on price with low-cost packages.
The revised Tourism Promotion Act, promulgated last June, prohibits dedicated travel agencies from disrupting the order of the travel industry by significantly lowering the cost of attracting group tourists while receiving commissions exceeding the standard rate. It also prohibits forcing tourists to make purchases or using shopping commissions to cover costs that should be paid to tour guides and other tourism professionals. The discussion on the 13th will focus on the commission rates delegated by the Act to the Ministry of Culture, Sports and Tourism’s ordinance.

◇If Commissions Are Reduced, Who Pays the Difference in Stay Costs?
In the previous example, for the dedicated travel agency to operate the same itinerary without incurring a loss, the payment received from the overseas sales agent must increase from 150,000 won to 180,000 won. However, this 30,000-won difference does not necessarily fall entirely on the travelers. The booking price varies depending on how much the overseas sales agent covers and how much is reflected in the package price. However, domestic travel agencies that have already agreed to accept group tours at low prices must still cover the agreed-upon hotel and chartered bus costs, even if their commission income decreases.
The inbound tourism industry is concerned that reduced commissions could lead to a decline in revenue for domestic travel agencies. There were also calls for the government to step in to improve business practices so that domestic accommodation costs are settled at their full value. In response, the Ministry of Culture, Sports and Tourism is reviewing a plan to apply different commission rates based on store type and purchased items until the end of 2027, followed by a single rate starting in 2028. This is to give travel agencies time to reprice their packages and to allow duty-free and tax-free shops time to amend existing contracts. While retailers can save on commission expenses, their sales may decline if the number of group tourists decreases.
What matters most to foreign tourists is the total cost—the package price plus essential local expenses—and the time spent shopping. Even if the package price rises, there is a net benefit if the amount of money they have to pay separately on-site decreases and they have more time for sightseeing instead of visiting retail outlets. However, if it is difficult to verify the total cost and shopping schedule before booking, it is hard to determine which package is better based solely on the price tag.
Kang Jeong-won, Director General of the Tourism Policy Bureau at the Ministry of Culture, Sports and Tourism, stated, “Until now, some dumping tours have relied on excessive shopping commission structures, disrupting the tourism order and causing great disappointment among visitors.” He added, “This measure to limit shopping commissions will serve as an essential turning point for establishing a fair market order and achieving a qualitative leap in inbound tourism.”