Local travel agencies falling into bankruptcy

Incheon International Airport is seen empty last year after the number of travelers nosedived due to the COVID-19 pandemic. / Korea times file

By Kim Jae-heun

Local travel businesses are continuing to suffer as the COVID-19 pandemic enters its second year ― eight out of 10 travel agencies earned less than 50 million won ($44,718) last year.

According to a report from the Ministry of Culture, Sports and Tourism given to Democratic Party of Korea Rep. Lim O-kyeong, travel agencies here are estimated to have lost 7.4 trillion won in 2020.

Due to travel bans adopted around the world, the number of tourists visiting Korea nosedived by 80 percent from 29 million in 2019, naturally leading to a sharp decrease in spending by international travelers here.

Hanatour, the country's top travel agency, is on the edge of bankruptcy. Before the pandemic struck, the travel agency had forecast sales of 857.7 billion won last year with an operating profit of 34 billion won. However, struck hard by COVID-19, it ended up with a loss of 114.7 billion won as revenue declined by 82 percent to 110 billion won.

Cancellations by multiple tour groups was the biggest reason ― only 240,000 people traveled with Hana Tour last year, the average number of tourists per month before the COVID-19 outbreak.

Hanatour closed its duty free and hotel business and dismissed nearly 2,300 workers as a result. It even sold its downtown Seoul headquarters last Wednesday for 94 billion won and is currently looking for new office space.

Small and medium-sized travel agencies are in the same boat. They had already been experiencing some hardship because of public sentiment against Japan which started when then-Japanese Prime Minister Shinzo Abe introduced politically motivated economic retaliation measures against certain Korean firms in 2018.

The COVID-19 pandemic has made the situation worse and 13,081 firms out of 17,600 have now closed, while the survivors are not in good shape either with most closing temporarily.

Some companies changed their business models to cope with rental and maintenance fees for their offices.

"I pay about 3 million won every month for rental and maintenance fees. I started a small karaoke business using my office temporarily and I am working part-time jobs too. But they are not enough to pay the rent and my workers are on paid holidays," a travel agency owner in Gangdong District, southeastern Seoul, said.

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