Taiwan, Korea tourism sector continues to underperform on decline in Chinese tourists

Taiwan and Korea’s tourism sector continued to underperform as the number of foreign tourists visiting Korea contracted sharply by 22.8 percent y/y during the first eight months this year. In Taiwan, tourist arrivals also declined in Jan-Aug, albeit at a relatively moderate pace of 3.9 percent.

By contrast, the corresponding number in Japan was a strong rise of 17.8 percent. The underperformance could be well explained by the decline in Chinese tourists. As a result of the THAAD disputes, the number of Chinese tourists visiting Korea plunged nearly 50 percent in Jan-Aug. Taiwan also saw a circa 30 percent decline in Chinese tourists, because of the deterioration in cross-strait ties.

Despite the surge in China’s outbound travels during the ongoing Golden Week holiday, Korea and Taiwan may not be able to benefit much. According to information from various travel services companies, the top travel destinations of Chinese tourists during this holiday included Thailand, Japan, Singapore, the US, and Vietnam. Korea and Taiwan have dropped from the list.

On a relative basis, Taiwan is doing better than Korea in terms of exploring new sources of tourists. The number of visitors from Southeast Asia, for instance, surged nearly 40 percent in the first eight months this year. As a share of total visitors, Southeast Asia has risen to 19 percent, from 15 percent in 2016, while China has declined to 26 percent from 33 percent.

In the case of Korea, the general interest of foreign visitors is weak this year, because of the massive demonstrations in early-2017 and the escalation in North Korea tensions recently. The situation here is relatively more complicated and a meaningful recovery will take time.

Meanwhile, FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest