Personal Research on Korean Outbound-Travel Market

Grand SummaryAs international travel has been considerably liberalized and income per capita has been rising, overseas travel has become an intrinsic part of Korean’s balanced happy and healthy life. The number of departures has been on a rise at least till 2020 and most of the Koreans travellers choose Asia Pacific as their destinations, making it one of the priority markets. Even though Koreans are increasingly coming to Vietnam, arrivals only rack up 5% of the total number of travellers, meaning that there’s a lot of potential from this market.

Among Korean travellers, it’s studied and revealed that those from 49 to 60 years of age are most likely to welcome luxury travel. This segment has the spending power and seeks for relaxation and services such as rental cars, spas, golfing and activities that are typical of the local culture. Demographically, senior age group will continue to be dominant in Korea in the foreseeable future. Since this particular group of travellers prefers packaged tours, the role of travel agents should be more emphasized.

Other segments that can be very potential include luxury honeymooners and female business travellers.

Internet has become an irreplaceable part of Koreans’ life, including travel. Hence, it goes without saying that a digital marketing strategy is of great importance in reaching out to Koreans. Blogs, TV, social networks and sites such as Naver, Dam and Tistory should be paid great attention to. Particularly, content should be in Korean.

The use of celebrities in marketing campaigns is recommended. Operationally, on-site dedicated Korean restaurants and collaterals or signs in Korean are strongly suggested

Market Info

As its economy has seen solid growth in the past few years, South Korea’s income per capita has correspondingly picked up, resulting in the expansion of international travel. The number of departures has been on the rise since 2009 and 2014 saw 14,850,000 of them. According to a study in 2013 by Amadeus, Korea is ranked at number 3 in the region, only after China and Japan, in terms of outbound travel market. Possessing a higher percentage of international travellers in its population, Korea is expected to surpass Japan in the next few years in this regard. A research study by Standard Chartered in 2013, forecasts that the number of overseas departures will reach 16,800,000 million in 2016.

The same report also noted that in 2012, the number of Korean travellers to Vietnam made up 5% of the total outbound travellers. Vietnam Tourism Board reports that arrivals from South Korea have been growing from 475,000 in 2007 to 847,000 in 2014.

Given that the outbound travel of Korea is expanding, Vietnam only racks up 5% of the pie and the number of Korean arrivals to our country is increasing, Korea is a very potential market for Vietnamese hotels and resorts.

Korean travellers’ profileStudies by European Travel Committee in 2012 and Standard Chartered in 2013 both suggest that outbound travellers are mostly evenly distributed among 20s, 30s, 40s and 50s. While travellers in 30s and 40s record the highest figures, the senior segment (over 50s) posts the biggest increase.

The senior segment is estimated to become the largest in the whole population in the foreseeable future. The baby boomers will remain the largest age group in 2023 per a study by Standard Chartered

Not only does this segment appear the most potential, but it is also a gold mine for luxurious service providers. Studies by Destination British Columbia and California showed that the older age demographic is responsible for the rise of luxury travel. Specifically, this particular group tends to seek for relaxation, “an escape from daily stresses of life in a safe, clean and healthy environment”, spas, cruises, rental cars and luxury products. Korean golf lovers are a rising segment among outbound travellers.

As the above tables indicate, 30s and 40s are the biggest group that travels internationally. Usually, they are married with children and tend to seek for cultural and educational experiences, as well as outdoor adventures to enrich their family’s lifestyles. According to a research by Australian Tourism Board, families of 30 to 44s spend on average $149 a night while those of 45 to 59s spend $277.

Observations by European Travel Committee, Australian Tourism Board and Visit California showed that lavish honeymoon trips are on an ascent when married couples increasingly choose overseas destination and prefer places that can combine sightseeing and relaxation.

Another segment that’s worth observing is the female business travellers. Currently, women form only 2% of the number of executive committee members in Korea. However, as gender equality is increasingly advocated in the country with the highlight being the appointment of the first female president in 2012, it is expected that the departures of female business Koreans will jump from over 0.5 million in 2012 to 2 million in 2030. Since little mention about travel behavior of this segment has been available, it is an area that seeks more study and observation.

What South Koreans look for when traveling?Per ATB, South Koreans’ top 3 factors in an overseas holiday include, in the order of importance, safety, value for money and family-orientedness. It is not surprising that safety and the family-oriented atmosphere are highly rated since many of the Korean travellers are seniors and go on trips with their families. But what constitutes value for money?

In general, Korean travellers look for beautiful environments with a strong cultural element. As natural believers in the pursuit of a healthy and happy life both physically and mentally, Koreans tend to seek for relaxation and escape from daily stresses by participating in activities that wouldn’t be available to them. Activities such as visiting museums, art galleries and literary, music, TV and film locations are appealing to Korean travellers. To dig in more deeply, the Canadian Tourism Board found out interesting results, as follows:

Koreans appreciate modern, good-quality (but not necessarily luxury) accommodation and quick service. Leaflets, guidebooks and information in Korean are greatly valued.

When do they usually travel?Overall, the seasonality of outbound travel from South Korea is not strong. The popularity of September – December for travel abroad seems to have increased at the expense of January - May

Booking behaviorMultiple studies altogether pointed out that although travel agents still play a significant role in the way Korean travellers retrieve information and book; FIT is still rising fast and strong in popularity. The growth of FIT stems from the quick adoption of Internet and the switch towards individualism of Korean citizens. Research by Amadeus claimed that FITs are now accounting for a majority of leisure travellers in Korea with 70% of Koreans travelling independently, albeit still mainly in family groups. This trend affects the ecosystem in Korea because almost every organization has a dedicated FIT team. This trend; however, is noticeable mainly among younger age groups, not senior travellers.

Study by Standard Chartered expressed faith in the role of packaged tours in the near future and reported their popularity to senior age groups.

The preference for packaged tours came from the belief among Koreans that dealing with travel agents gives them a feeling of touch and trust. Particularly, the novelty of Internet among senior age demographic aids the popular use of travel agents and packaged tours. As this segment will be the largest in Korean market in the near future, it’s expected that packaged tours will still be of significance.

In addition, Internet is growing leaps and bounds as a popular booking channel in Korea. Statistics showed that 66% of Korean leisure travellers make reservations online, either via a travel agent’s website or on branded websites of travel providers. The use of Internet is especially robust among young Koreans and aided by fast and reliable mobile broadband networks in Korea.

Source of InformationAccording to a Korean Tourism Organization survey, given their popularity, travel agents are unsurprisingly ranked at the top of major information source lists when it comes to either family or individual trips. Those who travel with family rely next on word of mouth such as family, relatives, or friends & colleagues while friends are listed as more prominent than family in terms of word-of-mouth for individual travellers. The question is: how word-of-mouth is conveyed in Korea?

A study by European Travel Committee disclosed that 70% of Korean travellers shared their experience with friends and family after trips. About 40% used emails, 30% shared photos/messages on social networks, 20% blogged, 6% submitted online reviews and less than 10% did no sharing. Naver is the most popular site in Korea, followed by Daum and Tistory while Facebook is said to be the leading social network.

Koreans are known as devotees of published and broadcast media. Celebrities have a huge influence on public perceptions and have been used in travel promotion campaigns. TV Is still influential while daily newspapers have been circulation declining.

Known as savvy Internet users, almost all Koreans of up to 50 years old use Internet for on an average of 2 hours per day while more than 50% buy products and services online, including travel. Most airlines, hotels and tour operators provide travellers with online booking capabilities over the Internet. As a result, travel information is massively easier to access to all Koreans, prompting the use of Korean

language instead of English. It’s observed that even though young Koreans are more comfortable with English these days, Korean is still the main language that should be utilized across all content.

What to know about Travel Agents in KoreaThere are two types of overseas travel agencies in South Korea: General Travel Agencies, which handle both inbound and outbound travel, and Overseas Travel Agencies, which handle outbound travel only. Approximately, there are 1,655 GTA and 5,300 Overseas Travel Agencies in Korea with the former being the most influential. The list of top agencies in Korea:

Most travel agents in Korea have their dedicated FIT teams and online presence. In terms of presence online, Interpark is leading the way, but followed closely by the online version of Hana Tour. According to a study by Standard Chartered, Hana Tour is positioned much better than Interpark to tap in the senior travellers in Korea:

As luxury travel is growing in the South Korea, especially in the older age demographic, travel agents are reacting to the trend and putting effort to tap in this market. Two large wholesalers, Hana Tour and Mode Tour, have dedicated divisions for this segment, called Zeus and Jewellery Mode respectively.

Korean Air’s affilicated travel agent uses KALPAK for luxury products while Jason Travel specializes in high end honeymoon products. Not to be left behind, major credit card providers also provide high-end packages.

Regarding business events, major specialized agents include: BT&I, Sejoong Travel, Global Tour, Sharp Travel, BCD Travel, Redcap Tour and Hana Business Travel. It’s observed that many incentive groups tend to travel as leisure groups with an additional component such as gala dinners added to the program.

Australian Tourism Board revealed some interesting findings over Korean’s preferences on brochures and rates, as follows:

Top tips for sales calls in South Korea:

Hard copies of brochures and collateral in South Korean language are preferred It’s advisable to have a translator on sales calls Punctuality is valued and a notice prior arrival is recommended The best time for sales calls is March to April and October to November Key market centers to visit include Seoul, Busan and Taegu It’s highly recommended to be well-prepared and to bring product information, promotional

ideas and specially discounted rates on the table of discussion Personal relationships are valued

Points for consideration Senior travellers of 49 to 60 years old are the type of customers who are more likely to be

appealed to luxury travel. They seek for relaxation in the form of doing things that they wouldn’t be able to normally. A destination with strong culture attracts their attention.

With that in mind, luxury resorts in Vietnam should create tailored packages to this special segment, especially given that seniors will remain the largest group of country and travel populations

Senior travellers prefer packaged tours and hence the role of travel agents such as Hana Tour, Mode Tour should be much more highlighted in any business strategies

Other segments that are worth observing for the long run are female business travellers and luxury honeymooners

As Koreans are tech-savvy, Internet becomes an increasingly important channel via which travellers look for information and make bookings. Blogs, sites such as Naver, Daum and Tistory,

and Facebook are important channels through which Vietnamese resorts can reach out to Koreans. Hence, a few things that can be done include:

o A campaign to invite bloggers to properties can be implemented. Hawaii already did a similar campaign to promote the destination to Koreans

o A social network strategy to facilitate the sharing of experience among Koreanso A search engine strategy dedicated to Koreans , especially on Naver and emails

Celebrities can be used to influence decisions while TV is still popular in Korea. Contracting a suitable and popular celebrity for a promotion and advertising campaign is suggested.

Content in Korean is highly recommended in all content and communication On-site collaterals and signs should be in Koreans to make guests feel comfortable. A Korean

restaurant is a huge plus