South Korean tourism trends and sector shifts

South Korea is experiencing a surge in international tourism, with cumulative foreign visitors reaching 17.11 million through September, a 21.5% increase compared to the previous year. Growth is largely driven by Asian markets, specifically China, Taiwan, and Japan. Foreign card spending in the tourism sector has also reached record levels, totaling approximately 15.94 trillion won.

Despite rising visitor numbers, the tourism balance returned to a deficit in July, recording a loss of US$50.3 million. This followed a brief period of surpluses, including a $596.6 million surplus in June. The deficit was driven by South Koreans traveling abroad spending $2.67 billion, which surpassed the $2.62 billion spent by foreign visitors within the country. Data from 2025 indicates that foreign tourist spending accounted for 1.17 percent of the country's GDP.

Sector-specific challenges persist. The duty-free industry faces a crisis as consumption patterns shift from bulk buyers to individual travelers who favor street shops and drugstores. While Chinese visitor numbers rose, duty-free sales from these tourists have dropped significantly since 2021, with average per-person spending at duty-free shops falling by over 84%.

Additionally, the casino sector is facing downward pressure on stocks due to seasonal factors, a strengthening Korean won, and potential regulatory changes. The government is considering raising the Tourism Promotion and Development Fund contribution cap for foreign-only casinos from 10% to 15%. Furthermore, Chinese capital regulations regarding offshore trust income have reportedly dampened the spending sentiment of high-rolling Chinese VIPs.