South Korea

Market Overview

    Yr/Yr % Chg
Visitors to California (2014) * 397,000 2.1%
Visitor Spending (2014) ** $965 million 6.3%
California Market Share (2014) 27.4% -
Average Length of Stay - nights (2013) 9.8 -
     
Weekly Non-Stop Flights (2015) 63 17.0%
Weekly Non-Stop Seats (2015) 21,675 16.0%
2015 Visitation Forecast (% change vs. 2014) 435,000 4.3%
2018 Visitation Forecast (% change vs. 2014) 519,000 24.5%

Source: Office of Travel and Tourism Industries, CIC Research, Tourism Economics, OAG

* Visitor volumes: The U.S. Department of Commerce started to count one-night visitors in 2014. This change inflated Yr/Yr visitation gains compared to previous years but delivers a more accurate picture of total visitation.

** Visitor spending: The U.S. Bureau of Economic Analysis made changes to their methodology in 2014 to include spending by students, temporary workers, and people traveling for reasons related to their health. Although this change increased total travelers, some Yr/Yr declines in spending per visitor have been seen which are more likely related to the gaining strength of the US dollar vs. foreign currencies in the 4th quarter of 2014.

Visitor Spending by Category 2013

  % spending $ Category Spending
Accommodations 25.1% $228 million
Entertainment/Recreation 12.7% $115 million
Food & Beverage 20.1% $183 million
Ground Transportation 7.2% $65 million
Shopping 24.5% $222 million
U.S. Air Transportation 5.2% $47 million
Other 5.3% $48 million
Total 100% $908 million

Source: U.S. Dept. of Commerce; CIC Research, Inc.; U.S. BEA; Tourism Economics

Background

International Markets

Korean visitation to California has increased steadily since November 2008 when the Visa Waiver Program was implemented. Korea was California’s seventh-largest overseas market in 2014 with 397,000 Korean visitors, spending $965 million, or $2,430 per trip. In 2013, Korean visitors stayed an average 9.8 nights in California.

A high proportion of Korean visitors to California are traveling for business or visiting friends and relatives (VFR) rather than being purely leisure travelers. Korean business travelers are visiting the many Korean conglomerates that have invested in California, while Korean VFR travelers are visiting Korean students and migrant families who have settled in the state.


Economy
 

The Korean economy has enjoyed solid growth in recent years, growing 3.5 percent in 2014 and projected to grow 3.8 percent for 2015. Gross Domestic Product per capita increased to $28,739 in 2014, up from $26,205 a year earlier.

Korea’s economy is relatively more dependent on overseas trade compared to other similarly sized nations and the volume of trade is expected to continue rising thanks to recent Free Trade Agreements signed with a number of countries including the United States, Canada and Australia, the European Union and other key trade partners in Asia.

The U.S. dollar to Won exchange rate is expected to remain stable this year with a forecasted rate of 1,080 won to the dollar compared to 1,054 won in 2014. Korea also is expected to benefit from tumbling oil prices with Korean households expected to save at least $10 billion, businesses $4 billion and the government $2 billion.

Korea, however, faces the challenge of a rapidly aging society with nearly 25 percent of its population projected to be 65 years or older in 10 years and its current birthrate of 1.19 among the lowest in the world. With the government planning to expand social welfare programs, there is growing concern about an increasing tax burden on the working class and a resulting economic inequality. Korea ranked third in a recent survey of 20 Organization for Economic Co-Operation and Development countries displaying such economic polarization.

 

Nonstop Airservice into California

    Avg. Weekly Flights Avg. Weekly Seats  
Airport Airline 63 21,653 Cities Served
LAX Asiana  14 5,519 Seoul, KR
  Korean  17 6,576 Seoul, KR
  Thai 4 1,266 Seoul, KR
SFO  Asiana  7 2,049 Seoul, KR
  Korean  7 1,750 Seoul, KR
  Singapore 7 1,946 Seoul, KR
  United 7 2,546 Seoul, KR

 


Airlift
 

Four airlines operate 63 direct non-stop flights a week between Korea and the two California gateways of Los Angeles and San Francisco.

  • Korean Air, the nation’s leading carrier, accounts for 30 percent of international flights. It cut airfares to the United States in December after its passenger numbers fell in the wake of the “nut rage” incident involving one of its executives. This quickly led to other carriers also dropping airfares to the United States.
  • All airlines, effective February 2015, have also reduced the fuel surcharge for U.S. routes to $15 from $165 a year ago, and will soon implement a zero fuel surcharge thanks to falling oil prices, which will have a significant effect on the cost of travel to the United States from Korea and further stimulate demand.
  • Asiana Airlines, the nation’s second major carrier, launched new Airbus A380 service to LAX with nearly 100 additional seats in August 2014.
  • Korean Air will begin service to San Jose in late 2015, creating a third gateway to California for Korean visitors.
  • Both national carriers also will add an additional flight to LAX in July and August to meet the increased demand in peak season.
  • Delta Air Lines launched a new direct flight to Seattle last year and, using Seattle as a hub, will add daily flights to Palm Springs, Sacramento and Los Angeles.

 

Trip Information and Booking Sources** (2013)

  Travel Information Air Travel Booking Methods
Travel Agencies 14.6% 25.4%
Airlines Direct 36.1% 21.9%
Tour Operators 16.9% 16.1%
Personal Computer/OTA 27.7% 21.8%
Corporate Travel Office 14.3% 17.4%
Personal Recommendation 24.4% n.a.
Travel Guide 7.2% n.a.

 

** multiple sources


Travel Trends
 

  • Koreans are avid travelers. In 2014, the number of Koreans travelling overseas reached nearly 16 million, more than 30 percent of the entire population and one of the highest outbound ratios in the world.
  • Koreans’ desire to travel overseas is expected to continue to rise in coming years, fuelled by additional flight capacity, especially from low-cost carriers (LCCs). The market share of LCC in 2014 was 7.69 percent and is expected to rise to more than 10 percent in 2015. Lower airfares offered by the LCCs have spurred traditional carriers to also drop their seat prices, further boosting overseas travel demand by Koreans.
  • Korea’s Internet penetration ratio (103.7 percent) and smart phone usage rate (81 percent) are among the highest in the world. The significant digital media usage has led many Korean travel agents to stop producing printed brochures and a large percentage of advertising budgets have shifted from conventional print to online platforms. Though television continues to be a key channel influencing consumer travel destination selection, the leading sources of travel information are becoming personal blogs and other online channels and social media.
  • Celebrity tourism ambassadors have proven to have a significant impact in the Korean market, especially when the image and perception of the celebrity fits the destination. Koreans are highly influenced by celebrities’ activities and patronage of fashion brands, beauty items, eateries, etc., and celebrities also play a significant role when consumers select a travel destination. Accordingly, many national travel organizations appoint popular film and TV stars or well-known personalities as “ambassadors” to benefit from their celebrity power.
  • Exposing travel destinations on reality TV shows in Korea is a highly effective method of promoting a destination with a proven track record. 

Market Strategies

2014/2015
 

A key strategy in South Korea is increase and diversify the range of California tour products and content through various travel trade co-ops, partnerships and communication programs.

  • Activities have focused on promoting fly-and-drive experiences and increasing awareness of California destinations beyond the gateways. Partnerships and co-ops with both direct and non-direct airline partners have been sought to increase California’s market share. Highlights include: a mega blogger FAM with Canon Korea, Delta Air Lines and Hertz, featuring Santa Barbara, San Diego and Los Angeles; a travel agent FAM with Japan Airlines, highlighting both Northern and Southern California; and a celebrity FAM with Korean Air, Hertz and Brand USA, concentrating on the Central Coast in conjunction with Visit California Korea’s tourism ambassador BH Lee.
  • The Canon blogger FAM, an integration of both consumer and online elements, was strategically linked to the premiere of the Korean film “Santa Barbara” to create buzz and raise destination awareness of Santa Barbara and the Central Coast. Following the Japan Airlines travel trade FAM, California promotions and products based on the FAM itinerary were developed by all participating travel agents to generate immediate sales.
  • A “Dream & Drive in California with BH Lee” travel guidebook is being developed as a result of the BH Lee celebrity FAM.
  • Positioning California as a place for dreamers via an integrated TV and online campaign organized with major TV network EBS, resulting in a special three-part documentary about California, “Life Lessons,” which featured the Golden State as a life-changing destination for two public figures. The finale highlighted an encounter between the duo and Nick Vujicic, the world-famous Malibu-based motivational speaker born with tetra-amelia syndrome, who is highly regarded in Korea as a symbol of “dream and inspiration.”

 

2015/2016
 

  • With increased budget allocation for travel trade and public relations activities, including paid digital and social advertising, the primary strategy will involve large-scale co-ops and promotions to increase the exposure of California’s 12 regions in Korea.
  • New travel trade initiatives will focus on diversifying product to appeal to various key target segments, such as families, couples, single women, “silver travelers” and young explorers that have been identified as the main target profiles.
  • Host California education seminars to nurture California Experts and pro-California travel agents in major markets such as Busan and Daegu.
  • Establish tie-ins with major network TV programs, such as “Grandpas Over Flowers,” to boost the visibility of California and promote it as a premier leisure destination to a prime time mass market viewing audience nationwide.
  • Secure publicity and promotional opportunities through new social and digital advertising campaigns with existing and new partners, as well as enhance consumer engagement through major social media platforms.
  • Work with more online and offline travel agents equipped with mobile booking interfaces to increase California’s visibility and boost sales in the exploding mobile phone space.

 

2015/2016 Plan Highlights
 

Consumer, trade and PR plan highlights in the expanded budget environment will include:

  • Secure at least one influential TV program to be filmed in California and ensure development of related tour products and the integration of PR, online, and consumer promotions with focused destination messages
  • Develop luxury travel tour products with increased numbers of nights in higher quality accommodation in various regions of California and beyond key gateway cities
  • Establish fly-and-drive, national parks, shopping and golf travel themes to meet the needs of key Korean target audiences and work with major travel agent, airline and rental car partners for higher ROI.
  • Nurture California Experts and pro-California travel agents by hosting regular California education seminars in Seoul and other major cities.
  • Launch mega-sized campaigns with powerful Korea consumer brands that deliver the Dream Big message. Leverage and cross-promote via leading online and offline media channels accessed by target market segments.

 

Familiarity & Interest of California Areas

  Like to Visit Like to Learn More About It I'm Not Interested
Los Angeles County 57% 37% 8%
Orange County 56% 37% 10%
San Diego County 53% 36% 14%
San Francisco Bay Area 47% 44% 12%
Central Valley 42% 43% 17%
Central Coast 41% 43% 18%
High Sierra 39% 40% 25%
Deserts 37% 37% 28%
Gold Country 33% 46% 22%
North Coast 32% 45% 25%
Inland Empire 25% 47% 30%
Shasta Cascade 25% 46% 30%

Source: Hall & Partners, August 2012

Top 10 Motivating California Features

Disneyland 49%
Hollywood 47%
Beverly Hills 38%
Beaches 37%
Los Angeles 35%
Golden Gate Bridge 34%
San Francisco 28%
Universal Studios Hollywood 27%
Highway 1/California Coastline 17%
Food Festivals/Farmers Markets 17%

Source: Hall & Partners, August 2012

Contacts

Irene Lee
Managing Director
ilee@aviareps.com
Jinha Joh
Director of Marketing/Travel Trade Lead
jjoh@aviareps.com
Cecila Yoo
Public Relations Manager
cyoo@aviareps.com
Estelle Kim
Content Lead/Digital Promotions Manager
ejkim@aviareps.com
Dara Kim
Marketing Assistant
darakim@aviareps.com
Aviareps Marketing Garden Korea, Ltd.
Phone: 82 2 777 6665
Fax: 82 2 777 8179
www.visitcalifornia.co.kr
Thank you to our Golden State Sponsors:
MeringCarson Time Inc