Korea Monthly Activity Report - the California Tourism Industry Website

Korea Monthly Activity Report
The California Travel and Tourism Commission
I. Market Conditions
July 2009
Prepared by: AVIAREPS Marketing Garden Korea
A. Korea Economic Overview
Although the employment situation remains bleak, the Korean economy appears to be
starting to move out of the current global recession, with domestic demand and exports
recovering relatively fast.
Production in mining and manufacturing in May showed gradual improvements following
the previous month while the service sector performed poorly. Most consumption-
related economic indicators in May showed that the depression in consumption was
mitigated relatively fast as durable goods consumption grew rapidly.
In May, investment-related indicators showed that the severe contraction in equipment
investment has alleviated.
The trade account in June registered a record surplus of $7.44 billion as the decline in
exports began to ease and the imports continued to fall mainly led by crude oil imports.
In May, the labor market still remained under stress as the number of employed decreased
further and the unemployment rate rose.
In June, due to the expectation of economic recovery within domestic financial markets,
the market interest rate rose while stock prices and foreign exchange rates fluctuated
continuously.
Recently, leading economic indicators and sentiment indices of a few countries appear to
be improving and several key economic growth rates have been adjusted upward, though
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just slightly, suggesting a gradual alleviation in the rapid fall of the world‟s major
economies. Meanwhile, despite the low interest rate policy of major advanced countries,
the forecast for continued slowdown in real economies has increased the volatility of the
global financial market in some parts.
Korea's export-driven economy has much to gain from a bilateral free trade agreement
with the European Union, the world's biggest market and Korea's second largest trading
partner. Industry watchers say that the Korea-EU FTA could raise Korea's gross
domestic product by as much as five percent. By concluding its FTA with the EU ahead
of the U.S. and Japan, Korea could gain a valuable edge in the European market. Korean
carmakers are set to be the biggest winners. Currently a 10% import duty is levied on
vehicles entering the EU from Korea. When the FTA comes into effect the import tax will
be lowered by two percent annually, disappearing in five years. Manufacturers of
electronic appliances such as those that make televisions and satellite receivers will also
benefit from the trade deal as will makers of car parts. The Korean textile industry
competing in Europe against such countries as China and Taiwan is expected to get a
boost with the deal as well.
B. Korean Won Exchange Rate
The won weakened during the past month as the won/dollar exchange rate rose 16.7 to
finish at 1,282.7. Amid continuous caution surrounding future discussions at the G8
summit on the key international reserve currency, the rate started the week slightly higher
as geopolitical risk on the Korean peninsula regained attention and economic indicators
for the euro area worsened.
The won/dollar exchange rate is likely to rise marginally this month with volatility
expanding amid increased uncertainty about corporate performance ahead of earnings
season.
C. Korean Travel Market Trends
According to the KTO (Korea Tourism Organization), the total number of Korean
outbound travelers in May 2009 was 737,396, a decrease of 33% compared to the same
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month of 2008. The number of outbound travelers from January to May was 3,740,663,
a 32.8% drop compared to the same period last year.
According to KATA (the Korea Association of Travel Agents), total outbound bookings
via travel agents in May reached 225,661, a 47.1% decrease compared to the same month
of 2008. The number of bookings via travel agents from January to May was 1,206,649,
a 44.5% decrease compared to the same period of 2008.
The number of cases of the H1N1 flu virus is nearing the 1,000-mark here with an
additional 154 cases reported as of July 17. Cases of mass infection at schools are
increasing while the transmission route of some cases remains unclear. According to
health officials, the flu virus is suspected of having already spread to different regions,
indicating infection is possible without overseas travel or contact with patients. As of
July 17, a total of 827 in Korea have contracted the disease with no fatal case found in
Korea. Of this group, 531 were foreigners with 146 from the United States, 95 from the
Philippines and 70 from Australia. Currently, 173 people are staying at a state-run
isolation hospital for treatment and observation.
According to the latest Korean public opinion polls taken by the Korea Travel Times,
consumer sentiment toward overseas travel slid back to 2004 levels. Against the
backdrop of global business slowdown combined with swine flu fears, consumer
sentiment among would-be overseas travelers remains sluggish at the levels of 2004. A
total of 4,514 Koreans above 18 years of age selected at random across the country joined
the survey conducted by the Korea Travel Times from June 1 through 30. In 2009,
65.6% of the people responded that they had cancelled an overseas trip or postponed
overseas travel.
Canada and Korea have finally signed a Blue Skies Transport Agreement. The new
agreement allows any number of air carriers from either country to operate scheduled
passenger and all-cargo air services as frequently as desired, to and from any point in
either country's territory. Air carriers will also be able to pick up traffic in each other's
territory and continue to a third country as part of a service to or from their home territory.
The agreement also provides for rights pertaining to flights carrying cargo only, allowing
stand-alone cargo services between each other's territory and third countries, and includes
a tariff regime that will allow carriers to readily react to market conditions. This latest
agreement will benefit travelers and shippers by providing more choices in terms of
destinations, flights and routes, and the potential for lower fares. The new agreement is
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eing applied on an administrative basis, which allows new air services to take place
immediately.
Jin Air, Korean Air's budget affiliate, has selected China and Thailand as its first two
destinations for international service. The budget carrier, which started domestic service
last July, said it would start international operations in October to Macau and Bangkok.
Airfare at Jin Air will be about 80% of that of full service carriers. Jin Air's competitor
on the international routes to Southeast Asia is not Korean Air but foreign carriers which
take up 60-70% of the market, especially low cost carriers. For the plan, the carrier will
purchase one more aircraft within the year. It now has four B737-800s. Jin Air is the
first budget airline in Korea to pass the audit, and it obtained approval eight months after
the service launch, the shortest time of any carrier in the world.
The Korea customs Service will tighten luggage checks for travelers who frequently go on
golf tours or buy luxury goods during the summer holiday season until August 31. The
aim is to quell conspicuous consumption and prevent smuggling during the busy season.
Customs officers will keep a particular eye on flights and ships from shopping destinations
like Hong Kong and Macao and countries that are notorious origins of contraband.
Asiana Airlines has set up a global etiquette campaign to upgrade Korea's national brand
in line with the Presidential Council on National Branding's goal to position the country's
brand on a level suitable for that of its economy, which is about to enter the world's top 10.
The carrier is making an animation film about proper travel culture and plans to air it on
every international flight starting in the middle of May. The one-minute animation will
be about etiquette that travelers should observe during their trips. It will be aired right after
the video clip about in-flight safety before the plane takes off. The first 30 seconds will
be about in-flight manners, such as passengers not kicking the seats in front of them and
not making a disturbance on the plane, at airports and at hotels. The latter 30 seconds
will be about etiquette at tourist attractions, including not writing graffiti and not touching
cultural properties.
The country's air carriers are planning to impose fuel surcharges again for international
routes from September due to an increase in the price of jet fuel, industry officials said on
July 28. Korean Air, the country's largest air carrier, is likely to levy $10 in fuel
surcharges for one-way tickets flying to Asian cities and $23 for single tickets flying to
cities in Europe and North America. Asiana Airlines, the second-largest air carrier, may
levy the same amount of fuel charges for international flights.
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II. ACTIVITY UPDATE
A. Travel Trade Marketing
A-1. Major Sales Calls
CTTC Korea conducted sales calls to the following key Korean travel trade partners in July to
negotiate California tourism promotion opportunities.
Sanfo Tours: CTTC Korea met with Sanfo Tours, a receptive operator based in San
Francisco. Sanfo is the exclusive Korean contractor for major California tour company,
“Tower Tours”, which offers a variety of day tour programs in English. Sanfo Tours
built a booking engine for customers who prefer to join a local tour with an English-
speaking tour guide. Another business line of Sanfo Tours is winery or VIP tours, so
CTTC discussed how to sell such programs to major travel agents in Korea.
Naeil Tour: CTTC Korea sent 500 copies of the California official maps and guidebooks
to Naeil Tour, an agent who specializes in handling FITs and backpackers. In exchange,
CTTC asked the agent to promote CTTC Korea‟s microsite, and provide a link to that
microsite and California packages in the e-newsletter to its members.
Hana Tour: In line with the theme of “Fly & Drive”, Hana Tour is launching California
RV Tour program. CTTC met with the agent to discuss how to promote the tour. As the
package price is $3,300, double the average price of west coast U.S. packages, CTTC and
Hana Tour plan to promote the package to the premium family market who seeks unique
travel experience. CTTC Korea will keep in close contact with Hana Tour to plan co-op
promotion.
Mode Tour: To analyze Mode Tour‟s California-related products, CTTC met with the
team leader of the Western U.S. Division. Mode Tour currently offers more than 20 tour
programs that include California, but it has not yet developed a California-exclusive
package. CTTC will continue to work closely with Mode Tour to develop programs to
motivate the agent to create tours that are more California-focused.
Kaya Travel, RedCap and KAL Pak: CTTC visited the booth of the 3 agents at
WEDEX, the largest wedding fair in Korea which was held at the COEX from July 17 to
19 th . As there are currently no honeymoon packages to California, CTTC discussed with
honeymoon team leaders of participating agents to consider promoting California as a
honeymoon destination as well.
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Sejoong Tourmall & Noble Story: Ms. Yoo who was the former U.S. outbound team
leader at Sejoong Tourmall has resigned, and set up her own company called “Noble
Story,” as a retail agent of Hana Tour. CTTC Korea met with Ms. Yoo and her successor
at Sejoong Tourmall, Ms. SH Lee. Ms. Lee comes from the Southeast Asia Team, and
therefore has limited knowledge of the U.S. outbound market. CTTC provided general
information about California and the available collaterals we have. Sejoong has been a
supportive partner to CTTC, and CTTC will maintain a close relationship with the agent to
promote California.
Hertz Rent a Car: CTTC is kicking off a promotion with Hertz Rental Car, where those
consumers who book rental cars in California through Hertz Korea Office will receive
California Official Maps. CTTC Korea included two URLs on the map – one for the
CTTC official website and one for Hertz‟s micro-site, encouraging customers to visit the
website for get California tourism information. Hertz is providing „book 6 days or more
and get 1-day free day‟ promotion to increase the attractiveness of the. Hertz California
promotion will run for three months, starting from August 1 to October 30.
Top Travel: Top Travel is one of the top producing travel agents in terms of ticket sales.
They also represent Dollar Rental Car, and plan to develop a variety of airtel tour products
for USA. Top Travel prefers to work directly with hotels instead of going through
Korean receptive operators. CTTC will support the agent to find hotels that are
interested in working with them.
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A-2. Co-op Opportunities
(1) Lotte Tour and NS Home Shopping Channel Co-op
Promotional Period:
Air date: June 27 th. This
homeshopping promotion is also
available via Lotte Tour homepage
until the end of September.
Booking period: June 27th to
September 30th, 2009
Media Value:
PR: One-our program about
California tour package on this
channel in terms of PR value is
equivalent to US$100,000. The
rating is 1%).
Sales: CTTC expects this
promotion to generate 500 pax,
equivalent to approximately
US$500,000 revenue from California tour product sales.
Following the successful home
shopping co-op promotion with
Lotte Tour and NS Home Shopping
Channel in March, CTTC carried
out another project showcasing
California tour packages. The
one-hour tour program titled
“Wonderful California” aired on
June 27th, and introduced key
regions and tourist attractions in
California, and generated 400 calls
and 289 confirmed pax so far.
Lotte Tour is currently advertising
the same product on its website to
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generate additional bookings.
http://www.lottetour.com/wcommon/project/pj_main_frm.asp?v_pj_seq=4438
(2) United Airlines, KAL Tour and Shinsegae Department Store Co-op
In line with the goal of developing and promoting California-only tour programs in the
Korean market, CTTC Korea has established a large-scale co-op promotion with United
Airlines, KAL Tour and the Shinsegae Department Store, one of the largest premium
department store chains in Korea. The strategy is to create a new Northern California
exclusive 5-night tour package and promote the package through 800,000 copies of the
Shinsegae coupon books mailed directly to the store‟s customers. The promotion is also
featured on the main page of KAL Tour‟s website. In return, CTTC, United and KAL
Tour sponsored free California trips for three couples (total six pax).
Media Value:
PR: The combined total value of the coupon book and online advertising is $25,000.
Sales: The coupon book will indicate KAL Tour‟s phone number as the call to
action point, in order to track the result. Anticipated number of sales is 100 pax,
equivalent to approximately $25,000 in sales.
California Package Coupon in “Shinsegae Channel” Coupon Book (Front & Back)
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B. Public Relations
B-1. Media Monitoring (Clippings and Publicity Calendar)
In July, CTTC Korea secured PR coverage in a total of 29 publications, with an estimated
circulation of 24,930,000 and an estimated advertising value of US$693,000.
B-2. Press Release Distribution
The CTTC Korea office localized and/or developed the following press releases and sent them
to key trade and media representatives in Korea.
July 14th: California City Center
July 27th: The California Travel & Tourism Commission Opens Second Story Update in
Hotel California
July 29th: The California Travel & Tourism Commission Holds Online Event in Hotel
California
B-3. Media Fam Trip- Green California
From July 7th-14th, CTTC Korea participated in the international fam trip organized by
CTTC HQ, under the theme of “Green California.”
CTTC Korea carefully selected and invited two leading nationwide general daily
newspapers, the Chosun Ilbo and the Kyunghyang Shinmun to participate in the fam trip.
Korean media expressed their high expectations for the trip, as “Green,” “Environment,”
and “Organic” are top buzzwords in Korea.
CTTC Korea followed up with the media and provided relevant information on the “Green
California” theme, including background information, a trip itinerary and flight
information as well as a California fact sheet and press releases for the media to familiarize
themselves with California before their departure.
Chosun Ilbo (circulation 2,600,000) published the following Green California themed
coverage on July 28th and 30th. The clippings are shown below, and a full translation is
provided in this month‟s clipping report. Total media value:USD90,000
(fature:USD50,000/Interview:USD40,000)
Kyunghyang Shinmun will publish the coverage in August.
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B-4. Co Promotion with SK Telecom
CTTC Korea conducted a “Summer Hot Event” consumer promotion for Hotel California
in cooperation with SK Telecom, Korea‟s largest telecommunications provider.
CTTC Korea and SK Telecom distributed a press release about this promotion to local
media, particularly targeting IT news and online news media to attract young Korean
Internet users to the Hotel California website.
CTTC Korea also generated media coverage in IT and economic dailies using the Summer
Hot Event graphic shown below:
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B-5. Press Office - Media Liaisons
Press Calls
CTTC Korea made 22 press calls to major travel trade, daily newspapers and
magazines to pitch for California features:
1. Mr. Choi Seung Pyo, Korea Travel Times
2. Ms. Kim Mun Joo, Travel Information Times
3. Ms. Kim Hyo Jung, Global Travel News
4. Mr. Park San Hyun, Yonhap Repere
5. Mr. Choi Byung Jun, Kyunghyang Shinmun
6. Ms. Oh Kyung Yun, Travie
7. Ms. Kim Sun Hee, Tour De Monde
8. Ms. Lee Ju Yeun, AB-ROAD
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9. Mr. Lee Young Suk, Transportation News
10. Ms. Lee Hwa Sun, Happy House
11. Ms. Roh Ka Hwa, Hana Traveller
12. Ms. Kim Bo Mi, Elle
13. Ms. Kang Bo Ra, Style H
14. Mr. Jung Sung Kap, Luxury
15. Ms. Lee Ji Youn, Marie Claire
16. Ms. Ko Eun Suk, M 25
17. Ms. Chun Soo Lim, Hi Mom
18. Ms. Yun Eun Jung, Neighbor
19. Ms. Park Mi Sun, Lemon Tree
20. Mr. Lee Suk Ho, Economist
21. Ms. Jung Kwak, Cosmopolitan
22. Ms. Kim Hyun Joo, Cosmopolitan
C. Technology
C-1. Microsite Development and Monthly e-Newsletter
CTTC Korea created the second installment of actor Mr. Jung‟s California visit, this time
about Sonoma, Napa, Monterey and Carmel with 11 episodes, a sketch movie and an
interview movie, adding the submenu “Room # 101 2nd” on the top menu bar.
CTTC Korea is conducting a co-op promotion
until August 28th with popular consumer website
SK Enclean. The promotion is for guests to
leave a comment or review in the Hotel
California microsite guestbook.
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CTTC Korea started keyword advertising and display advertising by creating an attractive
flash banner specially promoting Hotel California on Korea‟s most popular search portal,
Naver.
CTTC Korea and Author Team prepared the second travel story for the California
microsite. The author team visited Yosemite National Park and Sequoia, and this updated
story, complete with impressive images and short movies, will be released on August 10th.
Microsite e-Newsletter: CTTC Korea distributed the Hotel
California e-newsletter, introducing the second part of the
story about Mr. Jung‟s visit to California.
July Website Statistics (www.visitcalifornia.co.kr)
Number of visits: 5,377
Number of unique visitors: 5,060
Total page views: 19,381
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July Microsite Statistics (www.mycalifornai.co.kr)
Number of visits: 17,478
Number of unique visitors: 14,891
Total page views: 20,001*
(* Since a single swf file is embedded on the microsite, the swf is considered an additional page view, looking at the
Google Analytics for page views. So when someone goes to more than one page on the site, GA has it only count
as one.)
C-2. Mobile Website Development
For July, CTTC Korea completed mobile content updates about national parks and world
heritage sites, as well as a travel story about San Diego. For August, CTTC is preparing
updates on Monterey & Carmel, Entertainment & Nightlife and California news.
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