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Tourism sector sinking into bottomless pit amid prolonged pandemic

The office of a tour company in central Seoul is almost empty in this photo taken on Oct. 5 as most of its employees have been on unpaid leave amid plummeting demand for travel caused by the prolonged COVID-19 pandemic. / Yonhap
The office of a tour company in central Seoul is almost empty in this photo taken on Oct. 5 as most of its employees have been on unpaid leave amid plummeting demand for travel caused by the prolonged COVID-19 pandemic. / Yonhap

By Jun Ji-hye

The tourism industry is suffering an unprecedented crisis caused by the prolonged COVID-19 pandemic.

Travel companies, hotels and airlines are laying off employees or having workers take unpaid leave, as no one is able to predict when the crisis will be over and they will be able to return to work.

According to Financial Supervisory Service (FSS) data, Tuesday, the workforce at the country's six listed travel companies has decreased by 7.8 percent, or 400, to 4,758 as of the end of September compared to the end of last year, due mainly to worsening business performances.

Staff at the nation's largest tour agency HanaTour and runner-up Modetour Network have been reduced by 5.8 percent and 7.9 percent, respectively, while smaller firms, Yellow Balloon Tour and Redcap Tour, have seen 13.6 percent and 10.8 percent decreases in the number of employees.

Amid the protracted public health crisis in and outside the country, HanaTour has continued to report an operating loss this year ― 27.5 billion won ($25 million) for the first quarter, 51.8 billion won for the second and 30.2 billion won for the third, with other companies having faced a similar situation.

HanaTour put most of its employees on unpaid leave for six months in June, which was supposed to end this month, but it has been extended for another four months until March next year, as there is currently no sign of travel demand seeing a recovery.

The employees of the company are expected to face financial difficulties during the second period of unpaid leave as government aid, worth 50 percent of their base pay that was given during the first six months will no longer be offered.

More than 90 percent of Modetour's workers have also been on unpaid leave since August, with government aid for them scheduled to be terminated in February.

Industry officials said some smaller tour companies have already carried out a voluntary retirement program in a move to cut costs.

"While the tourism industry has been hit hard by the virus outbreak, smaller firms have faced even bigger challenges directly related to their survival, as it has become more difficult to pay office rent and staff wages," an official from a Seoul-based travel company said. "Among those, some could even go bankrupt if the pandemic does not come to an end anytime soon."

Hotels and airlines have downsized as well amid the pandemic. Data from the FSS showed a 7.4 percent decrease in staff at the Hotel Shilla, and 3.7 percent and 3.3 percent decreases at Jeju Air and Jin Air, respectively, as of the end of September compared to the end of last year.

Earlier this month, a flight attendant in her 20s, who had worked for a domestic air carrier, was found dead in an apparent suicide in her home in Seoul. According to police, she had been on leave for months due to the financial difficulties of her company, and wrote in a note that she had been suffering from stress.

For their part, some pilots who were fired by cash-strapped Eastar Jet are struggling to make a living and have taken up working as delivery men or chauffeur service drivers, according to the pilots' union at the air carrier.


The office of a tour company in central Seoul is almost empty in this photo taken on Oct. 5 as most of its employees have been on unpaid leave amid plummeting demand for travel caused by the prolonged COVID-19 pandemic. / Yonhap
The office of a tour company in central Seoul is almost empty in this photo taken on Oct. 5 as most of its employees have been on unpaid leave amid plummeting demand for travel caused by the prolonged COVID-19 pandemic. / Yonhap

By Jun Ji-hye

The tourism industry is suffering an unprecedented crisis caused by the prolonged COVID-19 pandemic.

Travel companies, hotels and airlines are laying off employees or having workers take unpaid leave, as no one is able to predict when the crisis will be over and they will be able to return to work.

According to Financial Supervisory Service (FSS) data, Tuesday, the workforce at the country's six listed travel companies has decreased by 7.8 percent, or 400, to 4,758 as of the end of September compared to the end of last year, due mainly to worsening business performances.

Staff at the nation's largest tour agency HanaTour and runner-up Modetour Network have been reduced by 5.8 percent and 7.9 percent, respectively, while smaller firms, Yellow Balloon Tour and Redcap Tour, have seen 13.6 percent and 10.8 percent decreases in the number of employees.

Amid the protracted public health crisis in and outside the country, HanaTour has continued to report an operating loss this year ― 27.5 billion won ($25 million) for the first quarter, 51.8 billion won for the second and 30.2 billion won for the third, with other companies having faced a similar situation.

HanaTour put most of its employees on unpaid leave for six months in June, which was supposed to end this month, but it has been extended for another four months until March next year, as there is currently no sign of travel demand seeing a recovery.

The employees of the company are expected to face financial difficulties during the second period of unpaid leave as government aid, worth 50 percent of their base pay that was given during the first six months will no longer be offered.

More than 90 percent of Modetour's workers have also been on unpaid leave since August, with government aid for them scheduled to be terminated in February.

Industry officials said some smaller tour companies have already carried out a voluntary retirement program in a move to cut costs.

"While the tourism industry has been hit hard by the virus outbreak, smaller firms have faced even bigger challenges directly related to their survival, as it has become more difficult to pay office rent and staff wages," an official from a Seoul-based travel company said. "Among those, some could even go bankrupt if the pandemic does not come to an end anytime soon."

Hotels and airlines have downsized as well amid the pandemic. Data from the FSS showed a 7.4 percent decrease in staff at the Hotel Shilla, and 3.7 percent and 3.3 percent decreases at Jeju Air and Jin Air, respectively, as of the end of September compared to the end of last year.

Earlier this month, a flight attendant in her 20s, who had worked for a domestic air carrier, was found dead in an apparent suicide in her home in Seoul. According to police, she had been on leave for months due to the financial difficulties of her company, and wrote in a note that she had been suffering from stress.

For their part, some pilots who were fired by cash-strapped Eastar Jet are struggling to make a living and have taken up working as delivery men or chauffeur service drivers, according to the pilots' union at the air carrier.


Jun Ji-hye jjh@koreatimes.co.kr

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