New Consumer Protection Rules to Combat Price Gouging in Hotels

A view of Goyang Sports Complex in Goyang, Gyeonggi Province, where a BTS concert was held on April 12 [Photo=Yonhap News]

To prevent hotels from unilaterally canceling reservations to raise prices, new consumer compensation regulations will be established. Under the proposed plan, if a hotel cancels an existing reservation to sell rooms at a higher rate, it will be required to refund the deposit and pay 200% of the canceled accommodation fee.
On June 4, during a meeting of the Special Task Force on Living Costs led by Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol at the Government Seoul Complex, officials discussed the implementation status and future plans for measures to eradicate price gouging.
The government decided to strengthen consumer protection measures in response to a surge in hotel prices and unilateral reservation cancellations, particularly during recent BTS concerts in Busan. Reports indicated that hotel rates in the Busan area surged by an average of 2.4 times, with some prices increasing as much as 7.5 times compared to the weekends before and after the concerts. As of May 29, a total of 311 complaints regarding tourism inconveniences were filed, with 256 of those related to reservation cancellations.
In response, the government will revise consumer dispute resolution standards concerning cancellations made for price increases or resale purposes. The revisions will include provisions for refunding deposits and compensating consumers with 200% of the canceled accommodation fees. A related legislative proposal is expected to be introduced this month.
The government is also pushing for the introduction of a "price assurance system" that requires hotels to report and publicly disclose peak season rates. Hotels will be mandated to report seasonal rates to local governments and make them available on booking platforms and their websites. Measures are being considered to impose penalties on hotels that charge above reported rates or fail to report them in advance.
Additionally, enforcement against price gouging will be intensified. A joint government inspection team, including the Ministry of the Interior and Safety, the Ministry of Culture, Sports and Tourism, the Ministry of Health and Welfare, the National Tax Service, the National Police Agency, the Fair Trade Commission, and local governments, will focus on violations of mandatory price posting and unreported hotel operations. Strict measures will be taken against confirmed collusion or tax evasion.
Penalties for businesses engaged in price gouging will also be strengthened. The point deduction for unfair pricing during hotel evaluations will increase from a maximum of 10 points to 30 points, and penalties will be applied in the selection process for various government support programs and gift certificate refund events.
As summer vacation and various festivals approach, the government plans to continue special inspections in collaboration with relevant departments and enhance its response system to ensure immediate on-site inspections and administrative actions upon receiving reports.

* This article has been translated by AI.

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