Some low-cost group tour packages sold overseas do not accurately reflect the actual travel expenses, such as accommodation, meals, and transportation. These packages lower prices to attract tourists and then compensate for the shortfall through shopping commissions received from domestic duty-free shops or retailers. The more tourists purchase, the higher the income for the travel agencies.
This has led to excessive shopping schedules in some group tour packages and instances where tourists feel pressured to buy products. Tourists often only compare the prices displayed when booking, making it difficult to understand the actual costs of the trip or the proportion of the shopping schedule. In contrast, travel agencies that include necessary expenses for accommodation and meals in their package prices often struggle to compete with low-cost options.
To reduce such discount tourism, the government is moving to limit shopping commissions. This initiative aims to establish standards for the commissions travel agencies receive from duty-free shops and improve the business model that relies on shopping income. Once the regulations are implemented, changes are expected in the pricing of group tour packages and transactions between travel agencies and retailers.
According to the Ministry of Culture, Sports and Tourism, a public forum will be held on November 13 at 2 p.m. at the Seoul Garden Hotel to discuss the commission rates between designated travel agencies and retailers as part of the amendments to the Tourism Promotion Act.
The amended Article 12-3 of the Tourism Promotion Act, enacted on June 2, prohibits designated travel agencies from receiving commissions exceeding the rates set by the ministry when significantly lowering the costs of attracting group tourists, which disrupts the order of the tourism industry. It also bans practices that force tourists to make purchases or engage in disrespectful behavior, as well as using shopping commissions to cover costs owed to tourism workers. The upcoming regulatory amendments are a follow-up measure to establish commission rates.
The ministry plans to apply different commission caps based on the type of retailer and purchased items until the end of 2027, after which a uniform standard will be implemented regardless of the retailer or item.
This phased approach allows retailers time to adjust existing contracts and encourages travel agencies to cover accommodation, meal, and transportation costs through package sales rather than relying on shopping commissions, thereby minimizing market contraction due to sudden changes.
As shopping commissions decrease, the prices of some low-cost group tour packages may rise, as travel agencies will need to reflect previously covered costs in their package prices. However, this price increase could pose challenges in attracting tourists. The government's decision to implement regulations gradually until the end of 2027 also considers this burden.
The government believes that limiting shopping commissions will enable travel agencies to secure necessary expenses through package sales and increase the number of reasonably priced travel products. Reducing the reliance on tourist purchasing performance for agency income is expected to help improve excessive shopping schedules and pressure to buy.
Duty-free shops and retailers may also need to adjust existing contracts. Since shopping commissions are costs incurred in attracting group tourists, new standards will require renegotiation of commission payment conditions.
Before amending the regulations, the ministry gathered opinions from designated travel agencies and duty-free retailers, receiving written feedback as well. According to the ministry, there were concerns about reduced agency income, alongside calls for the government to facilitate securing profits through normal product sales instead of shopping commissions.
At the public forum on November 13, the Korea Culture and Tourism Institute will present on "Improving the Distribution Structure of Group Tourism and Enhancing Market Health," followed by an explanation of the background and key points of the regulatory amendments. This will be followed by presentations and open discussions representing both regulatory tightening and easing perspectives.
The government plans to review the opinions raised during the forum to prepare a partial amendment to the regulations, followed by consultations with relevant agencies, legislative announcements, and regulatory and legal reviews.
Gang Jeong-won, head of the tourism policy division at the ministry, pointed out that some discount tourism practices have relied excessively on shopping commissions, undermining tourism order and diminishing tourist satisfaction. He emphasized that the restriction on shopping commissions is a necessary turning point for establishing a fair market order and achieving qualitative advancement in inbound tourism.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.