As a result of the state of emergency following December 3rd, the won-dollar exchange rate has surpassed 1,450 won for the first time in 15 years (a drop in the value of the won). While the holiday season is approaching, overseas travel sentiment has weakened due to the arrival of the high exchange rate era. Additionally, with the Korea Consumer Agency presenting a corrective plan related to the Timon and Wemaef (hereafter referred to as Timapp) situation, asking to share up to 90% of the payment amounts, the travel industry is becoming increasingly concerned.
According to the Seoul foreign exchange market on the 24th, the won-dollar exchange rate has fluctuated around the 1,450 won level for four consecutive days. As of 4 p.m., it is trading at 1,449.30 won, down 1 won from the previous trading day's closing price of 1,450.30 won. Earlier in the day, the won-dollar exchange rate rose to as high as 1,453.90 won.
With the high exchange rate continuing day after day, the travel industry is facing a disappearance of the year-end special season. Some travel agencies have started adjusting prices by informing customers that they will bear the exchange rate differences when presenting travel packages.
An industry official noted, "I was wondering if we could see any year-end special effects, but with the aftermath of the martial law and impeachment, the combination of high exchange rates has led to a very difficult situation. With the exchange rate being this high, consumer sentiment to enjoy Christmas or New Year overseas has weakened. Even without the heightened inflation, the travel sentiment has already slowed down, and it seems that this situation will continue for the foreseeable future."
The travel industry anticipates that poor performance will persist following the third quarter of this year. Looking at the operational results of major domestic travel agencies, Mode Tour's operating profit for the third quarter has dropped to 1.5 billion won, a 44% decrease from the same period last year. Hana Tour also saw a decrease of about 9% in operating profit compared to the previous year, while Cham Good Travel dropped by 71%. Yellow Balloon recorded an operating loss in both the second and third quarters.
In this situation, travel agencies are troubled by the burden rates specified in the Korea Consumer Agency's consumer mediation plan related to Timapp's travel, accommodation, and airline products. It is excessive to require travel agencies, who are already suffering losses, to be responsible for up to 90% of the payment amounts. In fact, when the Timapp situation arose back in July, most travel agencies proceeded with the travel package schedules for July and August, even at a loss.
Earlier, on the 19th, the Korea Consumer Agency's Consumer Dispute Mediation Committee (hereafter referred to as the mediation committee) decided that Timapp must refund 100% of the unprocessed payment amounts related to travel, accommodation, and airline products, requiring the sellers to share up to 90% of the payment amounts, while payment gateway (PG) companies must share up to 30% of the payment amounts. However, it specified that only refunds within the scope of responsibility should be required, and the total maximum should not exceed 100%.
An official from the travel industry stated, "This effectively means that the sellers and PG companies should refund instead of Timapp, which has no refund capability. We are also victims of the Timapp situation, as we have not received the settlement amounts from Timapp, yet responsibility has been transferred to us." The official added, "Although we have decided to respond jointly centered around the Korea Travel Agency Association (KATA), whether to accept the mediation plan must be determined by each company, and it is questionable if some will accept it."
Some in the industry are prepared for a legal battle. Another travel industry official remarked, "We need to decide whether to accept the mediation plan within 15 days. We plan to prepare a response plan through internal discussions," but added, "Overall, there isn’t a strong atmosphere in the industry to accept the mediation plan. It is very likely to go to litigation."