FKI Proposes to Government and Local Authorities "Reduction of Traffic Inducement Charges for Hotels, Cinemas, etc."

[Asia Economy Reporter Jeong Hyunjin] The Federation of Korean Industries (FKI) announced on the 26th that it has requested the Office for Government Policy Coordination and local governments to reduce the traffic inducement charges for hotels, movie theaters, theme parks, and other facilities regardless of their location until the number of visitors recovers to pre-COVID-19 levels. The traffic inducement charge is a system that imposes an economic burden on facilities that cause traffic congestion to encourage a reduction in traffic volume.

The FKI argued that it is problematic to impose the full traffic inducement charge this year on hotels and other facilities whose visitor numbers have not recovered to the 2019 pre-COVID-19 levels, resulting in a reduced traffic inducement effect. In particular, while some local governments such as Daegu are reducing this year's traffic inducement charges, Seoul, where many facilities such as movie theaters are relatively concentrated, is imposing the full charge this year, exacerbating management difficulties in the related industries.

(Data provided by the Federation of Korean Industries)

For seven hotels in Seoul, the number of visitors in the first half of this year was 948,000, a slight increase compared to the first half of last year, but a 39.6% decrease compared to the first half of 2019 (1.57 million), before COVID-19. Nationwide, movie theaters had 40.324 million visitors from January to September this year, down from 49.856 million in the same period last year, and a significant 76.4% decrease compared to 170.755 million visitors from January to September 2019. Nine theme parks nationwide saw 6.387 million visitors from January to August this year, a slight increase compared to 4.938 million in the same period last year, but a 53.6% decrease compared to 13.773 million in 2019.

The FKI claimed that imposing the full traffic inducement charge this year on hotels and other facilities that continue to face management difficulties due to decreased visitor numbers could raise issues of fairness with COVID-19 related support systems such as employment retention support and financial aid. In fact, the government is providing employment retention subsidies to companies in special employment support sectors this year, including tourism accommodation businesses (including hotels), travel agencies, tourism transportation, and performance industries. Financial support is also ongoing.

Yoo Hwan-ik, Director of Corporate Policy at the FKI, said, "It is necessary to reduce the traffic inducement charges for hotels, movie theaters, theme parks, and others that are experiencing management crises due to the prolonged COVID-19 pandemic until visitor numbers recover to pre-COVID-19 levels." He added, "Considering the expansion of the non-face-to-face economy, in the mid to long term, we should also consider a flexible system of imposing traffic inducement charges based on the number of visitors."