South Korea, the top international destination for mainland tourists last year, may experience a shift in fortunes as an outbreak of Middle East Respiratory Syndrome forces tourists further east to Japan.
"Japan could soon exceed Korea to become the first outbound destination for Chinese," HSBC strategists said in a recent report, as the contagious disease threatens to cripple Asia's fourth largest economy.
MERS has claimed 27 lives in Korea since it first emerged a month ago, making it the largest outbreak outside Saudi Arabia. Fears of shrinking consumption, low inflation and subdued retail sales pushed the Bank of Korea to cut interest rates earlier this month and the country is widely expected to lose over $900 million in tourism revenue despite the lack of MERS-related travel restrictions from the World Health Organization.
Over 123,000 foreigners cancelled their trips to Korea in the first eighteen days of June, the Korea Tourism Organization said, the bulk of which were people from China, Taiwan and Hong Kong. That implies a more than 20 percent annual slide for Korea's total June visitor arrivals, it said, versus a 7.6 percent rise in May.
Last month, the number of mainland tourists to South Korea grew 20 percent on year, slowing from a 39 and 58 percent increase in January and February respectively.
Meanwhile, Chinese arrivals to Japan soared 134 percent on year in May, a sharp rise from previous months, according to the Japan National Tourism Organization. That marks the first time that Chinese have dominated Japan's visitor arrivals, HSBC said, a clear indication of the tourists' shifting preferences.
Indeed, the yen's devaluation is making Japan much more accessible, said Craig Smith, president of APAC at Marriott International. "It isn't just MERS. We've been seeing an uptick in Chinese business to Japan anyways. We're now up more than 140 percent on year for the first half of the year [in Japan]."
To boot, Chinese news media have reported that Japan is the top choice for mainland travelers during the Dragon Boat Festival holiday, citing several domestic tour operators. China is closed until Wednesday for the three-day holiday.