By Kang Seung-woo



In the wake of China's ban on tours to Korea via travel agencies, the local tourism industry, including duty-free stores and hotels, is increasingly showing concern.



As Beijing's retaliatory measures against Seoul's decision to deploy a U.S. Terminal High Altitude Area Defense (THAAD) battery here are at an early stage, it is too early to gauge how much the fallout will affect the industry.



But given that some 70 percent of Chinese tourists visiting Korea are presumed to use travel agencies, there are growing concerns that the relevant businesses inevitably will be hit hard if China continues such actions.



The China National Tourism Administration (CNTA) instructed travel agencies in Beijing, Thursday, to suspend sales of all travel packages - both online and offline - to Korea, ordering them to expedite those that have already been sold by mid-March.



According to the Korea Tourism Organization (KTO), 8.06 million Chinese tourists visited Korea last year, accounting for 46.8 percent of the all foreign visitors (17.2 million). They are estimated to have spent an average of $2,391 (2.76 million won) per person. Should Korea lose half of its Chinese tourists, it is expected to see its tourism revenue decrease by $9.63 billion.



"Considering the Chinese government's control on free trips sold by travel agencies, more than 60 percent of Chinese tourists visiting Korea are estimated to be affected," said Yoo Sung-man, an analyst at HMC Investment Securities.



Amid the escalating concern over the fallout from China's retaliation, the nation's duty-free industry is expected to take the hardest hit as their business is heavily dependent on Chinese tourists who spend big on shopping.



Last year, local duty-free stores raked in 12.27 trillion won ($10.6 billion) in total sales, of which about 70 percent, or 8.6 trillion won, came from Chinese travelers.



The duty-free industry plans to seek ways to deal with possible repercussions after sizing up the ongoing situation_ although there seem to be few options.



"We are monitoring the situation through a local branch in China, but we cannot find any good ideas against the Chinese government's moves," said an official at a local duty-free store.



Another official worried that should the CNTA continue to retain the travel ban, the duty-free industry will lose billions of dollars in sales annually, putting the business at risk.



The hotel industry is not free from the travel ban either.



Following the recent influx of Chinese tourists, a large number of budget hotels have been established around central Seoul and its surrounding neighborhoods.



Already, there are some signs that Chinese tourists are avoiding travelling to Korea.



According to an official of a hotel in Myeongdong, a favorite destination for Chinese tourists, its portion of guests from China dropped from 20 percent last March to 16 percent in December. Another budget hotel also saw the percentage hovering over just 10 percent after the venue for THAAD was decided in September, compared with 25 percent in July.



The hotel industry agrees that hotel occupancy in Jung-gu, central Seoul, stood at 60 percent as of the end of 2016.



"It is too early to make any assumptions at this stage. We will have to keep close tabs on the market," a KTO official said. The culture ministry said it is working on countermeasures.



Korea and the United States agreed to deploy the THAAD system here in July 2016 to deter evolving North Korean nuclear and missile threats, but China strongly opposes the anti-missile shield, claiming that its presence would undermine its security interests.



