Modelling the structure of the Korean package tour industry in Australia

Abstract

This paper examines the structure of the Korean package tour industry in Australia. Because of the demand by Korean consumers for cheap package tours, Korean tour wholesalers have lowered the wholesale package price to travel retailers to maintain market share. Rather than suffering a fall in profit from lower receipts, the Korean wholesale sector has forced the Inbound Tour Operator sector in Australia to absorb the cost of low retail prices. Unable to absorb lower revenue, the Inbound Tour Operators have been forced to recover losses through a range business practices that include the payment of commissions from tourist specialist shops, reduced tour quality and forced shopping. The operation of the Korean inbound market that facilitates the operation of such business practices is discussed in this paper.