Jeju’s all-important tourism market is making a post-pandemic comeback, spelling good news for the duty free sector.
That’s the message from The Shilla Duty Free, which has enjoyed a long-term and highly successful presence on the island.
In pre-pandemic 2019, downtown Jeju’s duty free shops generated sales of approximately KRW2.4 trillion (US$1,798,871,280), representing a significant share of the global duty free market.
International passenger numbers peaked at 1.35 million in 2016 but experienced a substantial decline due to the THAAD deployment row with China from 2017. However, in 2019, the number rebounded to 1.32 million. Then came the pandemic and in 2020 the COVID crisis halted the influx of tourists.
But following the Chinese government’s decision to permit group tourism to South Korea announced on 10 August, Jeju has seen encouraging signs of recovery. Foreign tourist visits to Jeju have surged, and the total projected passenger volume for 2023 is 670,000 – approximately 55 percent of the 2019 figure.
The future outlook is even brighter. By 2024, a full recovery is expected to over 1.4 million visitors. In 2025, the total is anticipated to reach 1.45 million, exceeding the previous 2016 peak.
Rapid recovery of Jeju Airport’s international flights
Since the Chinese government allowed group tourism to Korea in August, international flights at Jeju Airport have been recovering swiftly.
The monthly average number of flights for the first half of 2023 was 214, but the third quarter averaged 452 – more than doubling the earlier levels. The fourth quarter is projected to have an average of 612 flights, marking a +36 percent increase from the third quarter, with December expected to recover to about 90 percent of the 2019 level.
Explosive growth in cruise passengers
Like air traffic, cruise travel is also showing a noteworthy upswing. There are plans for 93 cruise ships to dock in Jeju in 2023 and over 360 in 2024.
This is comparable to past figures, such as 285 ships in 2015 and 507 in 2016. Cruise operations were entirely halted after the THAAD deployment in March 2017. After the first post-THAAD, post-pandemic Chinese cruise docked this August, the number of package tourists at The Shilla Duty Free in Jeju soared +150 percent month-on-month and by a taggering +3,000 percent year-on-year.
Returning FIT Customers
FIT customer numbers have been significantly increasing each month.
As of August 2023, the visitor count at The Shilla Duty Free Jeju store has recovered to 80 percent of the levels seen in 2019.
Especially during the peak season of August, there was a notable rise in FITs accompanied by their families. Consequently, the Jeju store’s FIT sales surpassed even those of The Shilla Duty Free’s flagship Seoul branch.
In particular, the proportion of FIT customers whose purchases are characterised by high value and high unit prices is expanding, resulting in increasing demand for luxury brands.
Luxury fashion and luxury watches and jewellery brands alone account for about 60% of The Shilla Duty Free Jeju’s FIT sales, underscoring the popularity of luxury brands.
Jeju tops the list of cities preferred by Chinese visitors
According to a Jeju Tourism Organization (JTO) survey post-COVID, Jeju Island was selected as the top Korean city Chinese tourists wish to visit.
That most-preferred status is due to the island being perceived as geographically advantageous and offering diverse touristic activities.
Notably, recent data from Ctrip, one of China’s top three online travel platforms, showed that searches for ‘Jeju Island’ reached 65,000, a notably +330 percent higher than the 15,000 searches for ‘Busan’.
Jeju duty free: A promising retail channel for international luxury shoppers
Based on credit card analysis data from the Jeju Tourism Organization (JTO), foreign visitors to Jeju in 2019 spent approximately KRW1 trillion (US$749 million, with 95% spent at duty free shops. This data clearly illustrates the substantial spending of foreign visitors at these establishments.
Recently, the number of visitors to casinos in Jeju has also risen, leading to a surge in high-ticket customers and sales.
Geographically, Jeju is positioned at the central maritime route connecting the continent, including Russia and China, with countries and regions such as Japan and Southeast Asia. It plays a crucial role as a mid-stop for Asian cruise tourism.
Uniquely in Korea, Jeju allows tourists visa-free entry, permitting foreign visitors to stay for up to 30 days without a visa. These geographical and policy advantages are driving a swift recovery in Jeju tourism.
Furthermore, various stakeholders, including the Korean government, actively promote Jeju’s tourism and duty free industries. There are also ongoing plans for a second airport construction project in Jeju, suggesting a very high potential for a further increase in passenger numbers.
Meanwhile, spanning four floors, The Shilla Duty Free store in Jeju offers a broad shopping space showcasing everything from top-tier global luxury brands to world-class cosmetics and perfumes, providing tourists with an unparalleled duty free shopping experience.
The first floor houses an exhibition space featuring artworks by Jeju-based artists, creating a cultural space where visitors can experience everything from shopping to art.
The second floor exclusively showcases unique Jeju souvenir brands. With the increasing number of FIT customers, The Shilla Duty Free is enhancing events targeting them, deploying themed photo zones on the first floor and the rooftop garden.
Given all these developments, a dazzling recovery of Jeju’s duty free market is anticipated.