Only about 30 percent of the tickets for next year’s Winter Olympics have been sold. The Alpensia ski jumping center for the PyeongChang Games is pictured here. SeongJoon Cho / Bloomberg
Skift Take: Threats from North Korea and prolonged conflict with China are keeping tourism down in South Korea as preparations continue for the Winter Olympics next year. With domestic interest lacking as well, will the Games be a failure for the host country?
In South Korea’s mountainous Gangwon province, construction workers are putting final touches on the 35,000-seat outdoor stadium that will be used for the opening and closing ceremonies for the PyeongChang Winter Olympics.
Mission accomplished, except for one thing. It’s unclear at this point just how many sports fans will actually show up.
With less than 100 days to go before the Games start on Feb. 9, organizers have sold little more than 30 percent of the target of 1.1 million tickets, which range from $18 to $1,340. And there’s still a $270 million shortfall in the local Games committee’s $2.5 billion budget.
Ominously, most of the venues lie just 90 kilometers (60 miles) from the border with North Korea amid military tension that’s rarely been so high since war on the peninsula ended in an uneasy truce in 1953.
Some things are going right. South Korea’s world-class engineering firms are on target to have all the facilities ready — free of the problems that plagued the last Winter Olympics in Sochi. And organizers have met their corporate sponsorship goals. But the question is, will the nation reap long-term economic benefits?
South Korea has a lot riding on PyeongChang, which it hopes will showcase the country “as the new hub for winter sports in Asia.” On top of the Games committee’s budget, $10 billion is being poured into infrastructure to support the Olympics, much of it on road upgrades and the extension of a high-speed rail network into the heart of the ski fields.
Yet international tourists are shunning the nation, with visitor numbers down 24 percent this year as North Korea ramps up rocket launches and nuclear tests. Making matters worse, a U.S. missile shield that Seoul deployed to guard against the threat raised the ire of Beijing. It lashed out with a ban on package tours to South Korea that halved the number of travelers from China.
South Korea and China indicated this week that they want to put the dispute behind them, which should pave the way for tourists to return. It’s still hoped that Chinese skiers, who have flocked to Japanese resorts in recent years, will become a source of growth for winter tourism in South Korea, which is less than two hours flight time from Shanghai and Beijing.
When PyeongChang beat Munich and France’s Annecy in 2011 to host the Winter Olympics, local think tank Hyundai Research Institute said the Games could draw an additional 1 million foreign tourists to the region each year for a decade. Transforming the area into a global winter tourism destination and raising South Korea’s profile in the world could bring the nation almost $40 billion in economic benefits, according to the institute.
Hyundai Research hasn’t updated its estimates but recently acknowledged that current tourist numbers no longer match the projections. History isn’t on PyeongChang’s side. Numerous studies of the costs and benefits of the Olympics show that many Games hosts lose money.
Perhaps unexpectedly, international ticket sales are doing much better than those in South Korea. Buyers overseas have taken up about 56 percent of the 320,000 target set by organizers while locals have bought just 22 percent of the 750,000 goal for domestic sales.
“I don’t think the Games will do anything to improve my life,” said Gu In-mo, who works at a motel near the stadium. “The tickets are too expensive for ordinary people like me. I’ll just watch on TV.”
Spectators can get into the cross country skiing, a sport that lacks a strong following in South Korea, for as little as $18. But many seats at the figure skating, which is hugely popular, go for about $500, while premium tickets for the opening ceremony are more than double.
“I wouldn’t say the current pace of ticket sales is what it should be,” Yeo Hyung-koo, secretary general for the PyeongChang organizing committee, said in an interview. The start of the torch relay should increase interest and other Games saw sales increase in the final three months, said Yeo.
Kim Jin-seok, another local resident, said there hasn’t been enough done to promote the event. “I see more South Korean flags around here than Olympic banners,” said Kim. “Local people aren’t excited.”
Overseas demand partly reflects tickets for sponsors and a hardcore of global winter sports fans. Jet Set Sports, one of the authorized ticket re-sellers for markets including the U.S., said questions from customers at every Games are typically about safety around venues and the local area, as opposed to geopolitical concerns.
South Korea has a good record protecting athletes and spectators at previous events, but North Korea’s past actions give reason to worry. The year before the 1988 Summer Olympics in Seoul, agents from Pyongyang bombed a Korean Air flight, killing all 115 passengers and crew. In 2002, when South Korea was hosting the soccer World Cup, North Korean patrol boats crossed into disputed waters, sparking a naval clash that sunk one South Korean ship and claimed the lives of six sailors.
With its growing technical sophistication, North Korea doesn’t have to rely on its military to disrupt the Games. This time it could easily launch a cyber attack, which is cheap to execute and difficult to attribute, said Mason Richey, associate professor of international politics at Hankuk University of Foreign Studies in Seoul.
While these kinds of events are beyond the reach of Olympics security, the government, police and military have set up a special headquarters to coordinate personnel. Organizers declined to reveal the size of the security force that will protect the Games.
Amid all the fears, the U.K. is reportedly drawing up evacuation plans for its team in case tensions escalate while other nations have expressed reservations about sending athletes. PyeongChang organizers say no teams have withdrawn and South Korean President Moon Jae-in has urged North Korea to send competitors.
With no winter sports champions now with the same star appeal as figure skater Kim Yuna — who won gold at the Games in Vancouver and silver in Sochi — South Koreans have had their attention pulled away by disheartening scandals. The biggest of them ousted the President from office and landed her and the heir to the Samsung empire (a partner of the worldwide Olympic movement and PyeongChang Games no less) — in jail.
“There’s a broad consensus that unless there’s a big change in the run up to the Games, they’ll be seen as a failure, no matter how you look at it,” said Kim Yukyoum, a professor of sports management at Seoul National University. “The biggest problem with PyeongChang is that it doesn’t have a message to send to the the public — both at home and overseas — on why these Games are meaningful and what Korea can achieve through the event.”
–With assistance from Kanga Kong Hannah Dormido and Henry Hoenig
©2017 Bloomberg L.P.
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