The government has launched a strong response after hotel rooms that normally cost 50,000 to 100,000 won surged to hundreds of thousands or even millions of won during BTS's Busan concert period, with some operators canceling existing reservations to resell rooms at higher prices.
Government Expands On-Site Crackdowns, Pursues 'One-Strike-Out' Policy
The government is pushing aggressive measures that would impose a business suspension from the first violation for failing to post price tags or charging more than reported prices, while requiring businesses that cancel reservations to resell rooms at higher prices to pay 200% of the accommodation fee in compensation.
The government held a special price management ministerial task force (TF) meeting at the Government Complex Seoul on Wednesday and announced the "Implementation Status and Future Plans for Measures to Eradicate Price Gouging."
First, the government will address the accommodation shortage ahead of the BTS concert and the summer vacation season. It has secured alternative lodging facilities capable of accommodating more than 1,900 people by utilizing youth training facilities, public institution training centers, and temple stays. In cooperation with the city of Busan, the Ministry of Land, Infrastructure and Transport (MOLIT), and South Gyeongsang Province, it is also pushing to increase subway, express bus, and train services. For concertgoers who have difficulty returning home after the performance, late-night screenings at movie theaters near the venue are also under review.
The government plans to intensively inspect accommodation businesses near major hubs such as the concert venue, Busan Station, and Seomyeon through joint inspections by special judicial police and related agencies. It will focus on unreported accommodation business operations, violations of the price labeling system, failure to comply with reported rates, and violations of sanitation standards.
The government will also continuously accept reports of price gouging through the Tourist Complaint Center (1330) and local government reporting networks. Violating businesses will face administrative measures along with additional sanctions such as point deductions in hotel grade evaluations and consideration of tax audits.
Monitoring of unfair practices such as price collusion among accommodation businesses will also be strengthened. The Fair Trade Commission (FTC) plans to expand its whistleblower reward program to encourage the detection of collusion.
Accommodation Rate Caps Disclosed; 200% Compensation for Reservation Cancellations
The government, believing that crackdowns alone have limits, is also pursuing institutional improvements.
Notably, it is pushing to introduce a "Price Gouging Safe Price System," under which accommodation businesses report and disclose peak-season rate caps in advance. Under the plan, sanctions would be imposed on businesses that charge more than the reported price or charge unreported rates.
Reservation cancellation rules will also be significantly strengthened. The government is pushing to revise the consumer dispute resolution standards so that businesses that unilaterally cancel existing reservations for the purpose of raising prices or reselling rooms must refund the deposit and pay consumers 200% of the canceled accommodation fee.
In addition, the government is revising the relevant enforcement decree to allow immediate business suspension or license suspension when accommodation and food businesses fail to display prices, fail to comply with displayed prices, or are caught charging unfair taxi fares.
Expanded Penalties for Price-Gouging Businesses
The government is also strengthening incentives and penalties to eradicate price gouging.
Special grant taxes for local governments that excel in price management will be expanded from 3 billion won last year to 13 billion won this year, and price gouging management performance will be reflected in evaluations of tourism festivals and culture-tourism markets.
Conversely, businesses that receive administrative measures for price gouging may face disadvantages such as restrictions on participation in Onnuri gift certificate events, expanded point deductions in hotel grade evaluations, and cancellation of Onnuri gift certificate merchant registration.
"Ahead of the summer vacation season and the large-scale concert season, we will minimize consumer harm caused by price gouging," the government said. "We will restore trust in tourist destination prices by combining on-site crackdowns with institutional improvements."
