[On-site In] Busan Fireworks Festival lodging prices skyrocket… How long will the ‘rip-off’ controversy last?

As the Busan Fireworks Festival approaches, hotel prices in Gwangalli and Haeundae, Busan, soar, sparking a recurring controversy over price gouging.

Tourists claim that hotel prices are 3 to 5 times higher than usual, but the hotel industry is of the position that the frame of 'extortion' is somewhat unfair, saying, "In a market economy, prices are determined by supply and demand."

◇ Skyrocketing hotel rates… 5-star starts from 2 million won

According to Yonhap News coverage on the 11th, on November 7th, when the Busan Fireworks Festival is held, a three-star hotel located in Gwangalli, Busan, sold a room with a view of Gwangan Bridge (for two people) for 980,000 won.

A room of the same size was sold for 1.3 million won if four people stayed.

Prices jumped more than five times compared to regular weekends.

Another 3-star hotel had similar prices, but the rooms with a view of Gwangan Bridge had already been sold, and the rooms without a view of the fireworks were sold for around 500,000 to 600,000 won.

The prices of 5-star hotels in the Haeundae area also jumped significantly.

At a five-star hotel in Haeundae where you can view the fireworks festival, the cheapest room with a view of the fireworks festival was 2 million won.

The hotel has recently seen a significant increase in the number of foreign tourists, with sea view rooms sold for 800,000 to 1,000,000 won even on weekdays and weekends.

Most lodging establishments applied rates that were 3 to 5 times higher than usual on the day of the fireworks festival, and lodging establishments such as low-rated hotels and illegal Airbnbs made reservations at rates close to 10 times higher than usual.

The hotel industry's position is that it is somewhat unfair to be criticized for 'exorbitant prices'.

Price extortion refers to an amount that is unfairly set at an exorbitant price compared to the quality or market value of the product or service.

It mainly refers to commercial activities in which consumers suffer damage by exploiting information asymmetry or temporary monopoly status (vacation destinations, festivals, etc.).

An official in the hotel industry who requested anonymity said, "Prices are published online and we are competing with other hotels. In a market economy, prices are determined by supply and demand. It is somewhat unfair to call that price gouging."

Another hotel official said, "On the day of the fireworks festival, all employees come to work to improve the quality of service, and the room rates are high because they sell wine and other package products together. Hotels that do not disclose prices and engage in trick business are truly rip-off businesses, and we are also suffering because of them."

Some point out that the Busan Fireworks Festival is being operated on a paid basis, encouraging exorbitant prices.

Since a paid seat costs about 100,000 won per person, restaurants, coffee shops, and lodging establishments with a view of the fireworks are also raising their prices.

◇ Even for rooms where you can’t see the fireworks, rates rise… Selling through trickery without disclosing the price

Although the hotel industry's argument is partly understandable, it is clear that the prices for this fireworks festival are somewhat high for tourists.

In particular, there were many hotels that did not disclose prices online and took reservations over the phone, or that charged rooms that did not have a view of the fireworks at nearly five times the usual price.

From a consumer's point of view, it is difficult to compare prices accurately, and sometimes they end up booking a hotel at a high price because they are told that there are only a few rooms left.

In particular, there are many cases where there is a lack of explanation regarding the view of the room, so there are frequent cases where a hotel pays a high rate to make a reservation, but only a portion of the fireworks are visible, resulting in conflict between the hotel and the guest.

Tourists unanimously said that these businesses were truly ‘rip-offs’.

Seong Do-yoon (41, Seoul), who plans to visit Busan to take pictures during the Busan Fireworks Festival, said, "I always visit Busan during the Busan Fireworks Festival, but lodging prices are getting more expensive. In particular, accommodations with a view of the city center where you can't see the fireworks are too expensive, so I'm planning to go to Seoul on the same day this time, but transportation is a problem."

Lee Seong-min (49, Daegu) said, “During the fireworks festival, room prices in Busan soar much more than in Seoul,” and added, “I think reasonable management of accommodation rates is essential to attract more people from other regions to the fireworks festival.”

◇ Despite a torrent of countermeasures, we cannot overcome the threshold of the National Assembly... “We need to hurry up with legislation.”

Busan has far fewer lodging establishments than Seoul, so the controversy over exorbitant prices comes to the fore whenever there are large-scale performances or festivals.

Last year, during the BTS Busan performance, the controversy over price gouging erupted and had a negative impact on the city's overall image, but the city of Busan is virtually at the level of guidance.

This is because there is no legal basis for regulating or sanctioning price gouging.

Last June, the government announced the status of implementation of measures to eradicate price gouging and future plans on the occasion of BTS's Busan performance.

The government is pushing for the introduction of a 'price gouging relief system' that requires lodging companies to report and disclose the upper limit of accommodation fees by season to local governments.

The Ministry of Culture, Sports and Tourism is promoting a revision to the 'Tourism Promotion Act' to introduce a 'safe price gouging system' to form reasonable prices and improve transparency, and to establish new sanctions for unilateral cancellation of reservations without justifiable reasons.

Related laws have been proposed several times in the National Assembly, but are still pending.

Lee Soo-jin, a member of the Democratic Party of Korea, also proposed a bill that would impose a fine of up to 3 million won for violations of the obligation to report, post, and comply with lodging rates or the prohibition on cancellation of reservations during the vacation season and large-scale performances and festivals.

In particular, if a lodging business cancels a reservation without justifiable reason and then resells it at a higher price, a fine of up to 50 times the resale amount can be imposed.

Although related bills have been proposed repeatedly in the past, they have never crossed the threshold of the National Assembly.

Experts called for speed in enacting legislation.

Oh Chang-ho, a professor at Youngsan University's Department of Tourism and Convention, said, "The surest way is to report the upper limit on lodging rates during the festival to the local government and activate the disclosure of the RACK RATE (highest base price for rooms) like in other countries." He added, "Related laws should be revised quickly, and local governments should provide incentives to lodging businesses by promoting safe lodging establishments that participate in price reporting during the festival."