South Korea to mandate 200% compensation for cancelled hotel bookings

SEOUL (Yonhap) -- South Korea will mandate that accommodation businesses refund deposits and pay an additional 200% of the room rate as compensation if they unilaterally cancel existing reservations to resell them at higher prices.

The government announced the "Status of Implementation and Future Plans for Eradicating Price Gouging Measures" on Thursday at a meeting of the "Civilian Price Special Management Relations Ministers Task Force (TF)," chaired by Deputy Prime Minister and Minister of Economy and Finance Goo Yoon-cheol.

The government plans to incorporate regulations penalizing unilateral reservation cancellations by accommodation businesses into law and strengthen consumer damage compensation standards, prompted by the so-called "price gouging" controversy that arose ahead of the BTS concert in Busan on Oct. 12-13.

According to the government, a total of 311 complaints related to accommodation inconveniences were received as of Oct. 29 concerning the BTS Busan concert. Of these, 256 cases, or 82% of the total, were "reservation cancellations," while 48 cases were related to "high prices."

The government is pushing to introduce a "Worry-Free Price System" that requires accommodation businesses to report seasonal price caps to local governments and disclose them publicly. It also plans to establish regulations to penalize unilateral reservation cancellations without justifiable reasons. The related bill is expected to be proposed this month, with a goal of finalizing legislation within the year.

Consumer damage compensation standards will also be strengthened. The Fair Trade Commission is pursuing a revision of the consumer dispute resolution standards to mandate that when accommodation reservations are unilaterally canceled for the purpose of price increases or resale, the deposit must be refunded and an additional 200% of the canceled room rate must be paid as compensation.

Furthermore, the government plans to revise the Traditional Market Act to allow the cancellation of traditional market voucher merchant registration for businesses that have received administrative disposition for price gouging.

In order to eradicate price gouging, incentives and penalties for local governments and accommodation industries will be strengthened.

Outstanding special grants will be provided to local governments that excel in price stabilization management in December of this year, and disadvantages related to price gouging will be expanded in the selection and evaluation process for government support projects.

The government is making all-out efforts to secure alternative accommodation and transportation in preparation for the "accommodation shortage" during the BTS Busan concert period.

As of Oct. 3, approximately 2,000 spots of alternative accommodation, both paid and free, have been secured by utilizing university dormitories, religious facilities, and public institution training centers. To disperse accommodation demand, late-night movie screenings at cinemas near the concert venue are also being pursued.

In addition, the operating hours and frequency of public transportation within Busan will be extended, and late-night express bus services between the Seoul metropolitan area and Busan will be expanded. Trains and intercity buses connecting Busan and surrounding areas will also be increased.

On Oct. 8-9, joint on-site inspections by related agencies will be conducted to crack down on practices such as the posting of fare tables, and immediate corrective orders and business suspension measures will be taken if violations are detected.