BTS Concert Reshapes the Lodging Industry as Government Moves to Introduce a Fixed-Price System Amid Canceled Bookings and Fivefold Rate Hikes

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[Financial News] Ahead of BTS's concert in Busan later this month, lodging businesses have been canceling reservations without warning and demanding extra charges, prompting the government to take a hard line by introducing a pre-reporting system for accommodation rates. To eliminate the recurring problem of inflated lodging prices at concerts and local festivals, the government appears set to legislate an effective fixed-price system, known as the Advance Lodging Rate Reporting System, within the year.
According to News1 on the 1st, the Ministry of Economy and Finance and the Ministry of Culture, Sports and Tourism (MCST) recently held a meeting of the task force on eradicating regional price gouging and began preparing comprehensive measures, including the introduction of a pre-reporting system for lodging rates.
At the center of the plan is the Voluntary Fare Pre-Declaration System, under which lodging providers would set room rates in advance for peak and off-peak seasons as well as for special local events, report them to local governments, and disclose them to consumers. Businesses that fail to honor the reported rates or falsely display prices would face strong administrative penalties.
In particular, the government is also pushing a measure that would impose a five-day suspension of business operations without warning if businesses are found not to display prices, to have posted false prices, to have failed to comply with reported rates, or to have canceled reservations unilaterally. It would amount to a one-strike-out penalty in practice.
The reason behind the government's tough response is a series of questionable practices in the lodging industry surrounding the BTS concert in Busan.
The Korea Consumer Agency recently issued a consumer alert on inflated lodging fees together with the Korea Fair Trade Commission (KFTC) and the Busan Consumers' Organizations Council. The warning came after repeated cases in which some lodging businesses canceled confirmed reservations or demanded additional payments ahead of the concert.
In one case, a consumer who had booked a room in Busan received a cancellation notice two months later, with the property citing overbooking and a pricing error. The consumer later found that the same room had been relisted at a price about five times higher than the original booking rate.
In another case, a customer who had made a reservation in January was recently asked to pay an additional 500,000 won, with the lodging provider saying that peak-season rates should apply. The customer was also told the reservation would be canceled if the extra charge was refused.
The government is also stepping up monitoring of price-fixing among lodging businesses. It is considering abolishing the current cap of 3 billion won on rewards for reporting collusion and instead offering up to 10% of any imposed fine as a reward. The goal is to encourage internal whistleblowing and root out market-distorting behavior.
Emergency measures are also being activated to ease the lodging shortage during the BTS concert. About 1,300 alternative accommodations have been secured by using university dormitories, religious facilities, public institution training centers, and youth training facilities in nearby areas such as Busan, Yangsan, and Changwon. These facilities will be offered to domestic and international fans, either free of charge or for a fee.
y27k@fnnews.com Seo Yoon-kyung Reporter