Accommodation business operator referred for investigation on suspicion of canceling reservations and reselling rooms ahead of BTS Busan concert

A lodging manager in Busan was sent to the public prosecutor’s office on fraud charges after falsely inducing existing reservation customers to cancel their bookings due to overbooking ahead of the BTS concert, then reselling the rooms at prices up to seven times higher. On the 4th, the Anti-Corruption and Economic Crime Investigation Unit of the Busan Metropolitan Police Agency announced that they had sent Mr. A, a man in his 50s managing a lodging facility in Busan city, to prosecution without detention on fraud charges. According to the police, in mid-May, ahead of the BTS concert held on June 12-13 in Busan, Mr. A induced customers who had booked rooms at the normal price to cancel their reservations by falsely claiming that ″dozens of overbookings had occurred.″ However, there were actually available rooms, and police investigations revealed that Mr. A provided this false information to resell the rooms at higher prices. Subsequently, the rooms were sold at 500,000 to 600,000 KRW per night, which is 6 to 7 times the normal price. The police explained that although there was a temporary overbooking situation in mid-January right after the BTS concert announcement, it was resolved within about a month through measures taken by lodging facilities and reservation platforms. Nevertheless, Mr. A was confirmed to have canceled existing reservations to maximize business profits and resold the rooms at expensive prices. This kind of price gouging behavior in the lodging industry was also revealed in a government investigation. According to an inspection of 135 lodging facilities in the Busan area conducted by the Fair Trade Commission and the Korea Consumer Agency in February this year, the average one-night accommodation fee on the weekend of June 13-14, when the concert was held, was 433,999 KRW, which was 140.2% higher than the previous weekend (240,320 KRW) and 147.5% higher than the following weekend (231,180 KRW). The rates increased by an average of more than 2.4 times (143.9%) compared to usual. At that time, cases were shared on social media where BTS fans who had booked rooms for 100,000 KRW months in advance had their reservations canceled due to double booking, only to see the rooms resold hours later for 1,500,000 KRW. The government reported that there were 311 lodging inconvenience complaints related to the BTS Busan concert, of which 256 cases (82%) were unilateral reservation cancellations by businesses. The police are also reviewing additional illegal cases after receiving about 230 lodging inconvenience complaints filed with the Busan city government. The police explained that this case could be the first to hold lodging facilities criminally responsible for price gouging practices. They also announced plans to continuously inspect habitual price gouging businesses ahead of the Busan Fireworks Festival scheduled for the 7th. The government stated that to prevent unfair reservation cancellations aimed at exploiting concert demand, they will revise standards so that lodging businesses that unilaterally cancel reservations for price increases or resale purposes must refund deposits and pay an additional 200% compensation of the accommodation fee.