Takes effect Oct. 28 next year; lodging rates must be reported and observed

Prior-residency and home-ownership requirements scrapped; notification system replaced by registration

Vacant rural homes may be used for guesthouses; lunch and dinner service permitted

Photo not related to article [Getty Images Bank]
Photo not related to article [Getty Images Bank]

Starting next October, rural guesthouse operators who unilaterally cancel existing reservations and relist rooms at higher prices will face surcharges. Operators will also be required to report their lodging rates to local governments and adhere to them, tightening controls on price gouging during peak seasons. At the same time, prior-residency and home-ownership requirements that had blocked entry into the rural guesthouse business will be abolished.

The Ministry of Agriculture, Food and Rural Affairs announced Monday that it will promulgate Tuesday an amended version of the Act on Promotion of Exchange between Urban and Rural Areas containing these provisions. The amended law takes effect Oct. 28 next year.

The revision centers on easing entry barriers for rural guesthouses while strengthening oversight of unfair business practices such as rate manipulation and arbitrary reservation cancellations. Provisions governing rural guesthouses previously housed in the Rural Community Improvement Act will also be transferred to the urban-rural exchange law.

Under the new rules, guesthouse operators must report their lodging rates to the relevant mayor, county chief or district mayor and comply with the rates on file. Unilaterally canceling or modifying a guest's reservation without justifiable cause will be prohibited.

Violations will be subject to administrative sanctions including fines and business suspension. Operators who cancel or alter a reservation and then relist the room at a higher price will face a surcharge. The measure puts into law a price-gouging eradication plan the government announced in February.

The management framework for rural guesthouses will shift from a notification system to a registration system. Registration may be revoked when an operator fails to meet registration standards or violates applicable laws. A new disqualification clause will bar people with certain criminal records — including sex crimes — from running a guesthouse.

Operators will also be prohibited from refusing or evading inspections by government officials without justifiable cause. Any online booking listing or promotional material must clearly identify the accommodation as a rural guesthouse.

On the deregulatory side, the prior-residency and home-ownership requirements for starting a rural guesthouse will be scrapped, lowering the barrier to entry for people returning to farming or rural life.

Standards for the size of eligible homes may also vary by region, with local governments permitted to set their own size criteria by ordinance rather than following the ministry's default rules. To prevent unchecked facility expansion from damaging rural landscapes or stoking community conflict, however, a cap on the number of guest rooms will be set by ministerial decree.

Areas experiencing population decline will be eligible for a special provision allowing room-count standards to be set by local ordinance within the range prescribed by ministerial decree.

The law will also institutionalize guesthouse operations using vacant rural homes. Unlike standard rural guesthouses, these "vacant-home regeneration guesthouses" will be exempt from the owner-occupancy requirement. A manager must nonetheless be on site to ensure guest safety and facility upkeep. Violations will be punishable by up to six months in prison or a fine of up to 5 million won ($3,770).

When a corporation or organization runs a vacant-home regeneration guesthouse, eligible operators will be limited to local governments, village enterprises, social enterprises, social cooperatives and nonprofit corporations.

The range of meals rural guesthouses may serve will expand beyond breakfast to include lunch and dinner. Meals other than breakfast will be subject to relevant food-hygiene regulations.

The law will also allow heirs to inherit a guesthouse business when an operator dies. Previously, heirs had to file a new notification to continue operations; under the revised law, an heir who meets the statutory requirements and resides at the business premises may succeed to the operator's status.

Jeon Han-young, director general of the Rural Policy Bureau at the Ministry of Agriculture, Food and Rural Affairs, said the revision "is meaningful in that it improves business conditions for rural guesthouses to support the revitalization of rural tourism, while at the same time strengthening institutional safeguards to protect guests and foster a fair lodging market." He added that the ministry "will do its utmost to prepare subordinate legislation and take other follow-up measures so that the intent of the revision can be smoothly realized on the ground."


adastra@heraldcorp.com