Early spring is usually high season for tourism at Seongsan Sunrise Peak on the southern resort island of Jeju.

But it was hard to spot foreigners visiting the site on Monday afternoon as the spat between South Korea and China over the deployment of a US missile defense system known as the Terminal High Altitude Area Defense dealt a harsh blow to the tourism industry nationwide. 

In the UNESCO-listed world heritage site, only a small number of locals were hiking on the mountain or taking pictures basking in the bright spring sunshine.

Seongsan Sunrise Peak was so popular for its beautiful and exotic scenery, especially among Chinese group tourists, that its spacious parking lot used to be fully packed with large-sized tour buses whenever Chinese cruise ships arrived in Jeju carrying hundreds of tourists each time.

But the number of Chinese tourists visiting Korea began to decline after China restricted its imports of Korean culture in October in retaliation for Seoul's installation of THAAD. The number marked a sharp fall from early this month amid heightening diplomatic tension.

On March 2, Beijing banned travel agencies in the country from selling package tours bound for South Korea beginning on March 15 apparently as part of its economic retaliation, casting a pall over South Korea's tourism industry that depends heavily on Chinese tourists.

About 8 million Chinese tourists per year have visited South Korea over the last five years, nearly half of the total number of foreigners coming to visit the country.

These days, Chinese people can hardly be seen on Baojian Street in downtown Jeju.

Named after a Chinese health care product company that brought 11,000 employees to Jeju on incentive tours in 2011, the street that is also called "a small China in Jeju" used to bustle with Chinese tourists until recently.

Travel agencies, hotels and restaurants operating in Jeju were already suffering from the spat even before the ban on package tours came into force.

A 70-room hotel in downtown Jeju has recently decided to suspend its business temporarily from Wednesday.

Tour agencies have been flooded with calls wanting to cancel room reservations for Chinese tourists since the beginning of the month when tensions began to escalate. There were no reservations for nights after Wednesday.

"Since we specialize in Chinese tourists, we're currently not ready to accept Korean guests," a hotel official said. "So we've decided to temporarily close down after the remaining guests check out."

Unable to keep operating due to dwindling Chinese tourists, another hotel in downtown Jeju with 160 rooms has already taken steps to permanently shut down.

A travel agency mainly working with Chinese group tours temporarily closed down Wednesday.

"We had no other choice but to temporarily close operation as all reservations for Chinese group tours from the middle of this month were called off," an official with the agency said. He said the company with about 1,000 employees, including part-time tour guides, recommended their workers take paid leave during the closure.

Busan, a southern port city frequented by Chinese tourists, was one of the cities hardest hit by China's anger over the THAAD deployment.

"About one third of our customers are foreigners and about half of them are Chinese," said an employee of a cosmetics shop in Gwangbok Street in downtown Busan, asking not to be named. "Many cosmetics stores sprung up in our neighborhood with the rise of Chinese tourists. I bet many shops will be forced to temporarily or permanently close down if the current trend persists."

Lee Dong-hyeong, who represents merchandisers at Busan's Gukje Market, also said the traditional market has seen fewer group tourists from China in recent months.

"Although our damage is not as serious as the merchandisers on Gwangbok Street heavily populated with cosmetics stores, there is nothing we can do about the THAAD spat," Lee said.

The situation was the same in Chinatown in Incheon, a popular tourist destination on the west coast.

Tour buses carrying Chinese tourists used to line up along both sides of roads in the neighborhood, but it was not easy to spot even individual Chinese tourists as of Monday.

"A daily average of 40 to 80 Chinese tourists visited our restaurant before, but the number more than halved recently," the owner of a Chinese restaurant in the town said.

According to figures from the Incheon metropolitan government, the number of foreigners visiting the city's Junggu district where Chinatown is located almost halved from 18,000 in 2015 to 9,800 last year.

As their fears over declining Chinese tourists became a reality, the tourism industry and municipal governments were desperately trying to find a way out.

The Jeju provincial government requested 5.8 billion won ($ 5 million) in financial support and 10 billion won in low-interest loans from the central government to make up for the losses stemming from the massive trip cancellations by China-based cruise giants.

It also decided to lure more field trips from local schools and tourists from Japan, Taiwan and Southeast Asian countries.

"Although the atmosphere of abstaining from traveling to South Korea is spreading in China, we expect the Chinese government cannot keep individual tourists from visiting Korea. So we're stepping up activities to promote Jeju tourism on various social networking services (for them)," said Ko Seong-ik, director of the marketing bureau of the Jeju tourism industry association.

The Busan metropolitan government also plans to shift the focus of its tourism promotion policy away from mainland China.

For this, the authority will encourage the local tourism industry to develop joint tour packages for residents of major Japanese cities that have direct flight services to Busan.

It will also engage in intensive activities to promote Busan-bound group tours that include visits to the filming locations of popular Korean TV series and other places where visitors can experience "hallyu" to consumers in Southeast Asian countries while developing tour programs tailored for the Muslim market. Hallyu refers to the Asianwide boom of Korean pop culture.

The government also plans to expand the realm of its marketing activities to lure other Chinese-speaking people from Taiwan and Hong Kong.

"We'll develop various travel apps designed to help individual Chinese tourists comfortably travel around Busan while making full efforts to lure more medical tourists and individual cruise tourists from the Middle East, India, Mongolia and Russia as well as Southeast Asia," an official at the Busan Tourism Organization said. (Yonhap)