Lee Mi Ja and her 50-member hiking club are among thousands of Koreans canceling holidays, as grief for the dead and missing from a sunken ferry overshadow what’s normally peak season for hotels and retailers.

Lee’s group had planned a day-trip to Cheongsando to see the island’s spring-blooming yellow canola flowers and rice paddies laid out among granite rocks. All canceled the 50,000 won ($48) package including bus and ferry tickets to the island, about 85 kilometers (53 miles) to the east of where the ‘Sewol’ sank on April 16, leaving 302 people dead or missing.

“I felt scared of visiting a place near the ferry accident,” Lee, a 57-year-old housewife from Cheongju, south of Seoul, said last week. “Nobody is in the right mood for traveling. We’ll do it later, but we haven’t decided when.”

Divers are still searching for bodies on the ferry, which sank in an area of strong currents off the southwest corner of the Korean peninsula on its way to Jeju island. No survivors have been found since 174 passengers and crew were rescued on the day of the incident, Korea’s worst maritime disaster in more than four decades.

President Park Geun Hye yesterday accepted Prime Minister Chung Hong Won’s offer to resign over the government’s failure to properly handle an incident he said had left the nation “shocked and saddened.”

Across the country, travel agencies, transport companies and hotel chains are bracing for lost bookings during the country’s so-called golden week at the start of May, as schools cancel trips and towns postpone spring festivals. Cinema and theme park ticket sales slumped after the ferry incident, while the central bank said last week it’s monitoring for any impact on economic growth from falling consumption.

Special Period

The government on Feb. 3 designated May 1-11 as a special period for tourism, encouraging schools to take short breaks and providing discount coupons for hotels, attractions and restaurants as part of its plan to boost domestic tourism spending to 30 trillion won ($29 billion) by 2017, from 24 trillion won in 2012.

South Korea’s golden week comprises a Labor Day holiday on May 1, Children’s Day on May 5 and Buddha’s Birthday on May 6.

More than two thirds of the passengers on board the ferry were a group of 339 students and teachers from Danwon High School near Seoul. They were on a four-day excursion to Jeju island, nicknamed ‘Korea’s Hawaii’ for its volcanic scenery and sandy beaches, a trip made by about 300,000 students a year, according to the island’s government.

The students’ schedule included Jeju’s Yongduam rock, shaped like a dragon’s head, the 23-meter (75 feet) Jeongbang waterfall near the ocean and Soingook theme park, which contains miniature models of famous buildings around the world.

“I hear the shipwreck is leading to many cancellations,” Kim Hyung Jin, deputy director of the Jeju government’s tourism policy division, said by phone. The government is planning safety checks across transportation and accommodation to reassure prospective visitors, he said.

Tourism Earnings

Jeju earned 6.5 trillion won from tourism from 10.85 million visitors in 2013, according to municipal government data. About 80 percent arrive by plane and the remainder by ferry, Kim said.

A Seoul-based association of bond market traders is among the cancellations. About 40 members were planning to join the group’s semi-annual trip to Jeju from April 25 to 26 for a mixture of socializing and seminars on bond markets, according to Kim Gi Back, general manager of the securities investment and trading team at Korea Exchange Bank in Seoul.

The trip was canceled after the group decided to “participate in this national mood of condolences,” Kim said by phone on April 25.

Companies operating school tours are among the worst hit. Seventeen municipal education offices across the country have suspended long-distance school trips during the remainder of the first semester until July, the education ministry said in a statement on April 22.

No More Trips

The ministry is also discussing whether to permanently stop the trips, often viewed by students as the last few days of fun before a long period of study for university entrance exams, after consultation with teachers, students, parents, and education experts, the ministry said.

“We took cancellations from more than 1,700 students at seven schools and decided not to impose any penalties out of respect to families mourning over their loss,” Oh Seung Hwan, a press official at South Korea’s largest domestic travel agency Hana Tour Service Inc., said by phone. “We’re worried that this will last for a while.”

Hana Tour shares have fallen 4.6 percent since the close on April 15, the day before the ferry sank. That compares with a 1 percent decline in the benchmark Kospi index.

For Daemyung Leisure Industry, South Korea’s largest condominium operator with 7,748 rooms nationwide, the loss of school bookings means lost revenue from harder-to-fill weekday bookings, according to company official Hwang Young Hun.

‘Rush to Cancel’

“All schools have canceled their group reservations well into May,” said Hwang, the press manager at Daemyung, which manages 10 condominium resorts and two hotels including on Jeju. “Companies are also rushing to cancel rooms and convention halls.”

The ferry sinking may “weigh on domestic demand,” Kwon Goohoon, an economist at Goldman Sachs Group Inc. in Seoul, said in a research report last week.

“May is usually a big consumption month with people giving presents to children, parents, and teachers,” Park Sang Hyun, chief economist at HI Investment & Securities Co. in Seoul, said by phone. It’s too early to tell if spending will fall enough to affect second-quarter GDP data, he said.

Retailers say shoppers are staying at home rather than seeking spring promotions. Sales at Lotte Department Store, the nation’s biggest with a 45 percent share, fell 1.3 percent during April 16-20 compared with the same period last year.

Ticket Sales

Cinema-goers were also fewer after the ferry incident, the Korean Film Council said. Tickets sold at Samsung Everland, an amusement park operated by the country’s largest conglomerate, fell by 15 percent to about 38,000 on April 19 compared with the previous Saturday, according to the company.

The question for retailers, hotels and tour companies is how long the somber mood will last following Korea’s worst maritime disaster since the ‘Namyoung’ ferry sank in 1970, killing 323.

For 68-year-old Kang Pyeong Soon, there was no chance she’d join an annual couples’ golf trip to Jeju planned for May 4-10. The trip would have cost about 2 million won, she said.

“We go to Jeju for golf every May,” Park said on April 25 by phone. “This time, as a mother and grandmother, I just don’t want to go and enjoy it when so many young students have died and their families are crying so hard at their loss.”

With assistance from Heesu Lee in Seoul. To contact the reporters on this story: Cynthia Kim in Seoul at ckim170@bloomberg.net; Eunkyung Seo in Seoul at eseo3@bloomberg.net; Jiyeun Lee in Seoul at jlee1029@bloomberg.net. To contact the editors responsible for this story: Brian Fowler at bfowler4@bloomberg.net. 

Photo Credit: A woman offers prayers during a candlelight vigil for the missing passengers of a sunken ferry at Danwon High School in Ansan, South Korea, Thursday, April 17, 2014. Wonghae Cho / Associated Press