Global Hotel Chains Turn Their Eyes to Korea as Hot Market – BusinessKorea

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A view of the Four Seasons Hotel Seoul
A view of the Four Seasons Hotel Seoul

Korea is emerging as a battleground among global hotel chains. As the Korean Wave, including K-pop and K-food, has made Seoul a global tourist hot spot, global hotel chains have been racing to preempt the Korean market.

According to sources in the hotel industry on May 5, Marriott, the world’s No. 1 hotel chain, will take over the management of the brand of InterContinental Hotel Seoul COEX in Seoul’s Samseong neighborhood and reopen it as a Westin hotel as early as 2024. Westin is Marriott’s premium hotel brand. In Korea, it operates two hotels in the Sogong neighborhood of Seoul and the Haeundae district of Busan in partnership with Shinsegae Group. Marriott’s original principle was “one hotel per city” but demand for hotels in Seoul is on a sharp rise, so the global hotel giant has decided to open another hotel in Seoul.

A luxury hotel brand that is one level up from Westin will also come to Korea. Aman Group, which has hotels favored by the world’s richest people, will open a hotel under the Janu brand in 2027 in a mixed-use development in the northern neighborhood of Seoul Station. Rosewood will also open a 250-room hotel at The Parkside Seoul, a development on the site of the United Nations Command in the Itaewon neighborhood of Seoul. Rosewood will be a luxury hotel with room rates of at least US$700,000 per night. Banyan Group, known for its Banyan Tree brand, will debut its Home brand in July in the city of Sokcho in Gangwon Province in Korea. It will be the first in Korea and the eighth in the world. IHG Group will open two more Boko hotels in the Myeongdong neighborhood after Gangnam district in Seoul. The number of five-star hotels in Seoul is expected to increase from 34 this year to at least 37 by 2027.

This year, The Unbound Collection by Hyatt and Magok Mercure Ambassador Hotel will open in Seoul’s Nonhyeon and Magok neighborhoods, respectively. Banyan Tree Haeundae and InterContinental Pyeongtaek will also open next year. All are five-star luxury hotels.

The main reason for global hotels’ expansion into Korea is that the hotel industry is enjoying the biggest boom ever in Korea. Lotte Hotel, the No. 1 hotel chain in Korea, earned 1.3 trillion won in sales and 71.2 billion won in operating profit last year. Both its revenue and operating profit hit all-time highs with operating profit surging 296 percent year on year. Shinsegae’s Westin Josun Hotel also posted an operating profit of 40.3 billion won last year, doubling from the previous year’s 22.2 billion won. Shilla Hotel also posted record sales of 634.7 billion won.

Hotel industry insiders attribute the boom to restructuring effects. In the 2010s, an influx of Chinese tourists led to an increase in hotel openings. With a glut of hotel supply, China’s retaliation against South Korea over their agreement to allow the U.S. to deploy a THAAD system in South Korea cut off Chinese group tours. At that time, the Korean hotel industry went through a major restructuring. In 2020, the COVID-19 pandemic began. Since then, hotel supply had shrunk dramatically.

Since 2023, things have reversed. Tourists started coming back to South Korea in droves. Last year, the number of foreign tourists recovered to 10 million. The Korea Culture and Tourism Institute expects the number of foreign tourists to Korea to rise to 20.51 million in 2024 and 22.69 million in 2026. This is because the Korean Wave, once centered on K-pop, is spreading across all aspects of culture, including TV shows, films and food.

Although the number of tourists to Korea is on the uptick, there will be a shortage of hotels in Korea due to a supply cliff, observers forecast. In particular, there is a major shortage of luxury hotels. Forbes Travel Guide lists only two five-star hotels in Seoul, the Four Seasons Hotel and Shilla Hotel. This is far fewer than other major global metropolises such as Macau with 22 five-star hotels, London  with 20, Paris with 12, and Tokyo with 9.

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