Developers plan midscale, upscale hotels in South Korea

Courtyard Namdaeun

A surging number of Chinese visitors is driving development of miscale and upscale hotels in downtown Seoul, South Korea. While global chains have traditionally focused on luxury properties in the popular tourism districts, local operators are looking to attract business travelers and those focused on shopping in Myeongdong. 

Recently, HanaTour, South Korea's largest tour agency, opened the 576-room Tmark Grand Hotel Myeongdong. It is the agency's third hotel, following Center Mark Hotel in Insa-dong and Tmark Hotel Myeongdong in Chungmuro. 

Back in January, Lotte Hotels opened the Lotte City Hotel Myeongdong. The 430-room property is the seventh under the Lotte City Hotel brand in Korea. That same month, Lotte also opened the 245-room L7 Hotel Myeongdong, the operator's first boutique hotel. 

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Also in January, France's Louvre Hotels Group partnered with Seoul M Hotel to run the 430-room Golden Tulip M Hotel in Myeongdong. In May, Courtyard by Marriott opened a 409-room property in the Central Seoul neighborhood of Namdaemun, close to Myeongdong. The hotel is the brand's third in the country.

Looking farther ahead, Myeongdong is expected to get a 223-room Aloft hotel next February.

New Opportunities

Ramada GunsanLooking ahead, Wyndham Hotel Group is planning to triple its footprint in South Korea with mid-tier Ramada and Days Inn brands through local partnerships. The U.S.-based group operates 13 hotels in South Korea and plans to increase the number to 40 by 2018 through franchise agreements with local developers and partners, adding 8,670 rooms to its portfolio.

Currently, five hotels are under construction in Incheon, Yongin and Gimpo—all in the greater Seoul metropolitan area—and in Daejeon, near the central administrative city of Sejong. These hotels are all poised to open in the next two years. 

"We are confident of the government's plans to boost tourism in the country, and the second-tier cities are slated for massive development," Davis Wray, VP of acquisitions and business development at Wyndham Hotel Group, said, adding that the Ramada and Days Inn brands are both in "high demand" with Korean developers. 

Wray said that Wyndham is putting a high priority on the Asia-Pacific region, which is expected to show the strongest growth thanks to a rising middle class in the emerging economies and growing demand for leisure and international travel. South Korea's popularity among Chinese travelers is a major factor for development growth, he said—and the country is ranked sixth in Asia for visitor numbers. 

According to a study by Korea's Culture and Tourism Institute, the daily demand for hotel rooms in Seoul is estimated to be 41,000 in 2017, while the supply is projected to be around 33,000—a shortage of nearly 8,000 rooms in one city alone. "Those with a long-term growth strategy to build quality accommodation, consistent service and a robust loyalty program will stand to gain in the long run instead of those merely engaging in a price war," Wray said, calling opportunities for development in Seoul "vast." 

Wray noted growth potential in the second-tier cities outside of Seoul, including locations in Gyeonggi Province that are experiencing booms in both real estate and transportation networks. With demand also increasing in these cities, companies like Wyndham can find lucrative footholds to grow both their footprints and brand awareness among a growing niche of travelers. 

But this does not mean that upscale development in South Korea is due for a downturn. Once the company's mid-tier brands are in place, Wyndham is planning to roll out other brands in the country, including the upscale Wyndham Hotels and Resorts brand and TRYP by Wyndham. We are also actively looking for managed deals in South Korea," Wray said.

Sources: Korea Times, Yonhap News Agency, China Daily

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