More new breed hotels to come in Seoul
By Soo Jin
The total number of foreign visitors to hotels in Korea for the first quarter in 2012 has again reached a record high at 2.5 million, up 22 percent from the same period in 2011.
This year seems to be another rosy year for the hotel industry and this robust growth in the number of foreign visitors to hotels is likely to continue unless unexpected regional disasters occur.
The current strong market demand allows industry stakeholders to be more confident on their performance and have more positive projections.
Increased market demand naturally helps generate diversified needs and various niche markets. Customers these days are actively learning about different types of hotels through their own and others’ experiences via all kinds of communication channels.
They shrewdly make their choices on hotels which can most accommodate their preferences and needs. These ever-changing customers’ preferences have been the reasons for invention and introduction of tons of brands and products which are geared to target certain market segments.
Not only has the size of hotel demand in Seoul grown, but the market itself is also experiencing active diversification in demand.
Unlike the past when Seoul could only provide a limited range of very standardized upscale products, the current vibrant and promising market conditions have certainly caught the eyes of global and regional operators.
Although closed deals are still only a few, it is true that global operators have more opportunities that they can at least review along with the current new hotel development boom in the Seoul market.
It is obvious that Seoul becomes one of the strategic destinations for their regional expansion and some of the renowned global operators are currently reviewing their potential business opportunities very seriously.
Operators who could not enter Seoul are actively searching for introductory opportunities for their brands and major multi-branded hotel chains are also actively planning to enter by trying to absorb demand and targeting different segments.
Conrad, the high-end brand of Hilton Worldwide, will make its first debut in Seoul with the opening of Conrad Seoul in Yeoido IFC. The group is also ready to introduce the Hilton Garden Inn for the midscale market and Doubletree by Hilton for the upscale market as long as opportunities are there.
Accor Ambassador Group, which has been a major player in Seoul, recently introduced its Mercure Brand with the opening of the Mercure Ambassador SODOWE in Gangnam, which is a non-standardized midscale brand that is differentiated from the chain’s Ibis or Novotel brand. Furthermore, the group subdivided its Ibis brand into 3 categories, hoping to provide more flexibility in accommodating various niche markets.
Marriott has also already introduced its midscale brand _ Courtyard by Marriott and other chains like Starwood Hotels & Resorts and Hyatt Corporation are also looking for suitable opportunities.
As operators are eager to introduce multiple brands, Seoul’s hotel market is likely to see a series of new hotels, accelerated by the current development boom, while the operators are competing against each other to acquire good projects.
With the increased competition among brands, eventually each will struggle for superiority within its sector which will only be proved by its performance.
Overall, this diversification trend is definitely a part of healthy growth for the market especially from the customer’s perspective, as it can offer customers more diverse products within the same price range to make choices, which could possibly lead to better customer satisfaction and repeated use.
It is also an encouraging trend from the developer’s and investor’s perspective, as this allows them to have more options to search, negotiate and get better deals in selecting suitable operators for their development projects, creating healthy competition.
However, unlike customers who only need to bear a bad experience by making a wrong choice, developers and investors need to be more shrewd and careful in selecting the most suitable brand and operator for their projects, as mistakes in making choices will lead to a much serious loss with less return on investment.
Each new brand will demonstrate its competitiveness to be picked by developers and investors to enter this market. No one can know which one will actually provide the best performance and yield in the future.
There is no harm to emphasize the importance of the study and review process for selecting the most optimum operator in consideration of the proposed project’s location, product concept and target demand.
It is certainly an exciting time for Seoul’s hotel market to see various products stacked on display, but with the torrent of new brands, smart choices need to be made at the end of the day.
Soo Jin is a senior manager of hospitality in Cushman & Wakefield Korea.