Aju Hotels & Resorts spearheads comeback of Korean hotel industry
The Hyatt Regency Jeju hotel. Aju Hotels & Resorts operates the luxury resort with 222 guestrooms located near the Jungmun tourist complex in Seogwipo, Jeju Island. / Courtesy of Aju Hotels & Resorts
By Jhoo Dong-chan
Aju Hotels & Resorts takes the lead in the rise of Korea’s hotel industry this year.
The country’s hospitality market suffered an unprecedented slump last year as Chinese tourists stopped visiting after Beijing took retaliatory measures against Korea's deployment of a U.S. missile shield, which it saw as a security threat.
But a few managed to survive and thrive and one of the examples is Aju Hotels & Resorts, Aju Group’s hotel business affiliate, which had already tapped into foreign markets unlike its competitors that merely focused on Chinese visitors.
It started investing in the U.S. hotel market in 2014 by acquiring the Double Tree by Hilton Dallas hotel in Texas. Aju then carried out a large-scale renovation to upgrade the hotel.
The occupancy rate of the hotel with 227 guestrooms was 74.8 percent before the takeover, but Aju’s customized management pushed the rate up to 77.6 percent in 2016. Average customer transactions were also $114, but jumped to $143 when Aju sold the hotel in 2016.
In 2015, Aju took over the Holiday Inn San Jose Silicon Valley for $53.45 million. It invested even more aggressively to enhance the hotel’s competitiveness.
The company refurbished the hotel’s core venue while upgrading its restaurant menu in a bid to raise its value.
The average customer transaction at the Holiday Inn location was $127.60 before the acquisition, but later reached $170 when Aju sold it for $61.75 million in 2017.
Aju also took over the Westin San Jose for $64 million last year, saying it will carry out similar investments in North America.
An Aju official said the U.S. market is attractive for investment, and its success is a valuable asset to the company’s competitiveness.
“The U.S. hotel market has grown continuously for years. The ownership and management have been well balanced with massive investments targeting the market,” said the official who asked not to be named.
“Aju Hotels & Resorts is now diversifying its profit models. Thanks to such experience in the U.S. market, an increasing number of investors are sending inquiries to us.”
Aju is also reconstructing the Hotel Seokyo, a landmark destination in the Hongdae area for more than 30 years, and he said the venue and its services should first be attractive to locals.
“I believe true globalization in the hospitality industry comes from localization. What the locals like and enjoy will eventually appeal to foreigners,” he said.
“Chinese people visit Korea to experience what we like and enjoy. I believe they will fly to Korea en masse if our hotels and their services are attractive enough to the locals.”
He added the Hotel Seokyo was once a popular destination for youngsters in the area, but they stopped visiting the hotel at some point because it isn’t a fun place any more to them.
Aju signed a deal with global hotel brand Marriott, and started to reconstruct the Hotel Seokyo in 2015. The reconstruction is scheduled to be completed in April under its new name _ The RYSE Autograph Collection.
RYSE is an acronym for “Reveal Your Self-Expression,” a slogan targeting young hipsters in the Hongdae area, and the Autograph Collection is one of Marriott’s affiliate premium hotel brands.
The Aju official said the RYSE Autograph Collection will offer 272 luxury guestrooms in the building with 20 stories aboveground and five underground.
“The RYSE Autograph Collection will be different from other hotels in the area,” he said. “It will feature various attractions, such as an up-market club, craft beer bar and rooftop, especially designed for youngsters. If they like it, foreigners will naturally like it.”
Separate from the RYSE Autograph Collection, Aju Hotels & Resorts also operates the Hyatt Regency Jeju, a luxury resort with 222 guestrooms locate near the Jungmun tourist complex in Seogwipo, Jeju Island.