Why Lotte, Plaza, Shilla sing blues

Hana Tour, the nation’s leading tourist agency, has jumped into the business hotels, opening this Center Mark Hotel in Gwanhun-dong, Seoul last year. / Korea Times file

Growing number of business hotels stalling premier hotels

By Kim Ji-soo

Decades after its heyday industrialization, the landscape of Seoul is always changing as new constructions go up by the day. These days, it’s the construction of hotels, as more foreigners are visiting Korea.

The number of tourists marked an unprecedented 11 million last year, and officials in the related fields are hoping to see a similar or higher level in these figures in the coming years.

More visitors invariably mean the demand for accommodation, and office space in Seoul are giving way to hotels. In the most recent statistics released jointly by Seoul Metropolitan Government and the Seoul Institute, Seoul still lacks 15,791 rooms for visiting foreigners.

Aventree Hotel Jongno operated by Mode Tour that opened last September in Jongno, Seoul.

Hotels are fast rising in Myeong-dong and Chungmuro, especially the so-called business hotels. About 91 hotels or 13,487 rooms are under construction in Seoul as of June 19, according to the Seoul Metropolitan Government’s statistics.

But these motley-crew constructions, on the other hand, is translating into stalling business for the nation’s premier hotels, five stars and above.

The Lotte Hotel in downtown Seoul saw its number of Japanese tourists decline about 30 percent in the first six months of 2013, compared to the same period of the previous year.In its number of Chinese visitors, the Lotte Hotel however did see about a 50 percent in the first half of the year over the comparable period the previous year, but Chinese tourists only made up for 8 percent of the total visitors for the hotel in 2012.

Hotel Skypark Central Myeong-dong

“But it’s hard to make the correlation that the more business hotels rising are pulling down the occupancy at premier hotels,” said an industry insider.

“The low occupancy rate for premier hotels are a mixture of social factors and negative variables for the travel industry,” said Kim Na-hye, a PR official at the Plaza.

These factors and variables include the rocky North Korea, the low yen and the decreasing number of Japanese tourists and off-season had the leading hotels struggling in the first half of the year. The Plaza was fortunate in that its aggressive marketing led to the 160 percent in the rise of Chinese tourists in the first half of 2013 over the comparable period of the previous year.

The Lotte Hotel group has a business hotel titled Lotte City Hotel that opened its first one in 2009 and is expected to further branch out to the nation to meet the rising demand of tourists seeking more affordable choices. / Korea Times file

As such, premium hotel industry officials believe that there consumers’ market for five-star and above hotels and those of business hotels are different.

But five-star hotels are not complacent to the extent that they will just sit back; several of the nation’s leading hotels have plans to pioneer the business hotel segment. Currently leading is Lotte Hotel, where the hotel in last November announced its plans to build 25 business hotels in the nation through 2018. The Lotte’s first business hotel, the Lotte City Hotel Mapo, opened in 2009. Hotel Shilla is actively looking into the business hotels. Starting in the second half of the year, the hotel is expected to manage a business-level hotel titled “Shilla Stay” in Dongtan, near Suwon.

The Plaza, which is affiliated with Hanwha Group, reportedly is pursuing a 400-room business hotel by renting a building in Hoehyeon-dong, Jung-gu, Seoul.

The nation’s leading travel agencies have also jumped into business hotels. The Hanatour Service inc. has opened the Center Mark Hotel in Gwanhun-dong, Jongno, in downtown Seoul. It is planning for a second one in Chungmuro, in Jung-gu in Seoul. The Mode Tour, the nation’s second largest travel agency, opened last October in Gyeonji-dong, Seoul Aventree Hotel Jongno.