Korean hotel market still has more room to develop

Craig Smith, president of Asia Pacific for Marriott International, speaks during an interview in Seoul, Aug. 2. / Courtesy of Marriott International

Marriott plans to bring luxury hotels back here

By Kang Seung-woo

There are growing whispers that the Korean hotel industry has already reached a saturation point, with a great number of hotel brands -- both domestic and international -- setting up a closely contested battlefield.

However, Marriott International's Asia-Pacific President Craig Smith is shrugging off the concerns, believing there is more room to grow.

“I keep hearing everybody in Korea say the hotel market is saturated. Our increase this year is more than gross domestic product. How can we be saturated?” Smith said in an interview with The Korea Times in Seoul.

According to him, there are 21 Marriott brand hotels here and they average 80 percent of occupancy.

“This year, we have already opened five hotels. Imagine five hotels in one year and six hotels are coming soon. I think we have two large Fairfields opening in Busan and so we will see the Korean market growing very quickly,” the American CEO said.

“There are much more opportunities for growth and so we want to continue to develop and be part of Korea's growth. We cannot be saturated.”

His confidence in the firm's Korean business is reflected in its establishment of an area office in Korea earlier this year and its adoption of a “Go Local” policy by appointing a Korean as senior manager.

“We want to make sure we got the Korean market right and we have one area vice president in Duke Nam who is a strong Korean,” Smith said.

“Now we understand travelers are coming into Korea, but you will never be successful in countries until we localize senior managers. We want to make sure we have Koreans running Korea.”

To Marriott International, Korea is one of the largest source markets in Asia Pacific -- No. 6 in its outbound business -- and Smith claims it is a good ranking, considering the Korean population.

“Koreans have strong purchasing power. You look at our hotel resorts and all of them in Thailand and Maldives and Korea are usually top five source markets,” he said.

Marriott is adopting dual strategies regarding its Korean business.

“One side, we want to grow our hotels and make money here. That is a simple strategy. But our second strategy is we want Koreans to know our brands -- Le Meridien, JW Marriott, Fairfield, Four Points and all the different brands -- so when they travel outside of Korea, they choose us first because most of you don't realize Koreans have incredible purchasing power,” he said.

“Koreans are traveling in most major markets such as China, Japan, Bali and Phuket and so if we have more hotels here and they know it represents Marriott, then we have opportunities to capture that business as they travel outbound and so we capture their money twice.”

As part of expanding its business in Korea, Marriott is set to make the most of Chinese travelers visiting Korea.

“Chinese business is very important. It is the largest outbound source market now in the world,” Smith said.

“Our belief is Chinese travelers today are rebounding. Last year, they were upset about the THAAD missile, but today they are coming back. I think last month they were up 16.5 percent year-on-year.”

In addition, the Maryland-based hotel chain has set its sights on leisure travelers taking a break from everyday life, and as part of its efforts it is planning to establish properties in coastal areas. According to Nam, there are many tourism resources on the east coast, but few global hotel brands, which gives Marriott an opportunity.

“There is another statistics that leisure travel is growing four times as fast as business travel. That's everywhere in the world,” he said.

“So leisure hotels are much more becoming important because people are going for vacations and they are doing sometimes multi-generation vacations, where father takes children and grandchildren all on vacation together.”

Still not buying into the evaluation of oversaturation here, Marriott is mapping out a bolder plan for bringing high-end hotels to Korea.

“What we are missing in Korea is more luxury hotels. We will probably grow more select services in normal hotels and that is easy. But we don't see there are enough very high-end hotels. I think we are looking for opportunities to bring back a Ritz-Carlton hotel and a W hotel and bring a Bulgari hotel and a St. Regis hotel,” Smith said.

“I think we need to bring a couple of more our high-end sophisticated brands to the market and I think they will be very successful. We only announce when a deal is signed. We are working on it.”

A Ritz-Carlton Hotel was operated here for 21 years, but it was transformed to Le Meridien last year.