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Korea’s Hotel Market thrives amid robust demand and strategic growth drivers

Korea's hotel market

Korea’s hotel market has thrived over the past two years, with significant growth in ADR, RevPAR, and occupancy rates. Key drivers include strong domestic and international demand, Hallyu, and medical tourism.

Korea has solidified its position as one of the leading hotel markets in the Asia Pacific region, driven by robust domestic and international demand over the past two years. The country’s impressive performance metrics highlight its resilience and potential for sustained growth in the hospitality sector.

In the first quarter of 2024, Korea’s Average Daily Rates (ADR) surged to KRW 214,177, marking a 43% increase compared to Q1 2019. Additionally, Revenue Per Available Room (RevPAR) saw a remarkable rise of 49% over the same period, while occupancy rates were 2% higher than in Q1 2019. These figures underscore the strength of Korea’s hotel market, bolstered by a recovering global travel landscape and increasing domestic tourism.

The luxury and upscale hotel segments are particularly poised for continued success over the next six to twelve months. Key tourist destinations such as downtown Seoul, Haeundae in Busan, and Jeju Island are expected to lead this growth. The limited supply pipeline over the next four years, as noted by CBRE, suggests that hotel performance in these areas will continue to improve, driven by high demand and constrained supply.

Key Findings from the Asia Pacific Hotels & Hospitality Market Update – Korea
  1. Sustained Strong Performance: The report highlights that long-term growth drivers will further enhance the strong performance of Korea’s hotel market. These include the Korean Wave (Hallyu) experience, which attracts millions of international fans, and the burgeoning medical tourism industry, which positions Korea as a premier destination for high-quality medical care.
  2. Investment Activity Outlook: Despite significant improvements in hotel performance, investment activity has remained subdued. However, there is optimism on the horizon. Expectations are that borrowing costs will decline in the second half of 2024, following anticipated interest rate cuts in the U.S. This should spur an increase in purchasing activity as investors look to capitalize on the favorable financial environment.
  3. Focus on Value-Add Opportunities: Both private and institutional investors are expected to drive acquisitions in 2024, with a particular focus on value-add opportunities. This strategy aims to enhance property values through targeted improvements and repositioning, aligning with market demands and trends.
  4. Emerging Co-Living Market: Although still in its nascent stage, the co-living sector in Korea is set to expand. Operators are poised to capitalize on the overall shortage of living sector assets, offering innovative housing solutions that cater to the evolving needs of modern urban dwellers.
Co-Founder & Chief Editor - TravelDailyNews Media Network | + Articles

Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales. She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.

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