May 16, 2014 13:25
Seoul is experiencing an unprecedented boom in new luxury hotels. Four more "super deluxe" or five-plus-star hotels will be built by 2016, and overall 119 more hotels by 2018.
Seoul now has 204 hotels, but that is not enough for the booming tourist trade. Opinions are divided whether these luxury hotels will prove the cash cow the investors are hoping for.
◆ 4 Luxury Hotels
Four luxury hotels that are either being built or in planning. Mirae Asset Financial Group plans to complete the construction of the Four Seasons Hotel in the heart of Gwanghwamun in downtown Seoul by May next year. The hotel will have seven underground level floors and 25 above ground.
Grand Intercontinental Seoul Parnas Hotel, whose main shareholder is GS Engineering and Construction, is currently building another luxurious hotel, adding to a portfolio that already includes the Grand InterContinental Seoul and InterContinental Seoul Coex.
Lotte Group is building the 123-storey Lotte World Tower due to be complete by the end of 2016, and part of the tower from the 76th to the 101st floor will be a hotel. The company is also embarking on complete renovation of Lotte Hotel in Sogong-dong in downtown Seoul in the latter half of this year or early next year.
The Ambassador Hotel Group has plans to build three deluxe hotels in Yongsan, central Seoul by April 2017. At this rate, the number of super deluxe hotels in Seoul may jump from current 23 to over 30 by 2017.
◆ Room Shortage
There has been a huge surge in the number of foreign tourists in Korea in recent years. The number of foreign tourists rose from 5.32 million in 2000 to 12.20 million in 2013, but the number of hotel rooms in Seoul rose only by 33 percent, from 23,644 to 31,556.
This shortage will continue for some time, according to a government forecast. Kwon Tae-il at the Korea Culture and Tourism Institute said, "If we assume that 2.2 people stay in one bedroom and the average duration of a stay is 5.7 days, the capital is 4,000 guest rooms a year short. The number of tourists is expected to exceed 16 million by 2017, which would lead to a shortage of 7,400 rooms.
The Korea Tourism Organization conducted a survey of tourism operators in Korea in 2012, and the majority said they have missed out on bookings because they were unable to secure hotel rooms.
◆ Oversupply Fears
However, industry insiders say that saturation point has already been reached and the government is being overly optimistic.
"It's true that we had shortage of rooms until the first half of 2012 as we rarely had any vacant rooms, but currently only about 70 percent of the rooms are booked," one luxury hotel operator said. "Things may be different from one hotel to another, but the peak has definitely passed."
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