For this week′s Industry Insight we delve
into Korea′s hotel industry. World famous hotel chains may have an edge
in Seoul when it comes to brand recognition, but when it comes to customer preference,
the winner is not an international franchise. And as our Song Ji-sun tells us,… there′s
a new trend toward diversification in the industry that′s helping local chains weather
unexpected changes. Korea has its fair share of global luxury
hotels. But when it comes to selecting a venue for
celebrity weddings or hosting VIPs,… it′s the local chains that shine.
In the latest survey on preferred hotel brands, local chains like Shilla and Lotte came out
on top over internationally renowned brands. ″The service standards set by global brands
may not necessarily reflect the unique service expectation and culture of the local users.
On the other hand, local brands like Shilla and Lotte have spent many years researching
the specific needs and preferences of Korean guests and fine-tuning the products to their
needs.″ Domestic hotel chains also have an advantage
when it comes to revamping their facilities. They have a proven revenue stream that′s
separate from the hospitality side of the business. ″Korean hotels may be better known for hosting
VIP guests, including foreign leaders,… and providing the venues for celebrity weddings,
but the big money doesn′t come from the room rates or from the high-profile functions.
Most of their revenue actually comes from their duty-free businesses.″
Lotte and Shilla dominate the local duty-free market… and they are also expanding overseas
to airports in Singapore and Guam. They′ve also been quick to get a jump on
a different segment of the local hotel market. The two domestic chains are building new mid-range
and business hotels… catering to visitors seeking budget rooms with quality services.
And given that Korea′s hotel industry is expanding by the year especially with the
rapid rise in the number of Chinese tourists to Korea the hotel room supply is expected
to fall short of demand… especially in the capital.
Experts say these moves to diversify are helping the industry become more resilient,… but
they also point out that the local chains must prepare for changes in the market,…
like the recent drop in the number of Japanese tourists to Korea on the back of the weak
yen. They encourage hotels to devise strategies
for attracting visitors from a variety of countries to mitigate the volatility in the
industry. Song Ji-sun, Arirang News.