[At the Brink Hotel] Sharp Decline in Customers Due to COVID-19... From Wage Cuts to Unpaid Leave

Sharp Drop in Room Occupancy and Reservations
Self-initiated Wage Cuts and Other Self-Help Measures
Double Hardship Including Temporary Closure Due to Confirmed Case Visits

The arrival hall at Terminal 1 of Incheon International Airport is quiet on the 3rd, as the number of countries banning or restricting entry of people who have visited or transited through South Korea due to the spread of COVID-19 is increasing. Photo by Moon Honam munonam@

[Asia Economy Reporter Seungjin Lee] The hotel industry is staggering due to the impact of the novel coronavirus infection (COVID-19). With a sharp decline in tourists and a stagnant domestic economy, many hotels are experiencing empty rooms. In response, some hotels have taken self-help measures, such as executives voluntarily cutting their salaries.

According to the hotel industry on the 4th, Lotte Hotel Executive reportedly discussed the option of closing for the entire month of March. Due to continued poor business caused by COVID-19, they considered extraordinary measures. The recent room occupancy rate at Executive is about 10%, far below the average occupancy rate of 50-60%.

Earlier, from January 23 to February 17, when COVID-19 began to spread in earnest, Lotte Hotel experienced 50,000 room cancellations across 30 domestic and international hotels. In this situation, Lotte Hotel executives voluntarily returned 10% of their salaries for three months to share the pain. Additionally, Lotte Hotel encouraged all employees to take unpaid leave on a weekly basis between March and April.

On the 3rd, a securities industry information report (commonly called "Jirasi") circulated, claiming that a famous domestic luxury hotel had uniformly cut basic salaries for all employees and recommended the use of personal annual leave. The recent room occupancy rate of the hotel was around 30%, reportedly about a 50% decrease compared to last year.

Regarding this, the hotel side explained, "The related content seems to have been mentioned during a meeting discussing cost-cutting measures," adding, "There is absolutely no possibility of implementation, but it seems the difficult situation in the industry has been somewhat distorted."

Moreover, the hotel industry is facing a double hardship not only from the decrease in customers but also from business suspensions due to visits by confirmed COVID-19 patients. The President Hotel in Jung-gu, Seoul, suffered losses exceeding 1 billion KRW after closing its lodging and food and beverage operations for 10 days following a confirmed COVID-19 case last month. Shilla Stay Haeundae also temporarily closed for three days, reportedly incurring significant sales losses.

The pain in the hotel industry is expected to continue for the time being. According to the Ministry of Foreign Affairs on the 3rd, as of 9 a.m. that day, a total of 87 countries had banned or restricted entry of visitors from Korea. Asian countries with significant exchanges with Korea, such as Malaysia, Mongolia, Vietnam, Singapore, Japan, the Philippines, and Hong Kong, also imposed entry bans on Koreans.

Additionally, the number of Chinese tourists, who account for 20-30% of hotel guests, has sharply declined. The maximum daily average number of Chinese arrivals in January this year reached 18,743, but on the 27th of last month, it dropped 94% to 1,093.

This content was produced with the assistance of AI translation services.