Jeju Accommodation Businesses, Flooded with Last-Minute Discount Listings

Tourism Industry in Tears as Oversupply and COVID-19 Lead to Sharp Decline in Visitors
Q1 Sales Volume Doubled Year-on-Year
But Price per 3.3㎡ Dropped by 20%

[Asia Economy Reporter Onyu Lim] As the novel coronavirus infection (COVID-19) struck the tourism industry in Jeju, the transaction prices of accommodation facilities in the region have dropped by as much as 20%. The tourism industry, which had barely shown signs of recovery after the Terminal High Altitude Area Defense (THAAD) incident, has been hit hard by COVID-19, leading to a surge in "fire sale" listings.

According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on the 27th, the total number of sales transactions for accommodation facilities such as hotels, motels, and pensions in Jeju during the first quarter of this year was 297. This is nearly double the 151 transactions recorded in the same period last year. In March alone, 110 accommodation facilities were traded, an increase of 50 compared to the same period last year. Since the real estate transaction reporting period is within 30 days, the actual number of transactions is expected to be higher.

While increased real estate transactions usually indicate a market boom, the situation in Jeju is different. The average sale price per 3.3㎡ in the first quarter was 11.16 million KRW, a 20% decrease from 13.91 million KRW during the same period last year. Experts interpret the surge in transaction volume alongside falling prices as a sign that discounted sales are being cleared. With the chronic problem of oversupply of rooms and a sharp decline in tourists due to COVID-19, there has been an increase in cases where small and medium-sized accommodation businesses, unable to endure financial difficulties, have given up operations.

A representative from real estate agency A, specializing in guesthouses and pensions in Jeju, said, "Even before COVID-19, there were many establishments with low occupancy rates due to the oversupply of rooms in Jeju." He added, "Recently, with the tourism industry stagnating due to strict social distancing measures, some land intended for building pensions is being offered at half the market price."

In particular, as visits from Chinese and domestic tourists dried up, the number of tourists in Jeju in March, which used to range between 30,000 and 40,000, dropped to the 10,000 range. According to the "Survey on the Perceptions of Small Business Owners in Jeju due to COVID-19" conducted by the Jeju Research Institute through the Jeju Data Center, 79.8% experienced a decrease in sales, and sectors such as travel businesses (41.4%), accommodation and food services (39.3%), and construction (34.9%) implemented layoffs and unpaid leave.

The decline in the value of accommodation facilities in Jeju is also evident in the auction market. On the 20th, a large 14-story hotel in Samdo 1-dong, Jeju City, located 10 minutes from Jeju Airport, was sold at 2.95 billion KRW, about half of its appraised value of 5.60223 billion KRW. According to Gigi Auction, the bid-to-appraisal ratio for Jeju accommodation facilities in March was only 49.23%.

Researcher Hyuntaek Jo from the Commercial Information Research Institute said, "Although there are differences depending on size and location, the recent sharp decline in domestic and foreign tourists in Jeju due to the spread of COVID-19 has been a major factor in the decline in the value of accommodation facilities." He added, "Although COVID-19 is stabilizing, foreign tourists have not returned, so the accommodation market is expected to maintain a depressed atmosphere."

Asia Economy DB (Photo unrelated to the article)

However, the number of accommodation facility sales transactions nationwide in the first quarter was 1,741, about 100 fewer than the 1,886 transactions in the same period last year, but it is expected to reach a similar level by the end of this month when the real transaction reporting period for March contracts ends. The average sale price per 3.3㎡ was 11.19 million KRW, slightly up from 10.89 million KRW during the same period last year.

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