Jeju and Gangwon Hotels Bustling... Restructuring Storm Hits the Capital Area

Major Hotels in the Seoul Metropolitan Area Devastated by COVID-19
Regional Areas Attracting Domestic Travelers Show Stark Contrast

Millennium Hilton Plans to Cut 90 Employees
Labor-Management Conflicts Escalate, Making Business Recovery Difficult

Paradise City Implements Large-Scale Voluntary Retirement
Emergency Management Due to Loss of Key Casino Customers
20% of Executives to Step Down

[Asia Economy Reporter Seungjin Lee] Major hotels in the Seoul metropolitan area, hit hard by the novel coronavirus disease (COVID-19), are facing a wave of restructuring. This is in stark contrast to major tourist destinations such as Jeju and Gangwon-do, where a lodging crisis is unfolding due to an influx of vacationers during the summer holiday season.

According to the hotel industry on the 17th, the Millennium Hilton Seoul is experiencing intensified labor-management conflicts over restructuring. Hilton hotel employees have shared the pain by taking paid leave with 70% of their salary since March as hotel revenues worsened due to COVID-19. However, as the pandemic prolonged and the hotel business rapidly froze, the hotel management proposed a plan to reduce 90 staff members to the union.

The hotel management stated that the workforce reduction plan is one of the cost-cutting measures due to deteriorating business conditions but is not finalized. However, the union, which participated in business normalization by proposing a wage freeze, is protesting that the management is irresponsibly shifting the consequences of poor management onto employees, deepening the conflict between the two sides.

Paradise City in Incheon, which operates hotels and casinos, is also conducting large-scale voluntary retirements. Paradise City, where foreign casinos account for most of the revenue, has suffered prolonged business deterioration as foreign tourists have completely stopped visiting due to COVID-19. Paradise City has also closed the Artparadiso building, which consists of 58 suites along with a spa, club, and theme park.

Accordingly, Paradise Group, which operates Paradise City, entered an emergency management system starting this month. The measures include ▲ 20% of executives stepping down ▲ expansion of paid and unpaid leave for all employees ▲ long-term unpaid leave at Paradise City.

The situation is similar for major luxury hotels in Seoul. More than half of their guests are overseas MICE (Meetings, Incentives, Conferences, and Exhibitions) groups or foreign tourists, but visits have sharply declined due to COVID-19.

Hanwha Hotels & Resorts, which operates The Plaza Hotel, continues paid leave implemented in March without a specific plan for termination. Due to COVID-19, the average room occupancy rate at The Plaza Hotel dropped to 20-30% in March, and paid leave was offered only to willing employees. Executives also decided to forgo 20% of their base salary and managerial allowances for general managers and team leaders for three months.

Hotel Lotte and Hotel Shilla, representative luxury hotels in Korea, have also been implementing paid leave for several months. Although hotels in Jeju have reservation rates exceeding 90% in July and August, Seoul has not recovered from the COVID-19 impact, with occupancy rates dropping more than 40% compared to last year. Hotel Lotte implemented voluntary retirement last month targeting employees aged 58 and older who are entering the wage peak system.

A representative of a luxury hotel in Seoul explained, "Since February this year, foreign guests have been almost zero," adding, "Some Seoul hotels with outdoor swimming pools are seeing increased domestic demand during the vacation season, but others are almost in a state of temporary closure."

On the other hand, major tourist destinations such as Jeju and Gangwon-do are experiencing a lodging crisis due to an influx of vacationers. Luxury hotels in Jeju have fully booked weekend rooms through the end of August. Lotte Resort Sokcho's average weekend reservation rate in July exceeded 90%. Despite accommodation rates increasing by more than 30% during the peak season, vacationers are unable to find available rooms.

As major tourist destinations and metropolitan hotels face polar opposite situations, metropolitan hotels are striving to attract even staycation customers.

The Plaza Hotel introduced a '24-Hour Free Pass' package that allows check-in at any desired time and check-out 24 hours later. Unlike the usual check-in at 2 PM and check-out at 11 AM the next day, this package allows guests to check out at the same time they checked in, even if they check in late at night, enabling full use of 24 hours. Hotel Shilla also launched a similar 'Suite Honeymoon' package.

Earlier, InterContinental Seoul COEX Hotel became the first 5-star hotel to sell accommodation vouchers through home shopping. This measure was taken based on the judgment that the hotel’s survival itself is at risk and there is no room to consider brand image.

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