Samjong KPMG: Domestic Hotels Show Stable Growth Amid Surge in Tourists

'Hotel Industry at a Turning Point' Report Released
Ten Major Trends in the Domestic Hotel Market Outlined

The domestic hotel industry has shown steady growth recently, driven by an increase in inbound tourists. However, the recovery of employment has been somewhat delayed, which has been attributed to the digitalization and automation of hotel services, as well as a worsening labor shortage.

On July 21, Samjong KPMG released a report titled "Hotel Industry at a Turning Point: Business Trends and Growth Strategies," outlining these findings. According to Statistics Korea, as of 2023, both the revenue and the number of businesses in the tourism hotel sector have shown a clear recovery since the COVID-19 pandemic.

The report stated, "With Korea's rising status as a tourism hub in Asia, the spread of K-culture, and increased demand for luxury hotels centered in Seoul and Busan, global hotel chains are actively entering the domestic market. The entry of major brands from luxury hotel companies such as Rosewood Hotel & Resort and Aman Group is expected to change the competitive landscape of the domestic hotel market."

Samjong KPMG identified ten major trends in the domestic hotel market: multi-brand strategies, expansion into regional areas, brand repositioning, accelerated overseas expansion, entry into senior residences, intensifying competition among hotel restaurants, expansion of private brand (PB) businesses, strengthening of hotel membership services, differentiation of room products, and digital innovation.

Domestic hotel companies are pursuing both operational efficiency and profitability through multi-brand strategies focused on business hotels, while increasing market dominance by targeting a diverse customer base and expanding their brand portfolios. The demand for luxury hotels, once concentrated in Seoul, is now spreading to regional cities. The increase in both tourist and domestic travel demand is driving more hotel openings in major regional cities.

Aging hotels are pursuing brand transformation through facility improvements and partnerships with global chains, thereby strengthening their premium positioning and brand competitiveness. In addition, domestic hotel companies are expanding overseas based on their brand recognition. There is a noticeable trend of building global networks through management contracts and franchise models.

With the advent of a super-aged society, the hotel industry is focusing on senior residences as a new source of revenue. By combining hotel services with senior-friendly residential spaces in a long-term rental model, they expect to generate stable income. At the same time, the premiumization of hotel restaurants is accelerating, with differentiated food and beverage offerings and collaborations with chef brands emerging as key competitive factors.

There is also active development of private brand (PB) amenities and food and beverage products utilizing hotel brands. Expanding sales channels through subscription services and entry into e-commerce platforms is contributing to additional revenue streams. Through membership programs that offer point accumulation and exclusive benefits, hotels are enhancing personalized services for loyal customers and boosting brand loyalty.

To meet the segmented needs of customers visiting hotels with pets or children, hotels are expanding their customer base through brand collaborations and event partnerships. The adoption of digital technologies such as artificial intelligence (AI) and kiosks is improving operational efficiency, while digital transformation (DX) is rapidly spreading throughout the hotel industry.

The report emphasized that, going forward, hotel companies must actively seek strategies for expanding their domestic base by securing key regional locations and for entering global markets, including emerging economies. It also identified collaboration with related industries based on hospitality services, as well as technology-driven automation and DX strategies, as core tasks for enhancing profitability.

In particular, as customer expectations become more sophisticated and the criteria for choosing hotels shift from simple price to the quality of experience, the report suggested that developing differentiated concepts based on customer segmentation is essential.

Seo Gwangdeok, Executive Director of Real Estate Advisory at Samjong KPMG, stated, "As the growth potential of the domestic hotel market is highly regarded, investment capital is flowing in, and new brands from global chain hotels are entering the market. The domestic hotel market has already moved past the growth stage and is entering a period of maturity. Hotel companies need to pursue sustainable growth strategies by exploring new markets and diversifying their businesses in ways that create synergy with their core operations."

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