APPD Market Report Article


May 31, 2022


KRW 105,930


Visitation is recovering and domestic demand remains strong

  • As South Korea resumed travel without quarantine in April, we anticipate international visitation to quickly recover; however, with the delayed return of visitation from Mainland China — one of the most important source markets for Korea — we anticipate full recovery to pre-COVID-19 levels to be prolonged.
  • Domestic travel demand has also remained strong, driven by pent-up leisure demand. While demand remains well below pre-COVID-19 levels, the South Korean government has eased quarantine requirements, group restrictions, and the mask mandate in outdoor settings, signalling the start of a post-COVID-19 recovery.

Subdued pipeline will create a favourable supply-demand dynamic

  • Hotel supply growth has slowed in recent years, as most hotels transacted in 2020 and 2021 are taken off the market for redevelopment or alternative-use conversions. Further, new hotels opening in 2022 remain limited, with few notable openings MGallery by Sofitel Mapo, Voco Seoul Gangnam, and Moxy & Le Meridien Myeongdong.
  • The subdued supply growth and recovering demand are anticipated to create a favourable supply and demand dynamic in the near term, further expediting a recovery of the hospitality sector.

Luxury hotels outpace midscale hotels in recovery

  • Revenue per available room (RevPAR) of luxury & upper-upscale hotels in Seoul recovered to KRW 105,930 as of YTD March 2022, a 59.1% increase from the same time last year.
  • The rapid recovery is driven by strong average daily rate (ADR) growth, as ADR has increased by 11.3%. Occupancy has also recovered to 38.8%, implying 11.4 percentage points growth compared to 2021 levels.

Outlook: Global interest to fuel recovery

  • The industry’s resiliency has enabled a ‘reset’ which will poise the sector for a strong recovery. The pent-up demand and rising popularity of Hallyu is anticipated to attract visitors from more diverse source markets.
  • The favorable supply and demand balance created by the reduction in supply through alternative-use conversion during COVID-19, along with the recovery of international visitation and corporate travel is anticipated to fuel South Korea’s post-COVID-19 recovery.

Note: Seoul Hotels refers to Seoul's luxury and upper upscale hotel market.

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