APPD Market Report Article


August 26, 2022

Mike Batchelor, CEO - Hotels & Hospitality Group, Asia


KRW 128,898


Arrivals slow but show steady recovery

  • International visitor arrivals registered 69.7% y-o-y growth as of YTD May 2022 with 582,459 arrivals. The growth is mainly driven by the easing of border restrictions and social distancing regulations. With the popularisation of Korean culture and K-pop, South Korea will likely draw visitors from diverse source markets along with increasing numbers of business visitors.
  • During the COVID-19 pandemic and amid travelling restrictions, the Seoul hotel market has benefited from domestic travellers, which is likely to remain the key driver for 2022. With the increasing demand for staycations, luxury hotels have kept a high profile and are easing into recovery.

Conversion of existing supply with the opening of upscale hotels

  • Hotel openings have remained limited over the past two years due to pandemic uncertainty. This will likely continue to moderate supply growth, while recovery is expected to be led primarily by upper upscale and luxury hotels, such as Voco Seoul Gangnam.
  • The conversion and redevelopment of hotels have decreased existing stock, resulting in a favourable supply and demand dynamic. Prima Hotel and GLAD Live Gangnam Hotel were transacted in the second quarter of 2022 for alternative use.

Strong recovery of midscale hotels followed by luxury hotels

  • Revenue per available room (RevPAR) of midscale and economy hotels in Seoul recovered to KRW 29,845 as of YTD June 2022, a 123.7% increase from the same quarter last year. In addition, the RevPAR of luxury and upper upscale hotels has increased to KRW 128,898, recovering to 82.8% when compared to 2019 levels.
  • The rapid recovery is driven by strong occupancy growth, with occupancy for midscale and economy hotels increasing by 68.5%, and by 50.1% for luxury and upper upscale hotels. The average daily rates (ADRs) have also recovered to KRW 60,650 and KRW 277,883 respectively, showing growth of 32.8% and 11.3% when compared to 2021 levels.

Outlook: Recovery expected with the easing of restrictions

  • As of June 2022, the government has exempted travellers visiting South Korea from quarantine regardless of vaccination status. With the easing of social restrictions and the increasing interest to visit for both leisure and business purposes, South Korea is anticipating a consistent recovery throughout the year.
  • Both occupancy and ADR have showed signs of improvement during 2Q22. Recovery is anticipated to be driven by domestic visitors, arrivals from neighbouring countries and the United States. Full recovery, however, will likely take some time as demand from Mainland China remains uncertain due to its zero-COVID policy.

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

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