Korean cultural wave and China market drive tourism recovery

• Fuelled by global appetite for Korean cultural exports, international arrivals reached 12.38 million visitors as of August 2025, surpassing both the 2019 YTD and 2023 year-end records. This represents 16.0% y-o-y growth and is 7.9% higher than the 2019 record.
• Visitors from mainland China demonstrated strong momentum with 17.3% y-o-y growth as of YTD August 2025, representing 30.2% of total visitation and signalling robust recovery in this critical source market. Though still below 2019 levels, relaxed visa policies are expected to drive the much-anticipated recovery.

New 5-star hotel supply enters the market, while upscale to midscale development remains subdued

• The 564-key Westin Seoul Parnas–formerly the Coex InterContinental–successfully opened in Q3 2025. Another notable opening is the 150-key Pullman Ambassador Seoul Eastpole.
• Upscale to midscale hotels planned for 2025, like the L7 Cheongnyangni (260 rooms), have postponed openings, creating a severe supply-demand imbalance that creates favourable conditions for existing assets.

A confluence of favourable market forces underpins performance growth

• The Midscale & Economy segment achieved a strong RevPAR growth y-o-y, driven by ADR increases. Recent Airbnb restrictions are channelling visitors back to traditional accommodations.
• The Luxury & Upper Upscale segment recorded a 9.9% increase in RevPAR, marking another record-breaking year. Favourable supply-demand conditions are expected to sustain momentum throughout 2025.

Outlook: A strong pipeline of large master-leased properties is expected to lead transaction volume

• The fourth quarter of 2025 expects domestic LP activity for master-leased assets (Four Points Myeongdong, Shilla Stay Seodaemun, Courtyard Namdaemun), though deals may be delayed to 2026 amid tight funding schedules.
• Strategic value-add transactions remain scarce. A notable exception was CapitaLand’s acquisition of the 161-key Connoisseur Residence, which is planned to be converted to Oakwood in Q1 2026.