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South Korean Hotel Rates Surge 43%

Alan Woinski
May 20th, 2024 at 7:27 AM EDT

Skift Take

In the first quarter of 2024, South Korea’s hotel industry saw significant growth in average daily rates and RevPAR, driven by key tourist destinations, but investment activity remained subdued despite limited future supply and expected continued success in luxury and upscale segments.

In the first quarter of 2024, South Korea’s average daily rates surged to KRW 214,177. That was up 43% from 2019. RevPAR was up 49% from the pre-pandemic days with occupancy rates up by 2 points. CBRE said they expect luxury and upscale hotel segments to be poised for continued success over the next six to 12 months with key tourist destinations such as downtown Seoul, Haeundae in Busan and Jeju Island expected to lead the group. CBRE said there is a limited supply in the pipeline for the next four years, something that will drive improved existing hotel performance. CBRE said that despite significant improvements in hotel performance, investment activity has remained subdued.

The Vietnam National Administration of Tourism said in the first quarter of 2024, Phu Quoc, known as Pearl Island, witnessed an increase in international tourist arrivals of over 200% compared to the same period last year. Tourists from Taiwan and South Korea were the main contributors. The number of international tourist arrivals into Phu Quoc was approximately 1.6 million, up 58.2%. That brings international arrivals for the first four months of the year to 6.2 million, up 68.3%. That is also up 3.9% compared to the same period in 2019. The vision of Pearl Island is to become one of the must-visit places for foreign visitors, comparable to travel paradises like Boracay, Bora Bora and the Maldives.

OYO will be refiling its IPO following years of trying to get this done. They are close to financing refinancing plans to raise up to US$450 million via sale of dollar bonds and then will refile for the IPO. JP Morgan is the lead banker for the refinancing with the dollar bonds expected to offer interest rates of 9% to 10% per year. OYO told SEBI to withdraw its current draft red herring prospectus and will refile an updated version of the DRHP after the bond issuance. The refinancing will extend the repayment timeline to five years, versus the repayment of the remaining TLB due in 2026 and lower the current effective interest rate of 14% on its existing US$450 million Term Loan B facility. OYO first filed preliminary documents with SEBI for a Rs 8,430 crore IPO back in September 2021 and has had many issues including having to drastically lower the valuation and expected pricing on the IPO.

IHG Hotels & Resorts announced it signed its first management contract in Japan with Kajima Corporation to open ANA Holiday Inn Resort Karuizawa in 2025. The agreement is the first step in a mid to long-term mutual development partnership in Japan between IHG and Kajima, a leading Japanese construction, civil engineering and real estate development company. ANA Holiday Inn Resort Karuizawa will be an all-season resort, an hour and a half away from Tokyo Station in a location at an altitude of 1,300 meters in the majestic Asama wilderness with 100 guest rooms, 2 pet-friendly villas, a restaurant, natural hot spring, gym, indoor swimming pool and other facilities. The property is currently operating as President Resort Karuizawa and will undergo an extensive renovation and reopen as ANA Holiday Inn Resort Karuizawa in the first quarter of 2025. This will be the 10th hotel in Japan under the Holiday Inn brand family and the fourth Holiday Inn Resort offering. It is also IHG’s second hotel in Karuizawa.

Langham Hospitality Group is set to double its Cordis Hotels & Resorts footprint in Jiangsu Province with the planned opening of a new hotel in the city of Kunshan. The Cordis, Kunshan, Xiajia River will be situated in the Xiajia River Science and Technology Innovation Corridor, a draw for both business and leisure travelers. The 285 key hotel is being developed by Kunshan Xincheng Development Construction Company, a subsidiary of Kunshan Guochuang Investment Group Company and will be the 10th Cordis Hotels & Resorts property in operation or development in Mainland China.

The Seoul, South Korea Metropolitan Government announced that, as part of an initiative to invigorate water activities along the river, the café located at the northern end of the Hangang Bridge will be renovated into a scenic hotel and officially open its doors on July 16. The café has been refurbished into a hotel featuring a single suite of 144.13 square meters, complete with a bedroom, living room and bathroom, accommodating up to four guests. Hotel reservations will be available through Airbnb with operations entrusted to Sanha HM, the company operating Ramada Hotels and Millitopia Hotels.

Red Planet Hotels plans to expand further its portfolio in the Philippines with the budget hotel brand looking into opening a new site annually in the country starting next year. Red Planet said they are looking at several prospective areas across the country including locations in the cities of Iloilo, Davao, Cagayan de Oro and Cebu. Red Planet hopes to open one hotel every year in the next three to five years. They announced the full opening of its largest hotel, the 245 room Red Planet BGC The Fort, will be on May 30, 2024. This will be the 14th Red Planet property in the Philippines. This hotel had a soft opening in December with 45 rooms and represents an investment of at least P500 million by the company. Red Planet is now controlled by Japanese developer Polaris Holdings Co Ltd. As for future locations in the Philippines, they are looking at city centers and island destinations in the Visayas and Mindanao and are studying the franchising option for its expansion plans. They also see significant opportunities in Davao and Cagayan de Oro as those areas lack established international budget hotel brand. Cebu is also another area of focus.

Accor’s TRIBE midscale brand will debut in New Zealand this summer with TRIBE Auckland Fort Street. The hotel will feature 60 guestrooms, a lobby bar and social hub for travelers and locals. This will be the brand’s first address in New Zealand, located just a stone’s throw from central Britomart and the Commercial Bay precinct. Accor is partnering with CP Group to introduce brand to the country.

Indian Hotels Company Ltd said they will remain on an expansion spree, expecting to open more than 50 hotels in the next two years. The company has crossed the milestone of a 300 plus hotel portfolio including all five brands. There are 218 hotels in operation and 92 in the pipeline. Last year they signed up 53 hotels and opening 20. This year they expect to open a minimum of 25 hotels and the year after, a minimum of 30. Hotel supply is expected to grow at a CAGR of 8% over the net three years to reach about 2.41 lakh rooms by FY2027, up from 1.88 lakh rooms in FY24. About 60% of the supply is likely to be in outside the top 10 destinations. IHCL also plans to introduce a new brand, a reimagined version of Gateway, which will be a full service hotel offering its new avatar in the upscale segment. The hotel brand will roll out with 15 hotels with the expectations that the portfolio will increase to 100 by 2030.

Lemon Tree Hotels announced its latest signing – Keys Lite by Lemon Tree Hotels, Somnath. The property shall be managed by Lemon Tree Hotels Limited and is expected to open in FY2025. The hotel will feature 52 rooms, a restaurant, meeting room and a banquet hall, located bout 57 kilometers from the Diu Airport. The hotel is owned by Shivdarsh Hospitality Private Limited.

Alan Woinski
May 20th, 2024 at 7:27 AM EDT

Companies: OYO Hotels, CBRE Hotels, Cordis, Holiday Inn, IHG Hotels & Resorts, Langham Hospitality Group, Lemon Tree Hotels, Ramada, Red Planet, The Indian Hotels Company Ltd, TRIBE

Locations: Cebu, India, Japan, Mindanao, Philippines, Phu Quoc, Seoul, South Korea, Taiwan, Tokyo

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