Seoul’s new hotel supply pipeline remains muted

There were only 1,058 rooms completed in the first nine months of 2023.

No new hotels entered the market in 3Q23. JLL revealed that in the first nine months of 2023, a total of 1,058 rooms opened in and around Seoul. While the traditional hotel supply remained low, the co-living market experienced growth.

In August, NouDit Hongdae, a 276-room co-living space, opened its doors, indicating a growing interest in communal living options in Seoul.

Here’s more from JLL:

Before the end of 2023, the 1,275-room Inspire Entertainment Resort & Casino is set to enter the market. It aims to cater to the return of Chinese group travellers and capitalise on the growing popularity of Hallyu.

Nonetheless, the pipeline of new hotels within Seoul proper remains very limited, thus making the supply-demand dynamic very favourable for the near term.

RevPAR growth continues to show a robust recovery

The Luxury hotel market in Seoul has defied expectations, showing a consistent upward trajectory in revenue per available room (RevPAR). As of YTD September 2023, Seoul’s Luxury & Upper Upscale segment was at an all-time high, with an increase of 48.6% y-o-y to KRW 235,800. This growth was supported by elevated average daily rate (ADR) and occupancy levels of 342,495 KRW and 68.8%, respectively.

Midscale & Economy segment also showed stronger growth of 103.5% y-o-y to KRW 73,581, and has now recovered to almost reach pre-pandemic levels. The occupancy rate of the Midscale & Economy segment has increased by 19.2 percentage points, and the ADR has recovered to KRW 98,348 (51.3% higher) compared to 2022.

Outlook: Despite headwinds, the market captures a unique opportunity

In the short term, the hotel market in Seoul is expected to sustain its growth trajectory; however, in the medium to long term, the growth rate is anticipated to moderate due to the entry of new supply, which primarily focuses on the Luxury segment.

Recent transactions, including Nine Tree Premier Myeongdong 2 and Nine Tree Dongdaemun, have showcased robust investment momentum by strategic investors in South Korea’s hotel market. This resurgence is supported by improved trading performance and a positive outlook for the post-pandemic tourism industry.

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

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