Korea's Lodging Industry

Abstract

Even before the nation's currency crisis, Korea's hotel and tourism industry faced challenges despite its strengths. Increases in international arrivals are offset by a shortage of rooms. Land costs inhibit development of new hotels at the same time that investment in other forms of commercial real estate are more attractive than hotels. Labor costs have escalated at a rate greater than that experienced by many of Korea's trade partners and competitors. Hotel investors in Korea may find opportunity in mid-price hotels. Other product segments currently missing from the Korean market are extended-stay and budget properties. Another intriguing area of development is condominiums, which appear to be more profitable to investors than transient hotels.