Improved Q4 Performance in Seoul's Accommodation Sector Year-on-Year, with Slower Growth Anticipated in Q1 Due to Seasonal Trends

Yanolja Research (Director Jang Soo-chung) announced its ‘Q4 2023 Domestic Accommodation Industry Trends Report’ on the 31st, analyzing market trends in domestic hotels, motels, pensions, and the 2023 inbound tourism market for the period from October to December.

According to a comprehensive analysis of Yanolja platform data and survey results, Revenue per Available Room (RevPAR) in most accommodation types, including hotels and motels, increased in Q4 2023 compared to the same period in 2022. However, for resorts, while Occupancy Rate (OCC) declined compared to Q4 2022, a significant rise in Average Daily Rate (ADR) led to an approximate 7% increase in RevPAR. On the other hand, pensions saw an increase in ADR during the same period, but a sharp drop in OCC resulted in a 2% decrease in RevPAR.

Year-on-Year Changes in ADR, OCC, and RevPAR by Accommodation Type (Q4 2022 vs. Q4 2023)

Performance of Hotels in Q4 2023 Varied by Region Compared to Q4 2022. Seoul showed the highest growth in performance compared to the same period in the previous year, with ADR (Average Daily Rate), OCC (Occupancy Rate), and RevPAR (Revenue per Available Room) increasing across 1- to 4-star hotels. In contrast, Gangwon experienced a decline in RevPAR across all hotel star categories, with a notable 10.7% decrease in 4-star hotels. Similarly, Jeju saw deteriorating performance in both hotels and pensions. This decline is attributed to the increase in outbound travel by domestic tourists, leading to decreased demand for alternative domestic destinations such as Jeju and Gangwon.

According to the report, the Q4 Accommodation Industry Current Index for hotel ADR increased by 14 points from the previous quarter to 114.2, while the OCC index rose by 10.7 points to 110.8. For motels, the ADR index fell by 2.8 points to 97.2, and the OCC index declined by 5.4 points to 94.5. Yanolja Research also presented the Accommodation Industry Outlook Index for Q1 2024, forecasting a slowdown in the accommodation industry following the end of the peak travel season in Q3 and the year-end holiday period. The outlook indices for hotel ADR and OCC stand at 81.7 and 80.1, respectively, while those for motels are at 87.7 and 81.7.

The Accommodation Industry Current Index measures the revenue and market sentiment of the past three months compared to the same period in the previous year, while the Outlook Index predicts revenue and market sentiment for the upcoming three months. An index value above 100 indicates that more businesses reported an improvement, while a value below 100 indicates the opposite. Additionally, the report analyzed the status and travel patterns of inbound foreign tourists in 2023, reflecting the steady increase in their numbers following the easing of COVID-19 restrictions. However, the recovery rate remains at only 62.3% of the pre-pandemic level in 2019. Notably, despite the Chinese government allowing group travel to South Korea last year, the recovery rate of Chinese tourists was limited to approximately 30% due to China’s economic slowdown, significantly affecting the overall recovery rate.

The pandemic also brought changes to foreign tourists' consumption patterns. Large shopping malls have emerged as popular destinations for Millennial and Gen Z tourists, leading to increased spending in these venues, while spending at duty-free shops has significantly decreased. Furthermore, the sharp rise in hotel ADR has increased accommodation costs, prompting tourists to opt for more affordable lodging options. Despite these changes, foreign tourists continued to focus primarily on the Seoul metropolitan area for their visits.

Yanolja Research emphasized that to revitalize inbound tourism, it is essential to provide convenient transportation, including direct international flights, to major regional tourist hubs. Additionally, differentiated marketing efforts should focus on developing diverse, experiential tourism products to encourage foreign tourists to explore regions beyond the capital.