Performance Recovery of 3-Star Hotels and Above

Expectations Rise for Q2 Hospitality Performance with Increased Chinese Tourists

Yanolja Research (Director: Jang Soo-cheong) released the "2024 Q1 Domestic Hospitality Industry Trends Report" on the 7th, analyzing the performance trends of hotels, motels, pensions, and shared accommodations in Korea from January to March. According to the institute's "Hospitality Industry Outlook Index," based on a proprietary survey of accommodation owners, combined with data from the Yanolja platform and AirDNA, all key performance metrics—ADR (Average Daily Rate), OCC (Occupancy Rate), and RevPAR (Revenue Per Available Room)—improved compared to the same period last year, excluding pensions. Specifically, RevPAR for hotels and resorts increased by 7.7% year-on-year in Q1 2024.

Breaking down the details, motel RevPAR grew by 4.1%, while hotels rated below 2 stars recorded a growth rate of 3.4%. However, when considering the inflation rate of 3.6% in 2023, the real increase in RevPAR for these categories was not significant. In contrast, 3-star hotels recorded an 8.5% increase in RevPAR, 4-star hotels saw a 7.5% rise, and 5-star hotels achieved a 5.9% increase, demonstrating a stronger performance and real growth among higher-end hotels.

Segments facing challenges included resorts, pensions, and shared accommodations. All three saw a decline in OCC compared to the same period last year. Although these segments raised room rates to maintain RevPAR, pensions were the only segment to experience a year-on-year decrease in RevPAR (-0.8%).

Year-on-Year (2023 Q1 vs. 2024 Q1) Changes in ADR/OCC/RevPAR by Accommodation Type

RevPAR performance in Seoul and Jeju showed noticeable improvement compared to the same period last year. In particular, hotels rated 3 stars or higher and motels in both regions, as well as shared accommodations in Seoul, outperformed the national average growth rates. This is attributed to a substantial increase in inbound tourist demand during the same period.

On the other hand, the growth rate of shared accommodations in Jeju lagged behind the national average, while Jeju pensions recorded disappointing results with a -8.0% decrease in RevPAR.

Year-on-Year (2023 Q1 vs. 2024 Q1) Changes in RevPAR by Accommodation Type in Nationwide, Seoul, and Jeju

When compared to the previous quarter (Q4 2023), all segments of the hospitality industry experienced a decline in performance. This decline is attributed to the end of the year-end peak season and the increasing trend of outbound travel among domestic tourists.

However, an increase in demand for 1- and 2-star hotels and motels in non-metropolitan regions was observed in March. This rise is believed to be partly driven by the "Accommodation Sale Festa" promotion targeting non-metropolitan areas.

Quarter-on-Quarter (2023 Q4 vs. 2024 Q1) Changes in ADR/OCC/RevPAR by Accommodation Type

According to a survey conducted among hotel and motel owners regarding their outlook for Q2 2024 compared to Q1 2024, the industry anticipates increases in both ADR and OCC during the upcoming quarter.

A representative from Yanolja Research stated, "As the industry moves past Q1, a traditionally low travel season, March saw a rising trend of Chinese tourists visiting South Korea. Considering the Golden Week holiday in China during Q2, the number of inbound tourists, led by Chinese visitors, is expected to increase significantly."

They added, “In addition, domestic spring travel trends, along with the activation of regional festivals and other outdoor events in Q2, are likely to contribute to an overall improvement in the hospitality industry's performance compared to Q1.”

Lodging Industry Outlook Index: Year-on-Year (2023 Q1 vs. 2024 Q1) ADR/OCC Assessment