Korean Hotel Market Holds Vast Growth Potential Through Building Conversions

"The growth potential of the Korean hotel market is still limitless. Recently, the trend of converting existing buildings into hotels has become a new norm," said Jo Min-sook, Vice President for Accor's Korea operations.

Jo believes there is ample room for growth in the domestic hotel market, especially as the popularity of K-pop and Korean content has led to an increase in foreign tourists. Additionally, the movement towards hotel conversions is accelerating instead of building new hotels.

During a meeting on August 28 at the Pullman Ambassador Seoul Eastpool in Gwangjin-gu, Jo noted, "Typically, it takes about three to four years to acquire land, design, and construct a hotel. Recently, there has been a growing interest in conversions that allow for quicker commercialization."

However, not every building can be converted into a hotel. It must meet certain operational requirements, such as having service elevators and various facilities. Jo stated, "While there are buildings that are realistically feasible for conversion and those that are not, if the conditions are right, there is significant potential to expand branded hotels nationwide. The possibilities in the Korean market remain substantial."

Her optimism about the Korean hotel market is backed by over 30 years of experience in the field.

Jo entered the hotel industry in 1993, starting in sales and marketing before expanding into hotel operations. She has experience with Accor's economy, midscale, premium, and luxury brands, including Ibis, Novotel, Sofitel, and Pullman.

In 2011, she was selected for Accor's first general manager training program in Asia, where she received 18 months of training. She later served as the general manager of Ibis Ambassador Seoul Gangnam and oversaw the opening of Ibis Styles Ambassador Seoul Myeongdong. She also led the openings and initial operations of Novotel Ambassador Seoul Dongdaemun Hotel & Residence, Sofitel Ambassador Seoul Hotel & Serviced Residence, and Pullman Ambassador Seoul Eastpool.

Her background in sales and marketing continues to influence her management style.

Jo explained, "Those who have only worked in operations tend to focus on the guests who enter the hotel, but I have spent 12 years in sales attracting customers. I can see how to bring in guests and what the hotel should offer them."

After taking on her role in Korea, her first priority was to visit the field. In her first two and a half months, she visited all 27 Accor hotels in the country. She plans to continue visiting each hotel to assess operations and service quality.

"Guests pay to stay at hotels. They should receive services that match, or ideally exceed, the price they paid to encourage them to return. If quality is not maintained, no hotel can last long," she emphasized.

Jo's focus on the field is not about grand changes. For instance, instead of simply increasing the variety of breakfast items, she prefers to serve kimchi in Korean pottery and label chicken gangjeong as a 'Korean signature' dish. She believes it is more important for foreign guests trying Korean food for the first time to easily recognize and choose from the menu.

"I advise against just increasing the number of breakfast items. Changing the presentation can significantly alter how customers perceive it," she said, adding, "Ultimately, it comes down to details and communication."

When asked about Accor's competitive edge, Jo again pointed to the importance of field insights. She highlighted 'flexibility' as a key strength, explaining that while global brands have clear standards, they also provide operational know-how tailored to local markets and owners.

As the head of operations in Korea, she sees her role as facilitating rapid communication with owners and addressing their needs with headquarters as development increases in the country.

Jo identified 'polarization' and 'lifestyle' as the next changes in the domestic hotel market.

As labor costs and prices continue to rise, luxury hotels are expected to elevate both pricing and service, while the economy and midscale markets, which emphasize reasonable pricing, are likely to grow. In between, lifestyle brands that highlight regional and hotel uniqueness could create new demand.

"Recently, there has been a shift towards soft brands over standardized hard brands," Jo noted, suggesting that unique midscale lifestyle hotels could emerge in areas with distinct local characteristics like Seongsu, Hongdae, and Gangnam.

Accor's 'Handwritten Collection' aligns with this trend. Although it has not yet entered the Korean market, this midscale soft brand emphasizes individuality and personalized service at each hotel. Jo sees a strong potential for such brands to establish themselves in Korea.

The demand supporting the hotel market has also changed. With the global spread of K-content, perceptions of Korea abroad have shifted, according to Jo.

"In the past, when I mentioned I was from Korea at international events, the reactions were different than they are now. Post-COVID, many people say Korea is one of the countries they most want to visit," she said.

She added, "I truly feel that Korea's status has risen significantly," noting that Accor views Korea as a market with substantial growth potential. Currently, Accor operates 27 hotels in the country.

However, simply increasing the number of hotels does not equate to growth. Throughout the interview, Jo emphasized the importance of not only how many new hotels are opened but also how long and stably existing hotels are operated.

Similar considerations are present in the environmental sector. Accor is promoting the expansion of the 'Green Key' eco-certification for its hotels in Korea and is tracking energy and water usage through its 'Gaia' system. The data collected over time is used to identify energy-saving measures, and performance is reflected in general manager evaluations. The Pullman Ambassador Seoul Eastpool is also preparing a carbon-reducing menu.

However, Jo noted that it is not easy to directly apply the global headquarters' environmental standards to local hotels.

For instance, switching from plastic to glass bottles for in-room water requires facilities and space for washing the bottles. Hotels with many rooms face increased labor costs due to the need to collect hundreds or thousands of bottles daily.

"Sustainability is a priority for Accor, but considering Korea's labor costs and hotel structures, there are practical issues to address. We must continue to find methods that suit the Korean market," she said.

For Jo, the sustainability of hotels ultimately ties back to consistently delivering 'value for the price.'

"Novotel must be Novotel, and Ibis must be Ibis. There is no need for Ibis to provide luxury hotel services. However, the standards that match the brand and price must be maintained. If customers can affirm that the value matched the money they spent today, then it is a good hotel," she explained.

She also cautioned against excessive service. If a general manager raises service levels significantly while in charge, but the quality drops after they leave, it can lead to customer disappointment. In a context of rising labor and energy costs, maintaining profitability while consistently delivering the quality promised by the brand is more important.

"Field management comes first. There should be no over-service or service below standards. Regardless of who the general manager is, the quality of the hotel must be maintained," Jo stated.

Her concept of 'sustainability' also includes people. As hotels grow, opportunities for employees to advance arise, and paths for department heads to become general managers open up, according to her.

For Jo, who has risen from sales and marketing to general manager and now oversees operations in Korea, her career serves as a testament to this potential.

"I believe the Accor brand has nurtured me. Now, I want to pass on what I have learned to the next generation. My role is to ensure that hotels operate well for 10 or 20 years and that new general managers continue to emerge from within," she concluded.

Copyright ⓒ Aju Press All rights reserved.