Foreign Tourist Arrivals Near 20 Million as Shared Accommodations Gain Popularity

The number of foreign tourists visiting South Korea is rapidly increasing. In the first half of this year, foreign tourist arrivals rose by 21% compared to the same period last year, raising expectations for surpassing 20 million annually. The government aims to further increase this number to 30 million and 40 million. However, experts point out that addressing the shortage of accommodation facilities is essential for attracting more tourists.

With the challenge of rapidly increasing large-scale hotel accommodations, utilizing vacant residential spaces for 'shared accommodations' is being considered as a viable alternative. Shared accommodations are also gaining attention as a new source of income, appealing to both working professionals seeking side jobs and seniors preparing for a second career after retirement.

According to the Korea Hotel Association, there are about 60,000 hotel rooms in Seoul. The tourism industry estimates that to accommodate 20 million foreign tourists annually, approximately 100,000 hotel rooms are needed in the city. While the average occupancy rate has exceeded 85%, new hotel supply remains around 1,000 rooms per year. Given that it typically takes about five years to build a new hotel, it is challenging to meet the rising accommodation demand solely through hotels.

In contrast, shared accommodations can be supplied within a month without the need for large capital investments.

Research has also revealed that travelers have faced difficulties during the accommodation booking process. A report titled 'Exploring Every Corner of Korea' by Airbnb, based on a survey of 1,000 individuals aged 20 to 50, found that 87.5% of travelers considered 'overall accommodation conditions' as the most important factor when planning their trips. However, 92.5% reported experiencing difficulties during the booking process, leading 17.8% to shorten their itineraries and 10.2% to postpone or cancel their trips altogether.

Among shared accommodation users, the top reason for choosing this option was 'reasonable prices compared to similar conditions' (59.2%). Notably, 63.2% of respondents in their 50s valued the ability to stay together with family or companions. Satisfaction ratings were also high, averaging 4.0 out of 5, close to hotels and resorts, which scored 4.2. However, 77.8% of respondents who had used shared accommodations in domestic travel pointed out a lack of supply.

The K-Stay Expo 2026, the first shared accommodation fair in Korea, was held on October 9-10 at the Dongdaemun Design Plaza in Seoul, attracting a large crowd. Organized by the Korea Guesthouse Association and sponsored by Airbnb, the event saw 8,074 pre-registrants despite the holiday period. According to Airbnb, the largest age group among attendees was those in their 40s, with 2,847 participants (35%), followed by those in their 50s (2,192, 27%), 30s (1,954, 24%), 60s and above (532, 7%), and 20s (454, 6%).

As aspiring entrepreneurs flocked to the event, hosts reported feeling the boom in shared accommodations due to the increase in foreign tourists. Lee Sang-yeop, a host who transitioned from a bank employee to a full-time Airbnb host, stated, "There are a lot of foreign tourists in Seoul. The ratio of foreigners to locals is about 8 to 2," adding that he maintains an average booking rate of 80-90%, including weekdays.

Jung Hyun-woo, a host operating in Busan, shared that he started as a side job with Airbnb but became a full-time host due to health issues. He noted, "I can feel the significant increase in foreign visitors to Busan," mentioning that Japanese tourists, who traditionally preferred hotels, have shifted their preferences, with bookings from Japan increasing by about 10% at his property.

Hosts believe that ordinary individuals can earn a salary-level income through shared accommodations. Lee Sang-yeop explained, "The market average for operating a two-room accommodation is typically around 1.5 to 2 million won. For three rooms, it’s about 2.5 to 3 million won," adding that the amount invested in the space makes a difference.

Jung also mentioned, "For typical foreign tourist accommodations, net profits can reach 2 to 3 million won per month, which is sufficient to match a salary expected by office workers."

Operating costs are a key factor in determining profits. According to one host, personal operating costs are about 20-30% of revenue, with platform fees typically around 15%. By handling cleaning and guest interactions directly, hosts can further increase their net profit margins.

However, the initial investment burden has increased compared to the past. One host noted, "These days, many people are investing in proper interior design, so for a three-room setup, you need to invest around 20 to 30 million won after deducting the deposit to achieve average quality. It may take about a year to recoup that investment, but it’s much faster than other businesses like restaurants. You can recover it in as little as six months to two years."

Some seniors are also starting a new chapter in life through shared accommodations. Kim Soon-ja, a haenyeo (female diver) residing in Jeju's Gujwa-eup, has recently entered the hosting business. She expressed, "Having lived as a haenyeo for over 50 years, I want to find another joy in my retirement through hosting. I hope travelers feel comfortable staying at my grandmother's house in Jeju, thinking of it as a visit to a local grandmother's home."

Choi Soon-deok, who moved from Seoul to Sinheung-ri in Jeju, is a novice haenyeo. She participated in the 'Halma Stay' project, a collaboration between Jeju Olle and Airbnb Community Fund, transforming her existing accommodation into a Halma Stay. Choi hopes that travelers walking the Jeju Olle trail will enjoy their stay and return with stories of having stayed at a haenyeo's home.

However, significant regulatory challenges remain for the shared accommodation industry. During a panel discussion at the expo, concerns about regulatory rigidity were raised. Jung Dae-jun, secretary-general of the Korea Guesthouse Association, stated, "Issues such as noise complaints, waste management, reluctance from local government officials, and resistance from the existing accommodation industry make it difficult to allow domestic guests or ease residency requirements. The regulatory sandbox initiated in 2020 has been stuck in Seoul and Busan for six years and needs to be expanded to regional cities."

Concerns were also raised regarding lease agreements. One host shared, "The foreign tourist accommodation industry is subject to the Housing Lease Protection Act. Unlike the Commercial Lease Protection Act, which guarantees 10 years, the contract period is short, and there is no protection for key money. Even if you invest 10 to 20 million won in renovations, if the owner refuses to renew the contract or sells the building, you could lose your investment. I have experienced this seven times myself."

Varying registration standards across local governments were also highlighted as a problem. Another host pointed out, "While the government claims to ease regulations, local offices are becoming stricter. In one area, we faced difficulties because they required consent from local business owners, which is not even stipulated in the law."

Chae Bo-young, president of the Korea Guesthouse Association, added, "For apartments, some require consent from the entire complex, which is not a legal requirement but is demanded as a common practice by local governments. We urge that even these non-legal requirements be temporarily exempted."

The shared accommodation industry is calling for a review of related regulations. Seo Ga-yeon, country manager of Airbnb Korea, emphasized, "As we aim for a future with 40 million foreign tourists, shared accommodations can be the most realistic solution to the accommodation shortage. However, to develop the shared accommodation industry, including foreign tourist accommodations, regulations must be relaxed to create more reasonable improvements."

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