Korean hotel investment outlook 2023-2024

Strong tailwind from tourism recovery, but a headwind for hotel real estate

February 22, 2023

South Korea’s lodging sector exhibited one of the strongest recoveries in Asia Pacific and we anticipate the dynamic recovery to continue in 2023. While we are witnessing tailwinds such as the growing popularity of “Hallyu” and the border reopening with Mainland China, we also anticipate strong headwinds globally as the hotel sector faces a challenging lending environment, increasing operating costs, labour shortages, and recessionary fears.

We have identified four key trends that are likely to shape the Korean market in the year ahead:

  • The return of Mainland Chinese visitors should fuel the recovery of the tourism sector in 2023, yet remaining challenges are anticipated to curb the pace of recovery

  • Economy & Midscale segments’ recovery is expected to catch up with the Luxury & Upper-Upscale segment on the back of pent-up demand from increasing corporate and international tourists

  • Tightened loan markets and pressure on interest cover will pose challenges for development, owners and investors

  • Higher borrowing costs and reduced viability of alternate use conversions will lead to a decrease in transaction volume and pricing

Download our latest Korean Hotel Investment Outlook report as we dive into the impacts of these trends on the Korean hotel market.

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