This year, the hotel market in South Korea is projected to maintain a steady growth trend.
JLL (Jones Lang LaSalle) Korea announced on the 19th that its hotel team has published a report titled '2025 Outlook for the South Korean Hotel Investment Market.'
According to the report, strong tourism demand, limited supply, and excellent operational performance are expected to be the growth drivers for the hotel market.
First, the number of tourists visiting South Korea in 2024 is expected to reach 16.3 million, recovering to 93.5% of the level before the COVID-19 pandemic. By 2025, the number of foreign visitors to South Korea is expected to approach around 17.5 million. Notably, over 37% of visitors cited Hallyu as their main motivation for visiting.
The number of Chinese tourists is expected to remain at 4.6 million in 2024, only 76.4% of the level compared to 2019, and it showed a declining trend in the fourth quarter of 2024. In contrast, the number of visitors from other countries, such as the United States and Taiwan, exceeded pre-pandemic levels, indicating a trend of diversification in the inbound market.
In Seoul, the supply of 4- and 5-star hotels constitutes 30% of the total tourist accommodation facilities, clearly indicating a trend toward premiumization. By 2030, approximately 2,800 additional luxury hotel rooms are expected to be supplied, distributed not only in major areas but also in emerging subcenters such as Yongsan, Seongsu, and Jamsil. Most of the luxury hotel supply is planned as redevelopment or facilities within complex developments, with an expected supply timeline set for after 2028.
In contrast, the new supply of mid-range and business hotels is expected to be limited. Due to high construction costs, developers are focusing on luxury hotel developments where average daily rate (ADR) growth is pronounced.
In 2024, the average revenue per available room (RevPAR) for luxury hotels in Seoul increased by 62% compared to 2019. The RevPAR for the mid-range hotel market also exceeded pre-pandemic levels by 21.3%. In 2025, the RevPAR for the luxury hotel market is expected to grow by 5% to 10%, while the mid-range hotel market is anticipated to maintain a growth rate of 10% to 20%.
In 2024, the total annual transaction value in the domestic hotel investment market is estimated at approximately 1.63 trillion won, more than tripling compared to 2023. The successful sale of quality assets such as Conrad Seoul reflects high interest from foreign investors.
In 2025, approximately 2.2 trillion won in hotel transactions is expected, bolstered by strong operational performance and expectations for interest rate cuts. In particular, continued inflow of foreign capital is anticipated, centered around assets that provide value-add (investments such as remodeling and expansion to enhance property value).
Nihat Erkan, Chief Executive Officer (CEO) of JLL Hotels Group for the Asia-Pacific region, noted, "The South Korean hotel market will emerge as an attractive investment destination in 2025, based on stable tourism demand and limited supply. Continuous growth in the hotel sector and increasing interest from foreign investors will become key trends in the market."
Kim Min-jun, Director of JLL Korea's Hotel Business Unit, stated, "This year's hotel market will focus on normalizing growth and attracting overseas capital looking for hotel assets with value-add points." He added, "Despite recent instability in the global situation and sluggish domestic economy, the hotel sector is expected to be increasingly recognized as a major investment sector, based on its stable operational performance and solid fundamentals."