"To leap forward as a tourism advanced country, the development of tourism infrastructure for locals must precede. When domestic demand is activated, it can attract the interest of foreign tourists."
Nam Gi-duk, the representative of Marriott International for Korea, Vietnam, and the Philippines, said this during an interview with ChosunBiz at the JW Marriott Dongdaemun in Seoul on the 13th. He noted that regional tourism development at the government level is necessary for expanding domestic demand, creating a virtuous cycle that leads to attracting foreign tourists.
Nam is a veteran who has worked in the hotel industry for over 40 years since joining the Shilla Hotel in 1985. He became the regional representative for Marriott International in Korea in 2018 and is currently responsible for Korea, Vietnam, and the Philippines, while also overseeing operations in Saipan, Mongolia, and Palau.
Founded in 1927, Marriott operates more than 9,500 hotels in 144 countries. The hotel brands under its umbrella amount to 31, including Ritz-Carlton, Fairfield, Sheraton, and W. The number of Bonvoy members, the membership program, exceeds 220 million. In Korea, 15 brands are operating with 36 hotels.
Marriott has been showing strong performance as demand for travel, including overseas trips, has increased after COVID-19. The growth in the Asia-Pacific (APEC) region is particularly notable. In the first quarter of this year, global revenue per available room (RevPAR) increased by 4.1% compared to the previous year, with the APEC region showing an 11% growth rate.
Last year, 109 new contracts were signed in the APEC region. As a result, Marriott secured a pipeline of approximately 77,500 rooms in the APEC region. In Korea, the opening of Courtyard Marriott Pyeongtaek and Westin Seoul Parnas is imminent this year.
Nam said, "Over the past 4-5 years, Korea's growth rate has been the highest," adding, "In the past, Korea was a minority country tied to Japan or China, but now it has become a position managing multiple regions," expressing a sense of great change.
―The performance of the APEC region in the first quarter was good. The status of Korea has also changed.
"In the past 4-5 years, the average daily rate per guest in Korean hotels increased by about 50%. The increase in hotel guests and the strong dollar influenced this. The perception of hotels has also changed significantly. In the past, hotels were synonymous with luxury, but now it has become common for locals to visit hotels for a holiday getaway over the weekend. During the COVID-19 pandemic, while hotels worldwide faced crises, the popularity of holiday stays in Korea helped quickly recover from the crisis. The percentage of domestic guests, which was around 20-30%, has increased to about 40%."
The elevated status of K-culture has also had a positive impact. Especially in Southeast Asia, interest in Korean drama and K-pop has surged, increasing the demand for travel to Korea. When Nam was assigned to the Korea region in 2018, there were only about 20 hotels, but now that number has nearly doubled to around 40. As infrastructure improves, luxury hotels with daily rates exceeding 500,000 won are also on the rise."
―What strategies have been implemented to optimize hotel revenue?
"After working in overseas hotels for over 20 years, I returned to Korea in 2018 and found that the average daily rate in hotels hadn't changed. This is due to the decrease in demand resulting from external factors such as pandemics (SARS, MERS, COVID-19) and the THAAD deployment, along with intensified price competition."
To maximize revenue, a hotel loyalty program similar to those of airlines was introduced. Hotels, like airlines, cannot increase the number of rooms even if demand rises. The only way to increase revenue within a limited capacity is through price adjustments. The artificial intelligence (AI)-based revenue management system optimized prices by adjusting them four times a day to match demand.
Rather than simply raising the average daily rate, revenue optimization was pursued through strategies that enhance the competitiveness of the company's platforms. The official Marriott website sells lodging products at lower prices than other online travel agencies (OTAs). If it is priced higher than other platforms, the difference is compensated. Moreover, through a member management system that has been in place for over 20 years, additional discounts and rewards are offered. In Korea, the proportion of direct bookings made through the Marriott website reaches 46%. Among all guests, 70% are Bonvoy members. Industry insiders believe that the increase in direct bookings has a significant impact on attracting investors and securing hotel management contracts.
―The hotel business requires a lot of manpower. Do you have any secrets for organizational management?
"Marriott Hotels has provided an environment where employees are treated fairly and can grow based on the management philosophy of 'putting people first' since its inception. This high employee satisfaction with such culture is the reason why there has been little change in the general managers and key executives of each hotel."
Efforts are also actively made to nurture female workforce. After returning to Korea, there are eight female general managers, two of whom are currently working in Vietnam. Women tend to pay more attention to detail and have advantages in communication with staff. In the APEC region, diversity, equity, and inclusion are also being promoted. As of the fourth quarter of last year, about 36% of management positions in the APEC region were held by women, and one in six general managers was a woman.
-What does the representative think hospitality entails?
"A hotel consists of four components: employees, service, customers, and community. I believe that when employee satisfaction improves, the quality of service enhances, which in turn increases customer satisfaction. For instance, even when conducting employee evaluations, I manage them transparently and fairly to avoid any misunderstandings. I don't conduct the evaluations myself but share with employees how the key performance indicators (KPIs) are calculated so they can assess themselves. The goal is not to impress me (the representative), but for employees to achieve their own performance.
Coexistence with the local community is also important. Annual events such as sharing kimjang (making and distributing kimchi) and delivering briquettes are held to fulfill social responsibilities. In Vietnam, communication with local residents is facilitated through support for cleft lip and palate surgeries. I believe that when all these elements create a virtuous cycle, business will naturally thrive.
A hotel is a comprehensive art. Various departments exist within a confined space. One should not focus solely on their field without understanding other areas. I emphasize to employees the importance of observing what others are doing and trying it out themselves, as that can serve as a foundation for their growth."
―What are the market outlook and plans for launching new brands?
"The significant change in hotels is the transition from being centered on business travelers to establishing themselves as places for personal healing and self-satisfaction. As such, demand for luxury hotels has increased. In the APEC region, the revenue from the luxury sector grew by 13% in the first quarter, driving performance.
There is now a greater potential for attracting high-end brand hotels in Korea as well. In the past, low hotel rates made it difficult to attract luxury brands, but with recent improvements in hotel infrastructure and rising rates, there is a trend of increasing growth potential for luxury hotels. Currently, preparations are underway for openings in provincial areas such as Yeosu and Busan, in addition to luxury hotels.
However, it is unfortunate that there is a significant gap in tourism infrastructure between Seoul and the provinces. To leap forward as a tourism advanced country, the development of tourism infrastructure for locals is necessary. Places frequented by Koreans are also sought after by foreign tourists. Korea, with 70% of its land being mountainous, has many beautiful spots. If the government actively develops regional tourism, attracting people can also boost local businesses. The establishment of a single hotel can create local economic effects such as job creation, procurement of local food ingredients, and revitalization of local services related to room operation.
―What are your future goals?
"My goal is to contribute to Korea establishing itself not as a minority in the hotel industry, but as a central country in Asia beyond simple performance."