Korean hotels hit by Chinese tourism decline

Korean hotel occupancy fell 7.5% in May 2017
Korean hotel occupancy fell 7.5% in May 2017

Occupancy and rates at hotels in South Korea are declining sharply, as the country struggles to cope with the decline in Chinese visitor arrivals.

Inbound tourism to South Korea has plummeted since Beijing placed a ban on Chinese tour groups travelling to South Korea earlier this year, in a spat over the deployment of the USA’s THAAD missile defence system.

And according to the latest data from STR, this downturn contributed to a 7.5% year-on-year decline in South Korean hotel occupancy in May 2017, to 64.3%. And rates have also been affected; nationwide ADR (average daily rate) decreased 7.3% last month to KRW153,669.83 (approx. US$135).

This has led to a 14.3% slump in revenue per available room (revPAR) to KRW98,808.67 (approx. US$87), although this monthly average remains significantly higher than the Asia Pacific region’s average of US$67.

In the first four months of 2017, the Korea National Tourism Organization (KTO) reported a 25.8% year-to-date decline in arrivals from China, its largest feeder market. In April alone, this decline reached 66.6% year-on-year.

STR also noted that hotel supply in South Korea has increased 4.9% thus far in 2017, putting further pressure on hoteliers.

 

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