Shilla, Lotte in expansion mode

Hotels rush to build biz hotels for surging foreign tourists

Lotte, Shilla and other hotel operators affiliated with large business groups have gone into expansion mode in recent years due to the surging number of Japanese, Chinese and other foreign tourists.

They have renovated existing hotels to create more rooms or build low-priced business hotels in and around Seoul, with the capital city alone lacking at least 15,000 rooms to accommodate soaring numbers of foreign visitors.

Lotte Hotel, the country’s largest hotel franchise, said Tuesday that it plans to open two business hotels in Myeong-dong, a popular shopping district for foreign tourists, offering a combined 700 rooms.

Business hotels offer rooms at prices that are approximately 30-percent lower than charges in premium hotels, by downgrading rooms, providing only basic services.

“Real estate developers will acquire the two sites and build the structures. Once completed, we will lease them and do interior work to convert them into business hotels,’’ a Lotte Hotel spokeswoman said.

“We are the first hotel franchise to successfully enter the business hotel sector. In 2009, we opened the first Lotte City Hotel in the Mapo district. Last December, we opened the second Lotte City Hotel at Gimpo International Airport.’’

She said Lotte decided to open and operate business hotels to provide convenient and affordable lodging for tourists. “Many visitors have to stay in places far from downtown Seoul. This has inconvenienced them to a great extent. Our business hotels all located in downtown areas have and will continue to serve foreign customers.’’

The Shilla Hotel, affiliated with Samsung Group, also plans to enter the business hotel sector to capitalize on the recent visitor boom. It will operate two business hotels ― one in southern Seoul and the other in Dongtan, Gyeonggi Province.

“We expect the number of foreign visitors will continue to show an upward curve for the foreseeable future. The one to be built in southern Seoul will be 14-storys high, catering to both business and leisure travelers by providing more affordable accommodation in city centers,’’ a Shilla Hotel spokesman said.

Shilla is also considering turning its duty free shop in central Seoul into a business hotel.

The Parnas Hotel, affiliated with the GS Group, which operates the Grand InterContinental Hotel and the InterContinental Seoul COEX in southern Seoul, said it will raise 100 billion won by issuing corporate bonds. The hotel operator plans to extend the Grand InterContinental Hotel to create more rooms.

SK Networks, the local operator of the Sheraton Walkerhill and W Hotel in eastern Seoul, has teamed up with a real estate developer to open a business hotel in the capital.

Its spokesman said the developer will purchase the site and construct a building. SK Networks will then lease the structure, do the interior work and turn it into a business hotel.

Hyundai Group acquired the Banyan Tree Club and Spa near Mt. Nam earlier this year to advance into the hotel business, while Korean Air seeks to build a seven-star hotel near Gyeongbok Palace.

Daemyung Leisure Industry, which operates ski resorts and water theme parks across the country, has also entered the hotel business by launching the MVL Hotel in Yeosu to serve foreign VIPs during the ongoing expo in the city. The MVL, which stands for “most valuable life,’’ has 311 rooms and a range of state-of-the-art amenities.

Daemyung also plans to open a second MVL hotel in Ilsan, Gyeonggi Province, early next year to accommodate foreign participants of international meetings and exhibitions at KINTEX.

According to the Korea Tourism Organization, 9.79 million foreign tourists came here in 2011, up 11.3 percent from 8.79 million the previous year. The figure is widely expected to exceed 10 million this year.

Currently, there are about 20,000 hotel rooms available in Seoul. The city has recently unveiled a range of measures to help boost the number of hotel rooms to 51,000 in anticipation of 12 million inbound travelers annually. <Korea Times/Lee Hyo-sik>

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