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December 4, 2013

Hotel Boom in South Korea Sparks Concern

In the first eight months of the year, revenue per available room, an industry measure for demand, declined in South Korea by a bigger percentage from a year earlier than in any country in the Asian-Pacific region, according to CBRE's survey, measured in local currency.

At the same time, the greater region's tourism sector was growing. Tourist arrivals to Asia Pacific rose by 7.1% year on year in the first six months of this year, according to United Nations World Tourism Organization.

Continuing to attract Chinese visitors is critical for South Korea's tourism industry, according to Soo Jin, a hotel-industry analyst and senior manager at Cushman & Wakefield....

The optimism for growth has translated into plans to build 15,000 new rooms in the capital in the next three years in a market that had about 30,000 rooms as of October, according to the city's registry.

"In the next seven to eight years, we're going to have the fastest growth in hotels in the country's history," said Richard Hwang, managing director at U.S. commercial real estate consultancy Cushman & Wakefield. Cushman estimates that the number of hotel rooms in Seoul will rise to at least 50,000 by 2017.

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