Korea has seen strong growth in its hotel market in the Asia Pacific region over the past two years as a result of solid domestic and international demand.

In Q1 2024, Korea's Average Daily Rates (ADRs) increased by 43% to KRW 214,177 compared to Q1 2019, and the country's overall RevPAR increased by 49% during the same time. While the full-year occupancy rate has not yet recovered completely, Q1 2024 occupancy was 2% higher than Q1 2019.

The hotel business is expected to continue performing well in the near future because of long-term factors like the Hallyu phenomenon and the growing medical tourism market. 37% of tourists visited Korea in 2023 because of the Hallyu wave, and medical tourism hit a record high of 616,000 visitors in the same year, as reported by the Korea Tourism Organization.

The luxury and premium hotel sectors are expected to be very successful in the next six to twelve months, particularly in popular tourist destinations like downtown Seoul, Haeundae in Busan, and Jeju Island. Over the next four years, CBRE anticipates that hotel performance will continue to improve despite a limited supply pipeline.

Hotel performance has significantly improved over the last year, but investment activity has not increased. But with an anticipated U.S. interest rate reduction in the second half of 2024, borrowing costs are predicted to drop, which should lead to more spending. Korean investment in the US and Europe is very high, which may lead to investment opportunities and liquidity shortages in those places.

In 2024, acquisitions are anticipated to be driven by institutional and individual investors, with a concentration on value-add possibilities. Co-living operators are expected to grow, despite the business being in its early stages, by capitalizing on the overall shortage of housing assets.