Business hotels are becoming more refined

Traditionally, business hotels, or budget hotels, targeted business travelers and travelers looking for cheap rooms. Charging half the price of luxury hotels, business hotels made ends meet by cutting extra services and facilities. That, however, doesn’t mean services are mediocre. In fact, the business hotel market is growing in Korea, with rising demand drawing the attention of even high-end hotel. The result: “luxury business hotels.”

Hotel Shilla opened its second business hotel, Shilla Stay Yeoksam, in Gangnam, southern Seoul, in October, after opening its first in Dongtan, Gyeonggi, a year ago. Shilla Stay Yeoksam promotes its 306 rooms as having “Shilla Hotel-esque luxuriousness.” Equipped with Italian Cova coffee and Hungarian goose down bedding, the rooms are designed by renowned architect Piero Lissoni. The hotel’s cafe buffet has some of the same dishes as The Parkview at the Shilla Hotel.

But in other aspects, Shilla Stay Yeoksam is no different from other business hotels. There are no auxiliary facilities like banquet halls and swimming pools, or extra amenities like bellmen and room service. Rooms are two-thirds the size of those at Shilla Hotel, and the price is comparable to other business hotels.

“We’ve put our brand value in the meals, design of the building and quality of what’s in the bedrooms,” says Kim Tae-heung, general manager of Shilla Stay Yeoksam. “Both Korean and foreign customers can enjoy Shilla Hotel services at an affordable price.”

According to Hotel Shilla, Shilla Stay Yeoksam’s occupancy rate is about 80 percent. There are many customers on business trips during the week and tourists in the weekends, although the hotel has been open for only a month, a hotel official said. Hotel Shilla is expected to expand its Shilla Stay operation to 10 areas, including Seodaemun District, Mapo District, Guro District, Gwanghwamun and Seocho District in Seoul, and Jeju, Ulsan and Cheonan by 2016. It is also considering expanding overseas.

Lotte Hotel already launched its business hotel abroad. After opening its first, Lotte City Hotel Mapo, in 2009, the hotel opened its third international business hotel, Lotte City Hotel Tashkent Palace, in Uzbekistan in October 2013. Lotte Hotel currently operates Lotte City Hotels in Mapo, Gimpo Airport and Guro in Seoul, as well as in Daejeon and Jeju. It will add three more by next year, opening two in Myeongdong, central Seoul, and another in Ulsan.

Like Shilla Stay, Lotte City Hotel’s strategy is its luxurious feel. The business hotel uses the same bedding and toiletries as Lotte Hotel. With its location in downtown Jeju and facilities like a swimming pool and banquet halls, Lotte Hotel City Jeju was given the highest rating of special first class. Lotte City Hotel is also utilizing the global Lotte Hotel network in Moscow, Hanoi and Ho Chi Minh in Vietnam, and Guam for better marketing. It also is looking to launch a new business hotel brand next year.

Opening in Myeong-dong in December next year is a special second class-rated hotel, tentatively named Life Style Hotel, which aims to target younger customers. “We will offer a reasonably priced hotel that has taste and feels young, not only to the guests but also to all other customers who utilize facilities like the bar.”

Meanwhile, GS Group’s Parnas Hotel is focusing on its rooms, while differentiating itself from Lotte and Shilla. Parnas Hotel, which operates two luxury hotels in Samseong-dong, Seoul, along with global chain InterContinental Hotels Group, opened Nine Tree Hotel in Myeongdong, central Seoul, in 2012. Nine Tree isn’t affiliated with InterContinental.

Considering most of its customers sleep after a long day of business meetings or sightseeing, the hotel switched its focus. It equipped rooms with foot massagers and face masks, and offers nine kinds of pillows with salubrious ingredients like herbs. Aside from what’s offered in the rooms, the hotel sought an outside contractor for all other services. Breakfast, for instance, is contracted to an Italian restaurant. There also are also rooms for three people, unlike most high-end hotels. In the community room, there are massage chairs and a bulletin board, where guests can exchange information.

“Nine Tree is more well-known abroad,” said a Parnas Hotel official. “Most customers are families or female guests from Singapore, Hong Kong or Taiwan.” The annual occupancy is in the 90 percent range. Parnas Hotel looks forward to opening a second Nine Tree in Myeongdong in the first half of next year.

The special first class Mayfield hotel in Gangseo District, Seoul, also opened Mayplace Seoul Dongdaemun, a business hotel with 107 rooms. Rooms have views of Changgyeong Palace, Changdeok Palace and Jongmyo, a Confucian shrine. Shinsegae Chosun Hotel also will open a 350-room business hotel near Seoul Station in the first half of next year.

Why are high-end hotels jumping into the business hotel market?

For one, there is rising demand. Whereas fewer Japanese tourists, who frequent high-end hotels, are coming to Korea, due to economic stagnation and the weak yen, there are more visitors from China and South Asia, who prefer cheaper accommodations so they can spend more shopping.

The divide between expensive and cheaper hotels in the Korean hotel market also made clean and affordable hotels attractive. “Nine Tree is doing better than expected,” said a Parnas Hotel official. “Foreign customers said there are no adequate hotels with reasonable prices in the Myeongdong area.”

Another reason is the higher profit margins of business hotels, compared to high-end hotels. While high-end hotels spend more on food and labor, business hotels have smaller expenditures because they offer less elaborate meals and fewer services.

Business hotels also require a smaller initial investment. Most business hotels affiliated with luxury hotels sign a long-term lease for their buildings.

BY KOO HEE-RYEONG [eunjik@joongang.co.kr ]