The exterior of Sofitel Ambassador Seoul located in Songpa-gu, Seoul (center). / Courtesy of Accor Ambassador Korea

This article was published on Jan. 27, 2025, at 11:18 a.m. on ChosunBiz MoneyMove site.

Recently, major domestic conglomerates seeking business restructuring and liquidity are consecutively putting their hotel properties on the market. With the hotel industry booming, a rise in transaction prices is expected this year, leading to swift moves by investment firms aiming to secure quality properties.

According to the investment banking (IB) industry on the 27th, the most notable player is KT, a 'big player' in the hidden hotel industry. KT has recently selected Samjeong KPMG, Avison Young, Colliers Korea, and Real Estate Planet Consortium as its selling advisors and has begun to liquidate its real estate assets. Among these, the value of the hotel assets alone amounts to approximately 2 trillion won. These include five-star hotels like Andaz Hotel in Gangnam, Sofitel Ambassador Seoul in Songpa, Novotel Ambassador Seoul in Dongdaemun, and Le Meridien & Moxy Myeongdong in Jung-gu.

In the market, KT's moves, which are putting competitive hotels on the market in terms of location and size, are being viewed as unusual. KT has been increasing its luxury hotel portfolio by developing sites such as the former telephone exchange through its subsidiary, KT Estate. The hotel's revenue share of KT Estate increased from 7.4% in 2019 to 34.0% in the third quarter of 2024. KT explained that the reason for the real estate sales is to secure cash to invest in artificial intelligence (AI) and other areas to cultivate new growth engines.

DL Group is also pushing for hotel sales to secure cash for its core business, including construction. The targets for sale include Glad Yeouido, Glad Gangnam COEX Center, and Maison Glad Jeju. The estimated sale price for these hotels is between 600 billion to 700 billion won. Foreign investors, including the Singaporean Investment Corporation (GIC), Kohlberg Kravis Roberts & Co. (KKR), and Blackstone, are reportedly showing interest in the acquisitions.

Lotte Group, which faced liquidity crisis rumors, also plans to sell hotels. At a corporate briefing in November last year, Lotte Group announced that it was reviewing the sale of some mid-range hotels, including L7 and City Hotel, to alleviate liquidity concerns for Hotel Lotte. The market sees L7 Myeongdong, Hongdae, and Ulsan Lotte City Hotel as strong candidates for sale.

The backdrop for these groups hurriedly selling hotels is paradoxically the improving market conditions. As the number of tourists increases and hotel values rise, they are looking for new owners. According to commercial real estate service provider GenstarMate, the average room occupancy rate for Seoul hotels reached 85.5% as of October 2024, marking the highest level in the past six years. The average room rate has also shown a continuous increase to 220,000 won.

An industry insider noted, “Last year, the Conrad Hotel sold for 400 billion won after fierce competition, particularly among foreign investors keen on hotel acquisitions,” adding, “With the political uncertainties that were obstacles coming to an end, it seems likely that they will prioritize reviewing hotels with high valuation in Seoul and the metropolitan area.”

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