Hotel Lotte is actively expanding its kimchi product lineup as part of a new business, drawing attention to the reasons behind the move.
According to the retail industry on the 28th, Hotel Lotte is preparing to develop a kimchi powder product. It follows the launch of Lotte Hotel Kimchi in 2023 and kimchi stew in a home meal replacement format in September. A Hotel Lotte official said, "There was discussion about developing a variety of kimchi products."
As it increases the number of items, it is also moving aggressively to secure distribution channels. Recently, Hotel Lotte began selling kimchi at Lotte Department Store after previously offering it only through the hotel's online shop. A Hotel Lotte official said, "Sales performance has been validated, so we were able to sell at Lotte Department Store as well," adding, "The kimchi stew released in September and the kimchi powder to be released in the future will follow the same path."
Hotels selling kimchi is nothing new. Among five-star hotels, the first to pioneer the kimchi sales market was Walkerhill Hotel. Walkerhill Hotel began selling hotel kimchi in 1997. Walkerhill is known for using the best seasonal ingredients and operating dedicated storage to provide kimchi of consistent quality year-round. Then Josun Hotels & Resorts jumped into the kimchi business. As more consumers who tasted kimchi at hotel buffets and restaurants asked to buy it, sales began at Shinsegae Department Store in 2004. Hotel Lotte later entered this market as a latecomer, joined by Paradise Hotel & Resort and Seoul Dragon City.
There are several reasons hotels are entering the kimchi business. First, the hotel industry is overly sensitive to the economy and external variables. That was evident in the trend of foreign tourists visiting Korea during COVID-19. In 2019, the number of foreign tourists visiting Korea was 17.5 million, but it plunged to 970,000 in 2021. Major luxury hotels saw their sales drop 40% to 60% during this period, taking a hit. The situation is different again now. Recently, the occupancy rate of Seoul hotels has averaged 80% to 90%, with not a few days fully booked.
A hotel industry official said, "When business is good, everyone does well, and when it's bad, everyone struggles, so we have to find new businesses, and that's why hotels are moving into the kimchi business." Because kimchi is a food purchased repeatedly, it is a product category that can generate steady sales without being swayed by the economy.
Focusing on kimchi among countless foods is related to the asset hotels possess. Hotels have a luxurious image and brand and, as part of that, operate high-end restaurants and employ famous chefs. That is why Hotel Lotte introduced kimchi infused with the expertise of Kim Song-gi, master chef of Korea and executive chef of the Korean restaurant "Mugunghwa."
The steady growth of the kimchi market is another reason hotels are moving into the kimchi business. According to Nielsen, the domestic packaged kimchi market was 656 billion won in 2023, up 22% from two years earlier. Of that, hotel kimchi sales are estimated at about 150 billion won. The hotel industry expects the retail kimchi market to grow further. In particular, it projects more room for growth in the premium kimchi segment made by hotels.
A hotel industry official said, "More consumers want kimchi made with good ingredients, and foreign tourists who stay at hotels in Korea sometimes buy kimchi to take with them. We believe the market potential is sufficient." The official added, "Hotel kimchi is more than just selling kimchi; it is a case of extending the hotel's premium asset into the food business. It can offset the uncertainty of the hotel business caused by economic cycles while also creating an opportunity to globalize K-food."