The COVID-19 pandemic affected the South Korean hotel industry significantly, as was the case with most countries. Now, post-pandemic, hotels are adapting the way they approach revenue strategy to get ahead, and innovative hotel tech is helping them on their way.
We spoke to two experts who are perfectly placed to share the inside story on the evolution of the South Korean hotel industry right now - Jaehwan Lee, Revenue Manager at Lotte Hotel Seoul and Duetto’s Director of Hospitality Solutions for APAC, Jeong Pyon.
They shared their insights into how hotel tech is helping South Korean hotels get ahead of the game right now.
Appetite For Hotel Tech Investment
There is a clear appetite for tech investment in the South Korean hotels market currently, but the lack of knowledge in the hospitality ecosystem is slowing down the transformation of the industry that relied heavily on wholesale, group, and other qualified business, including corporate.
However, things are moving in the right direction, and Duetto’s Pyon points out: “The good news is that hotels are starting to understand that they require revenue management, and they are reaching out to us at Duetto for consulting. Recently, hotels including Banyan Tree Seoul and Lahan Hotels have signed contracts with Duetto, and Lotte L7 Gangnam will be deploying Duetto in Q1 2023.
“The pandemic certainly impacted Korean investment in hotel tech, as there was a major segmentation shift from the qualified business segment to transient, resulting in a shift from static to dynamic rates sold via OTAs. Hotels began to understand that they need a better way to price their rooms based on demand.
“In addition, the loss of the Chinese market played a major impact as hotels found themselves needing to understand and manage various geo sources including Singapore, Taiwan, Thailand, Malaysia, US, and European markets with differing purchasing behaviors including price sensitivity.
“Finally, the ‘Great Resignation’ played a major impact in an industry that is highly digitized. Hotel investors were quick to understand that the solution to the lack of staff is in technology. Unfortunately, the lack of basic knowledge of the ecosystem is slowing down the transformation, but there certainly is an understanding of the need and appetite.”
Pyon added: “In terms of hotel segments, the luxury and upper-class categories are leading the recovery, according to JLL. Even during the pandemic, there were luxury hotel openings including Josun Palace Hotel, Sofitel Ambassador Seoul, Fairmont Ambassador Seoul, Mondrian Seoul Itaewon, Grand Hyatt Jeju, and Parnas Hotel Jeju. Banyan Tree and Mohegan Group, who also run their revenue on Duetto, are also slated to open new properties in 2023.”
Why Lotte Hotels Made The Move To Duetto
Lotte Hotel Seoul also recently switched to Duetto from a pricing solution, having decided that Duetto was the right system to help them navigate the future as the recovery from COVID-19 continues. The five-star 1, 015-room hotel is a flagship property for Lotte Hotels & Resorts, the largest hotel group in Korea, with ambitious plans to expand beyond its Asian footprint to become a global brand.
“During the pandemic, I recognized that the historical data cannot be the bible source for future forecasts anymore, and systems cannot fully replace humans,” said Lee. “I felt the need to have a system that can work with the hotels' strategy. When I learned about Duetto, I felt that it would be a game changer, as it’s a system that can work with the revenue managers' strategy. It’s like a hybrid system; I can split the workload with the system by date range, season, day of week, and even by demand. For instance, I can configure a very specific sell strategy for periods with low demand, and allow the system to manage the dates where demand is healthy.”
Lee added: “I also believe that to be a specialist in a field, you must experience various things. If you have used just one RMS, you are the specialist for the RMS, but if you have used diverse systems, you can be a true expert in revenue management. At Lotte, we have experience working with IDeaS, which is a great system that faced some challenges during COVID-19. Now, it is our turn to give Duetto a chance to help us navigate through the uncertainty that we face ahead.”
Pyon, who was instrumental in helping Lotte onboard with Duetto, commented: “Lotte Hotels needed a system that could make decisions with less reliance on historical data to help them navigate through the pandemic. The adoption rate with their previous RMS was extremely low. Lotte was impressed by Duetto's ability to utilize the hotel's commercial strategy, and by the company's onboarding, training, and customer support system.
The Onboarding Process
Discussing the onboarding process with Duetto, Lee said: “Everything was done smoothly, thanks to the great people from Duetto. Any small challenges we faced along the way were resolved quickly and the whole process was done very well.”
Lee explained that they are particularly looking forward to adopting Duetto’s Open Pricing for hotel promotions to ensure stay through availability and capture all business opportunities while protecting ADR at the same time. By using BlockBuster, they hope to boost communication with sales teams and increase revenue from group business with more data-driven decisions.
The results are already starting to show themselves, with Duetto having already helped Lotte navigate several challenges since onboarding. Lee explained: “Revenue Strategy now needs to be set up differently. COVID-19 has greatly changed the Korean Hotel industry and we are observing various changes to our business including the geo mix, booking window, price sensitivity, etc. But here we have revenue specialists in Duetto, so we can discuss how to prepare for the next steps. Duetto is not just the system provider, but my revenue advisor, with whom I can discuss the hotel strategy.”
Trends And Predictions For 2023
Looking forward to the year ahead, Pyon has some interesting predictions for the South Korean hotel market. He said: “The Korean hotel industry will emerge stronger than ever in 2023 as it has become more sophisticated in terms of management. "Hallyu" or the "Korean Wave" is playing a major role in the tourism boom in the market. The Korea Creative Content Agency (KOCCA) announced on December 13, 2022, that the K-Culture industry, including K-Pop, Film, Drama, etc has grown by over 58% YoY. Think BTS, Parasite, and Squid Games. According to the Korean Tourism Organization, the "Hallyu tourism" from America alone grew by 30% YoY. It is expected that this will continue to rise rapidly, attracting both leisure and business travel.”
Discover how Duetto can help your hotel achieve greater revenue in 2023. Get in touch today book a demo: https://www.duettocloud.com/contact