Why Are Hotels Talking About "Home" Again? #Luxury Business Group #Insight |
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As Hotels Become "Places to Live"โWhat Should We Be Preparing For?
The hotel industry is changing its structure to design for living spaces. |
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Marketing & Communication Team |
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๐ This article will help you answer these key questions:
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What new business models are hotels focusing on these days?
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With the collapse of Korea's โJeonseโ system and the rise of monthly rent, what should the hotel industry pay attention to?
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If lodging alone is no longer enough, what is the real survival strategy for hotels? |
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๐ Why Are Hotels Talking About "Home" Again?
As of early 2025, South Korea's hotel industry has clearly entered a recovery phase, with the number of foreign tourists increasing by approximately 45% year-on-year, surpassing pre-COVID levels. But beyond this recovery, the industry is quietly exploring deeper, more fundamental transformations for long-term growth and sustainability.
One notable example is Hotel Shilla, a flagship luxury hotel brand under Samsung Group. Amid declining profitability in its duty-free sector, the company has announced plans to sell off non-core subsidiaries, including travel management firm SBTM, while actively exploring new business opportunities such as condominiums and senior residences. This marks a strategic pivot from simply providing accommodations to designing new ways of living for customers.
So, how can the hotel industry leverage its core strengthsโluxury service and operational excellenceโto expand and evolve its business?
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๐ Designing a New Way of Life: Hotels as Lifestyle Platforms
Recently, the Korean hotel industry has been shifting away from the traditional lodging model, turning its attention to high-end residential projects for seniors. Hotel Shilla amended its corporate charter to include the operation of senior residences and is preparing to enter the senior life-care sector. Mayfield Hotel Group launched its luxury silver town brand "The Haeden" near Seoul, while Lotte Hotel introduced its premium senior living space, "VL Senior Residence."
Why the shift? As Korea enters a super-aged society, major hotel groups are betting on the sustained purchasing power of affluent seniors. Long-term stays, wellness programs, and senior living facilities are no longer fringe ideasโthey are central to the industry's next chapter.
At Luxury Business Group (LBG), we anticipated this trend in our March newsletter titled "The Rise of Luxury Seniors." In todayโs aging society, seniors are no longer passive care recipients but proactive consumers seeking refined lifestyles and holistic wellness. Korean hotels are recognizing this shift and responding with tailored spaces and services.
A great example is Tokyoโs Avenue Club, a premium senior residence offering medical care, wellness programs, and hotel-grade amenitiesโa model gaining popularity among Japanโs affluent elderly.
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๐ From Jeonse to Monthly Rent: A New Opportunity for Hotels?
In Koreaโs unique real estate market, the traditional jeonse (a lump-sum deposit-based lease system) is rapidly losing public trust due to a wave of fraud cases. According to Koreaโs Ministry of Land, Infrastructure and Transport, the share of monthly rental transactions surpassed 60% for the first time in early 2025.
Sensing opportunity, global investment firms are actively entering the Korean rental housing market. For instance, U.S.-based private equity giant KKR has partnered with Hong Kong co-living firm Weave Living to convert a hotel in Seoulโs Yeongdeungpo district into a high-end residential facility. Similarly, UK-based asset manager ICG launched a 300 billion KRW fund with a local partner to convert commercial properties in Gangnam, Gasan, and Myeong-dong into residential spaces.
Is it the right move for hotels to jump into the rental housing market? Rather than fully transforming into rental providers, a more strategic middle ground may be appropriate.
For example:
- Expand Serviced Residences: Combine short-term leases (1-6 months) with hotel services to capture demand from those displaced by the decline in jeonse.
- Adopt Co-living Models: Target younger consumers with shared amenities (lounges, gyms) and private living quarters.
- Utilize Vacant Rooms: Convert underbooked rooms during off-season periods into monthly rental units for improved profitability.
Globally, serviced residences are already well established. In Singapore, Frasers Suites has gained popularity by offering a hybrid of upscale housing and hotel services for business travelers and long-term guests.
With its trusted brand and hospitality know-how, the hotel industry is well-positioned to expand into premium rental housing. This isn't just about providing spaceโit's about delivering comfort, convenience, and service in a home-like environment.
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๐ก LBG Insight
The hotel industry is facing a pivotal shift. Korea's declining jeonse system and the rise of monthly rent, combined with the emergence of both senior and MZ (Millennial & Gen Z) consumer segments, open the door for hotels to go beyond lodging and enter the residential space.
LBG proposes the following strategic directions:
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Hybrid Revenue Models for Flexibility
Hotels, often challenged by seasonal demand shifts, can stabilize earnings by integrating residential leasing (e.g., serviced residence floors) into their existing operations. Hotel Shillaโs push into condominiums is one such example.
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Leverage Strategic Partnerships
Entering the residential market doesnโt have to be a solo venture. By partnering with global investors or co-living operators, hotels can reduce risk while accessing new expertise. KKRโs case in Yeongdeungpo is a strong precedent.
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Redefine Service to Fit Residential Living
Light-touch luxury is key. Weekly cleaning instead of daily service, mobile concierge instead of 24-hour front desksโthese tweaks maintain premium quality while keeping costs lean.
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Empower Staff to Build Emotional Connection
Service professionals are the face of the hotel brand. Emotional intelligence and empathy at every touchpoint enhance guest loyalty. Thatโs why structured staff training is essential. |
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๐ The Future of Hotels: Spaces for Living
Forbes Travel Guide, often called the Michelin Guide for hotels, rates properties 70% on service and 30% on facilities. This illustrates a fundamental truth: it's not just the space, but the experience that defines a great hotel.
As the industry evolves, so must the people behind the scenes. Staff capabilities will determine whether a hotel can truly become a lifestyle brand.
Thatโs where LBG (Luxury Business Group) steps in. As a strategic partner for luxury and hospitality brands, LBG provides consulting, talent development, and training solutions to help businesses evolve with the changing landscape and deliver exceptional customer experiences.
There is no single path forward for hotels. But as traditional lodging models face new limitations, offering aspirational lifestyles and flexible living arrangements can open new doors. With Koreaโs rental market shifting and service expectations evolving, models like serviced residences and co-living present tangible opportunities.
"Hotels are uniquely positioned to become part of their customers' everyday lives. By creating spaces where people genuinely want to stayโand liveโhotels can write the next chapter of their legacy."
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Luxury Business Group (LBG) |
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LBG Marketing & Communication Team | Gayoung Lee, Jade Lee, Booki Jung |
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