South Korean conglomerates are strengthening their hotel businesses through upscaling and expansion to bring synergy with their mainstay businesses and enhance the brand image.

According to industry sources on Wednesday, Shinsegae Chosun Hotel, operator under the retail conglomerate Shinsegae, will open its first standalone boutique hotel brand ‘L’Escape’ near Myongdong, Seoul on July 19. Inspired by 19th-century French interior décor, the new hotel is the latest business pursuit of Shinsegae Group Vice Chairman Chung Yong-jin. His sister Chung Yoo-kyung, president of Shinsegae Department Store, is also readying to open JW Marriott Seoul next month.

L’Escape is expected to help create synergy with the retail units of the Shinsegae group. The hotel will supply its rooms with various promotional products sold in its retail groups.

Industry observers also believe large conglomerates are hoping to upgrade their brand image with their hotel businesses.

Shinsegae widened its business portfolio from department store to hotel in 2012 when it acquired a 60 percent stake in Central City, a multicultural leisure and entertainment complex.

SK Networks Co., the trading unit under SK Group, will open its third upscale capsule hotel dubbed ‘Darakhyu’ in the southern port city of Yeosu on August 1 via its hotel chain Walkerhill Hotel & Resort. The expanded lineup comes after its first two pod hotels in Incheon International Airport gained instant popularity as a stylish but cheap new form of lodging.

SK ended its alliance with the global hotel chain Sheraton and has been growing its hotel business as an independent name since last year.

CJ Group is also considering opening a hotel in K-Culture Valley, a theme park devoted to Korean pop culture that the food and entertainment giant is building in Goyang, Gyeonggi Province. The complex, slated to open in 2021, will house a theme park, concert hall and shopping mall on a site the size of 46 football fields. The company said it has not yet decided whether to invite a global hotel chain or operate the hotel under its own brand.

But some industry experts warn conglomerates’ aggressive movement to expand their hotel businesses would further intensify competition in the local hospitality market, which is already crowded with budget players and international names.

The lodging market in Seoul has recently burgeoned with a series of upgrades by existing hotels and inroads from budget and global names. The number of hotels in Seoul rapidly increased to 348 in 2016 following the addition of more than 100 including boutique and business hotels in the two years until 2016.

By Lee Yoo-jin and Kim Hyo-jin

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