South
Korea seems to be on everyone’s lips these days. There’s a monumental ‘Korean
Wave’ sweeping us towards its shores, fueled by the ongoing popularity of
South Korean entertainment and culture, specifically in the form of K-Pop and
television drama.
The
Seoul Metropolitan Government has reported that there are only 29,000 hotel
rooms in the country to accommodate the estimated 10.8 million visitors to
flock to the country this year – a shortfall of nearly 15,000 rooms. Keen to
get a slice of the action, local and international hotel chains are making a
beeline to invest in the country in what the Korean Herald in a recent article
described as a ‘Gold Digger’ mentality.
Add
to that the fact that South Korea will do the final switch from analogue to digital
television at the end of this year and you have an industry at an inflection
point. On the one hand there’s the massive influx of new hotel properties to
alleviate the room shortfall and on the other there are the existing hotels
that are faced with new competition and also have to address how to adapt to
the post-analogue world come 4.00am on 31 December (unless they have already
adapted to the ATSC digital standard of course).
So
no wonder plenty of suppliers -- including in-room entertainment specialists
such as my company -- are eagerly putting plans in place to participate. The
problem is that, unlike ‘mature’ hospitality markets in the region such as Hong
Kong and Singapore, there seems to be a very different perception among South
Korean hoteliers of the value of things such as in-room entertainment systems. The
prevailing view is that in-room entertainment systems should be either provided
free of charge to the hotel or provided through financing by the vendor. This
stems largely from the market being ‘spoiled’ by legacy providers who more
often than not threw in in-room entertainment for free because they subsidised
it through HSIA revenues.
In
the age of analogue entertainment and internet being a chargeable item in
hotels this made perfect sense. However, with the onset of the age of HD, smart
devices and ubiquity of internet access that is expected to be provided for
free, the game for what guests expect by way of in-room entertainment has
shifted quite dramatically.
Talking
to our local partners during my recent trip to Seoul, most middle management in
hotels seem understand the intrinsic value of sophisticated in-room
entertainment systems; it’s the top management that, apparently, still needs to
be convinced. This is not surprising: while the middle management is usually more
heavily exposed to guest complaints about substandard entertainment options,
the top management holds the purse strings and finds it harder to justify an
investment whose returns are seemingly less tangible.
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| Next-gen in-room entertainment offers branding and revPar opps |
But
here is the crux: the next generation in-room entertainment systems are not only
about superior picture quality, but offer a much wider opportunity for hotels
to benefit from both tangible and intangible returns. As I have written about
in another blog, in-room systems today offer hotels great opportunities on many
levels, from creating positive brand relationships and long lasting loyalty
through hotel-specific features, to streamlining backroom operations through
TV-based housekeeping, to increasing revPAR through interactive promotion of
hotel services and eCommerce features.
So
new hotel or old, the current ‘gold digging’ environment combined with the
upcoming switchover from analogue to digital presents a great opportunity for
South Korean hoteliers to propel their properties to the forefront of guest
room sophistication and reap the benefits with increased
brand value as well as a boost to the bottom line.
