South Korea’s Hotel Boom - a Boon for In-Room Entertainment?

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.

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.