Airbnb in Korea
Airbnb in Korea is keeping hotels in Korea in check. Since late December, South Korea has been battling price-gouging hospitality providers. When there are big events in Korea such as the Pyeongchang Winter Olympics, motels or hotels take advantage by raising the prices since there are limited accommodations in the area. The Korean government has taken measures to stop this from happening, however, the biggest regular seems to have come from Airbnb. The Korean government has embraced Airbnb which is very different than their experience with Uber in 2015 where Korea banned UberX.
Airbnb ended up being working with the Pyeongchang Winter Olympic games on offering short-term rentals in Gangwon. This allowed for the average price of around 100,000 won per person per night.
Airbnb increases the supply of rooms in a given area. Hotels have been greatly affected during major events where they are able to, in the past, charge a premium for their rooms. That is not the case anymore. South Korea in 2017 reported that close to 2 million travelers stayed in an Airbnb.
More options for Tourists in Korea
One of the major steps in planning a trip is the accommodation. They can choose from hotels, motels, hostels, guest houses, and Airbnb. Since Airbnb came to Korea there has been a rise in tourists coming to Korea. Especially in the young demographic, since they are familiar with technology devices and want to save money. More tourists mean more business for Korea.
Domestic Korean travelers make up the biggest percentage of Airbnb users in Korea (66%). Second is the United States (18%) with Singapore (13%) coming in third.
As Airbnb grows in Asia, they could be the key to the diversification of tourism in Korea. However, there are some who host on Airbnb and do not notify the government they are doing so. There were cases of many hosts getting fined for not reporting their earnings.
The current law in South Korea regarding home-sharing platforms like Airbnb is mainly for foreign travelers. It is illegal to rent to Koreans in Korea, however, stats show that this is not entirely the case.
Bad for Hotels in Korea?
While the 5-star hotels might not be greatly affected by Airbnb in Korea, the smaller budget hotels have been. Most hotels were able to make huge margins when rooms were limited and customers had no choice but to pay whatever rates the hotels and motels wanted. Especially during holidays or big events. However because Airbnb brings more customers into Korea, are the hotels and motels really losing out? It could be the case when hotels are fully booked, Airbnb is able to expand the capacity of rooms. The impact of Airbnb has not been that detrimental to Hotels but rather were able to stop the malicious price hikes Hotels use to take advantage of. However, as Airbnb grows the impact of Airbnb on Hotels will grow and grow.
In order to target these travelers, hotels in Korea will need to get creative. Some hotels in Korea are making rooms more flexible to change them from suites to conference rooms. Many hotels and hotel lobbying organizations are pushing back in Korea, so it will be interesting to see where things go from here.