Tourists Keep Pouring In, but Seoul Hotel Room Supply Will Grow Just 7% by 2032

[Financial News] Seoul’s hotel market is expected to face severe supply shortages and a supply-demand imbalance through the late 2020s.
According to a report published on the 9th by commercial real estate services firm CBRE Korea, the supply of hotel rooms in Seoul is projected to grow by only about 7% through 2032. Meanwhile, inbound tourism demand is steadily increasing, and a market in which demand outstrips supply due to supply constraints is seen as inevitable until before 2029.
In particular, while 44% of new supply is concentrated in upper-tier hotels, upper-midscale rooms, which are recovering especially quickly, will account for just 2% of total inventory by 2029, making mismatches by hotel class and location more pronounced. With occupancy already at the upper end of the range (76% as of 2025), the supply-demand gap is expected to feed directly into higher average daily rates (ADR).
As financing rates rise, improving the underlying quality of hotel assets, rather than simply holding them, has emerged as a key investment priority. Global brand conversions, a leading value-add strategy, yield different benefits for owners depending on the contract structure, such as third-party management or franchising. Third-party management is preferable in city centers, while a lease model is advantageous for highly leveraged assets. The voco Seoul Myeongdong, which adopted IHG’s voco brand after closing, saw its sale price per room surge 60% and is cited as a successful model.
The market is expected to move from a phase led by room-rate growth amid a future supply gap into a period of asset repricing. Accordingly, the advice is for value-add investors to pursue acquisitions of existing hotels and brand conversions through 2027, while core investors begin buying assets with proven performance in the second half of 2027.
Claire Soohye Choi, executive director and head of research, said, “With demand structurally outstripping supply, it is important to pay attention to detailed shifts in supply and demand.” Sean Sunghyeon Choi, executive vice president and head of capital markets, emphasized, “Given the challenging financing environment, future returns will be determined by an asset’s own ability to create value.”
[email protected] Jeon Min-kyung Reporter