As of 2022, there are approximately 62,000 accommodations in South Korea. These include various types of accommodations, including hotels, motels, pensions, resorts, guesthouses, and private lodgings. The number of tourist accommodations is estimated at approximately 3,200. The Korean hotel industry, in particular, faces fierce competition. With the rise in domestic and international travel demand and the emergence of diverse accommodation options, competition among hotels is intensifying, particularly among luxury and boutique hotels. Furthermore, price competition, differentiated service offerings, and new marketing strategies are becoming increasingly important.
The relationship between Korean accommodation providers and online travel agencies (OTAs) is both interdependent and competitive. While OTAs are a crucial channel for accommodation providers, providing access to global markets and convenient bookings, they also face challenges such as high commissions and intensifying price competition. Conversely, while accommodation providers can enhance brand awareness and increase room sales through OTAs, they also worry about weakening their own brand competitiveness in the long term.
Conflicts between OTAs and accommodation providers stem from the fact that OTAs charge a commission of 12.5% domestically and 15% internationally. However, competition among OTAs pressures accommodation providers to lower their advertising costs and prices, which can diminish their brand value. OTAs charge a commission per room reservation, and this commission rate can rise from 10% to 20%, or even over 30%, significantly reducing accommodation providers' profits and ultimately leading to closure.
K-Hotel is a hotel game changer leading new values and paradigms.
The main reasons hotels fail to develop their own apps are the high development and maintenance costs, the advantages of leveraging platforms, and the complexity of providing services beyond their core businesses of accommodation and food and beverage . Hotels believe it's more efficient to leverage the customer base and infrastructure of established OTA (Online Travel Agency) apps, and they see it as more beneficial to focus on core services like accommodation, food and beverage, and leisure rather than developing their own apps.
More importantly, the low value of individual hotel apps from the customer's perspective makes it difficult to attract and retain customers. OTA (Online Travel Agency) apps offer strong value by precisely addressing customer needs, which is the fundamental reason why individual hotel apps fail to appeal to customers.
Q: What if hotels could offer their customers a hotel app free from high investment costs, low app usage rates, fierce market competition, and the burden of technology and maintenance, offering customers a wide selection of options, the lowest prices and discounts, a convenient user experience, reliable information, and an integrated loyalty program?
If a hotel had its own app that met these criteria, it could significantly outperform OTAs and reshape the market. However, this assumption is practically impossible, which is why hotels are reluctant to develop their own apps. If both of these conditions (high value and low burden) are met, a hotel app can create the following remarkable synergies.
> K-Hotel solves these problems at once.
One of the hotel industry's biggest concerns is the burden of commissions from online travel agencies (OTAs). While securing room reservations through major OTAs is a vital marketing channel, commissions of up to 15-20% significantly erode hotel operating profits. This has led many hotels to ponder whether there's a way to reduce their reliance on OTAs.
However, there is ample room for profitability improvement if hotels strengthen their own marketing capabilities. For example, directly attracting international group tours (package tours) or independent travelers (FIT) can not only reduce OTA commissions but also steadily increase hotel occupancy rates (OCC). FIT customers are particularly sensitive to online reviews, loyalty programs, and local services, making direct hotel benefits and differentiated experiences a crucial competitive advantage.
Furthermore, if circumstances permit, offering large-scale accommodation bookings for international events or CRM-based services can significantly improve OCC. Hosting events such as international conferences, trade shows, and corporate training sessions can lead to a rapid increase in room occupancy, which can lead to an expected increase in OCC of at least 10%. Furthermore, systematic customer management utilizing CRM—such as return visit incentives, personalized services for long-term guests, and loyalty programs—can increase customer loyalty and reduce reliance on OTAs in the long term.
Ultimately, for hotels to partially shift away from OTA reliance, direct marketing , CRM-based long-term customer management , and securing demand for large-scale and international events could be key strategies. Supported by these self-help efforts, they will go beyond simply reducing commissions and serve as an opportunity to improve the hotel's brand value and revenue structure.
> K-Hotel has the solution.
The K-Hotel platform is a business model that frees hotels from dependence on large OTAs and directly connects their profits and the value of K-Travel to customers. Hotels reduce their existing commissions by half, reinvesting the savings in strengthening their core competitiveness, including facility investment, improved service quality, and enhanced customer benefits. They also strengthen direct marketing and customer relationships through the platform. Ultimately, K-Hotel aims to improve hotel profitability and enhance the hotel's asset value.
If you are a hotel interested in this platform , please contact
us at mail@k-hotel.org .