Five-star Hotels Turn to Home Shopping Networks to Attract Local Customers

SEOUL, May 22 (Korea Bizwire) — The hotel industry, which is on the brink of collapse due to the outbreak of the coronavirus, is breaking its business framework to survive.

While each hotel is scrambling to offer huge discounts, a five-star luxury hotel in downtown Seoul will also showcase rooms that have sharply lowered prices on a TV home shopping program.

With the recovery of global travel demand uncertain, the industry is diversifying its sales channels to increase the proportion of Korean customers.

The InterContinental Seoul COEX will sell its rooms at a special price through GS Shop’s home shopping broadcast this coming Sunday.

This is the first time that a five-star luxury hotel room will be shown on a home shopping network.

Prices and benefits are literally ‘shocking’. Including tax and service charges, the price is 129,000 won ($104) for weekdays and 169,000 won on the weekend, a discount of roughly 50 percent.

A step ahead, Lotte Hotel’s lifestyle boutique brand L7 will be selling its rooms on a special show on Friday night via Lotte Home Shopping.

The industry seems to be quite surprised by major hotels’ entry into home shopping.

Although domestic home shopping networks tout various products ranging from household goods to automobiles and package tours, they have rarely sold hotel products.

The ‘new normal’ under COVID-19 has functioned as a matchmaker bringing hotels and home shopping together.

The reason why the hotel industry has decided to venture into home shopping is that Korean customers have rapidly emerged as a prerequisite for the survival of local hotels.

In general, luxury hotels have been carrying out business strategies focusing on their targets, as the portion of profits from foreign businesses and various corporate and group events accounts more than domestic hotel guests.

However, this year’s situation has changed rapidly. The biggest source of hotel sales has disappeared with COVID-19 classified as a pandemic, cutting off inbound flights.

According to a recent report released by the World Tourism Organization (UNWTO), the number of global travelers is expected to decrease by 78 percent if travel restrictions around the world continue until December.

This is why the industry has to offset the sales gap by increasing the proportion of domestic guests.

In fact, the Intercontinental Seoul COEX, which launched home shopping products this time, is considered a representative luxury hotel with a higher proportion of overseas business customers than Koreans.

As the coronavirus crisis in Korea has subsided, the recovery of domestic travel will play a critical role.

Above all, TV home shopping is a frequently visited channel for “stay-at-home” consumers, so it is believed that expanding the market through home shopping will help lower the threshold of luxury hotels and secure a new consumer base.

However, there are concerns that such drastic discounts and channel diversification could be harmful in the long term.

Due to the conservative nature of the industry, it is not easy to reverse prices once lowered.

Some also say that the home shopping market will not be a benefit considering the fact that maintaining a high-end image is a competitive advantage within the industry.

“There are concerns about price discounts and home shopping sales, but we decided that expanding hotel awareness through home shopping channels, familiar to consumers, would be more effective,” said an official at Intercontinental Seoul COEX.

D. M. Park (dmpark@koreabizwire.com)