L7 West Lake Hanoi by Lotte (Image provided by Lotte Hotels)
SEOUL, June 23 (Korea Bizwire) — South Korea’s hotel industry is increasingly turning to management contracts as a cost-effective strategy to boost profitability and accelerate global expansion without the burden of large capital expenditures.
Major chains such as Lotte Hotels & Resorts and Hotel Shilla are shifting away from traditional asset-heavy models toward “asset-light” approaches, securing hotel operating rights without owning the land or buildings. This model allows them to earn revenue through brand licensing and operational expertise, while minimizing risk.
Lotte Hotels has significantly grown its portfolio of managed properties in recent years. Following its first overseas management deal with the Lotte City Hotel Tashkent Palace in Uzbekistan, the group has expanded to properties in Yangon, Samara, Seattle, and Hanoi. Domestically, it manages the Lotte Hotel & Resort Gimhae under the same model.
“Management contracts are only viable for brands with strong equity,” a Lotte Hotels spokesperson said. “This approach is central to our expansion strategy, enabling rapid growth with a lighter asset footprint.”
Shilla Stay Plus Ihoteu (Image provided by Shilla Stay)
Hotel Shilla has also adopted this model through its lifestyle brand Shilla Stay. Properties in Seobu Busan, Yeosu, and Jeonju operate under management contracts, while 12 others—including locations in Dongtan, Yeoksam, Jeju, Seodaemun, and Ulsan—use lease agreements. The upcoming Shilla Monogram Gangneung, set to open on July 31 near Anmok Beach, will also operate under a management contract.
Management contracts offer operators a share of profits, while lease models involve fixed rental payments. Both relieve hotel companies of upfront construction costs.
Shilla Stay has seen remarkable growth. In 2024, it posted revenue of 221.8 billion won—nearly on par with The Shilla Seoul’s 223.2 billion won—and recorded quarterly occupancy rates between 82% and 86%.
Hotel Shilla is also applying the model overseas, with the Shilla Monogram Danang in Vietnam as a flagship case. In its first-quarter earnings report, the company emphasized that the strategy minimizes investment risk while ensuring steady returns, and it aims to use this model to expand its global footprint.
Welcome lobby on the first floor of Nine Tree Rokaus Yongsan (Image provided by Parnas Hotel)
Other players are following suit. Parnas Hotel manages the Nine Tree Premier Rokaus Hotel in Seoul’s Yongsan district and will operate the Inscape Yangyang by Parnas, set to open in November 2026. Josun Hotels & Resorts is managing the Paraspahra in Bukhansan National Park under a similar agreement.
Industry insiders note that the growing prevalence of management contracts signals the rising global credibility of Korean hotel brands. “This approach was once exclusive to giants like Hilton and Marriott,” said one hotel executive. “Korean hotel chains now have the brand recognition to adopt it successfully.”
However, experts also caution that management contracts may yield lower margins and reduced operational control compared to direct ownership. “If brand value suffers at any managed location, the entire network could feel the ripple effects,” another official warned.
Lina Jang (linajang@koreabizwire.com)
