Hotel Shilla’s ‘Shilla Stay’ business hotel brand, a recent entrant to the market, is being blamed for lowering profits industrywide due to lower prices compared to other business hotel chains. (Image : Yonhap)
SEOUL, March 24 (Korea Bizwire) – As the number of business hotels targeting foreigners is increasing, price competition is getting fierce.
Hotel Shilla’s ‘Shilla Stay’ business hotel brand, a recent entrant to the market, is being blamed for lowering profits industrywide due to lower prices compared to other business hotel chains.
According to data from Interpark Tour, an online hotel reservation site, the price of a one-night stay at the Lotte City Hotel Mapo started at 127,280 won, while it only cost 100,000 per night at the Shilla Stay, which was 27,280 won less than the lowest prices in the industry.
However, the official homepages of the two hotels stated that the lowest price per night at the Lotte City Hotel Mapo was 130,000 won, and 180,000 won at the Shilla Stay Mapo.
Considering the high-end brand image that Hotel Shilla established through high prices, the lower rates at its business hotels indicate a rapid reversal.
Officials at Shilla Stay commented that as a ‘business hotel’, they have a different brand concept. “Since the brand was established to provide accommodation to visitors at a reasonable price, we had to lower prices. We don’t have pools at our facilities, unlike our competitors. Also, our business hotel rooms are much smaller,” they said.
Industry watchers say that the low prices might have been an inevitable choice for Shilla Stay as the company made a late entry into the business hotel market.
While Lotte City Hotel Mapo opened in 2009, the first Shilla Stay hotel in Dongtan, Gyeonggi Province, opened in November 2013. The Yeoksam branch, which was the first to open in Seoul, started business in 2014.
Although the ‘intentionally’ low prices could be beneficial to consumers, concerns are being raised that they could be the cause of confusion in the market.
Industry officials worry that the low-price strategy of Shilla Stay could damage the luxurious brand image of Hotel Shilla, leading to lower profits for the entire industry.
By Lina Jange (linajang@koreabizwire.com)
