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Issue Report

Collection of full-length papers and in-depth analysis of economic and management issues.

Mid-tier Hotel Formulas for Success

Mid-tier Hotel Formulas for Success

JOO Young-Min

Dec. 21, 2011

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Originally released on October 11, 2011

Since 2000, the arrival of mid-tier foreign hotel companies has reshaped the contours of the hospitality market in Korea, which had been dominated by high-end brands. The foreign hoteliers include Ibis from France, Toyoko Inn from Japan and US companies Best Western, Courtyard by Marriott, Ramada and Holiday Inn. They have enjoyed solid returns and are positioned for continuing demand due to an increasing influx of visitors to Korea and the persistent global economic pressures that are squeezing both domestic and foreign travelers’ spending. Moreover, more foreign entry into the local hotel industry is quite likely, considering a lack of mid-tier hotel rooms to accommodate the swelling number of foreign visitors in Korea.

As competition intensifies in their market segments, mid-tier hotels will need to meet three conditions to succeed. First, they must be scrupulous about containing operating costs. To this end, the facilities and services offered must be carefully selected and to keep labor costs in check, the employees will need to be proficient in multi-tasking. Second, the target customers must be e clearly identified and “killer contents” and services must be tailored to meet their specific needs. Third, incentives such as overseas promotions should be offered to overcome disadvantages in hiring quality personnel.

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