Korea’s lodging industry experienced a notable downturn in the first quarter of 2025, as high-end hotels and resorts were particularly hit hard by the seasonal slowdown following the year-end peak season, according to the “Q1 2025 Domestic Lodging Industry Report” released by Yanolja Research (Director: SooCheong Jang) on the 28th. Based on data from NOL (formerly Yanolja Platform), AirDNA, and proprietary surveys, the report offers a multi-dimensional analysis of demand trends and forecasts a rebound in the second quarter, driven by improving consumer sentiment and seasonal tailwinds.
The first quarter of 2025 marked a transition from the winter high season to the spring low season, leading to an overall decline in lodging performance. Compared to Q1 2024, Revenue per Available Room (RevPAR) fell by 9.4%, primarily due to an 11.2% drop in Occupancy Rate (OCC), despite a modest 2.1% increase in Average Daily Rate (ADR). Premium accommodations were especially affected. Five-star hotels saw a steep 39.0% drop in RevPAR and a 35.2% decline in OCC. Three-star hotels also recorded declines of 14.2% in RevPAR and 12.9% in OCC. In contrast, four-star hotels managed to limit their RevPAR decline to 5.0%, with ADR up 3.0% and OCC down 7.8%.
On the other hand, budget-friendly accommodations performed well. One- and two-star hotels recorded an 8.2% increase in RevPAR, with ADR up 3.9% and OCC up 4.2%. Pensions also posted a 5.0% rise in RevPAR, with both ADR and OCC increasing by around 2.5%. However, resorts saw an 18.3% drop in OCC, leading to an 18.4% decline in RevPAR. Shared accommodations experienced a 5.2% decline in RevPAR, while motels remained relatively stable with a slight 0.4% decrease.
Change in ADR, OCC, and RevPAR by Lodging Type (Q1 2024 vs. Q1 2025)
Source: Yanolja Research
Compared to the boom in Q4 2024, driven by year-end demand, the Q1 downturn is even more pronounced. Overall RevPAR across the industry dropped by 16.4%, while ADR and OCC declined by 7.0% and 10.2%, respectively. Five-star hotels recorded a 25.2% decline in RevPAR, and four- and three-star hotels fell by 23.2% and 24.0%, respectively. Despite a 5.7% increase in ADR, resorts saw RevPAR fall by 5.7% due to a 10.8% drop in OCC. Motels and pensions showed relative resilience with RevPAR declines of 8.2% and 1.4%, respectively, while shared accommodations saw a sharper 12.1% decline.
Yoon Hyowon, Senior Researcher at Yanolja Research, explained, “The shift to the spring low season and the sharp drop in demand after year-end festivities significantly affected the performance of premium hotels. This stands in contrast to the Q4 boom led by hotels and underscores the vulnerability of the lodging sector to seasonal fluctuations.”
Change in ADR, OCC, and RevPAR by Lodging Type (Q4 2024 vs. Q1 2025)
Source: Yanolja Research
Despite Q1 challenges, Yanolja Research’s Lodging Business Sentiment Index suggests a strong rebound in Q2 2025. Hotels scored 111.7 for ADR and 110.4 for OCC in the index, while motels scored 106.1 and 114.4, respectively — all exceeding the baseline of 100, indicating positive expectations. This is attributed to improving consumer sentiment, reduced political uncertainty following the confirmation of early presidential election dates, and favorable spring weather and holidays. Compared to the lackluster sentiment in Q4 2024 (Hotel: ADR 75.8, OCC 74.2; Motel: ADR 84.9, OCC 78.6), the Q2 outlook shows a particularly sharp recovery for hotels.
The 2025 Spring Lodging Sale Festa, held from February 28 to April 6, emerged as a bright spot during the first quarter. A total of 300,000 discount coupons were distributed — a 2.7x increase from the previous year’s 110,000 — which helped boost bookings. Coupon usage peaked in early March, dipped mid-month, and surged again at the end of the month. Regionally, Gangwon (14.0%) and Busan (13.7%) recorded the highest coupon usage, reflecting strong demand for spring coastal and cherry blossom destinations. By lodging type, motels had the highest usage rate at 61.1%, followed by hotels (28.8%) and pensions (10.1%).
Ahn Yejin, Senior Researcher at Yanolja Research, noted, “High coupon usage in Gangwon and Busan highlights the appeal of natural attractions and shows that the Festa helped stimulate demand during the off-season.” Lodging businesses reported higher satisfaction with the Festa compared to last year, with more respondents indicating they were “very satisfied” or “satisfied.” Some metropolitan-area hosts expressed willingness to participate again and suggested issuing more coupons and customizing them by accommodation type.
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