The Korean lodging market achieved a clear V-shaped recovery in the fourth quarter of 2025, rebounding from the sharp contraction recorded in the same period of the previous year. The recovery was led by five-star hotels, which posted strong revenue growth, while motels stood out as the only segment to maintain performance despite the seasonal off-peak period. These developments suggest that performance polarization across lodging segments is deepening alongside structural differentiation.
Yanolja Research released these findings in its Korean Lodging Industry Trends Report for Q4 2025, based on proprietary transaction data and an industry survey.
Premium Segment Leads the Recovery: Five-Star Hotels See Sharp Gains in RevPAR
According to the report, all property types recorded year-on-year performance improvements in Q4 2025 compared with Q4 2024. Growth was most pronounced in the five-star hotel segment, where occupancy rates (OCC) increased by 28.6%, while average daily rates (ADR) rose by 6.4%. As a result, revenue per available room (RevPAR) surged by 39.4%, marking the strongest growth among all lodging categories.
This performance reflects a combination of base effects following weak results in Q4 2024 and a notable increase in inbound tourism, particularly in major destinations such as Seoul and Busan. By property type, RevPAR growth followed in the order of resorts (+16.6%), one- and two-star hotels (+12.9%), three-star hotels (+7.4%), vacation rental (+6.7%), four-star hotels (+5.2%), motels (+3.4%), and pensions (+1.2%).
Regionally, Busan recorded the strongest momentum. Three-star hotels in the city saw simultaneous increases in ADR (+10.5%) and OCC (+14.0%), driving a 25.9% year-on-year increase in RevPAR, the highest growth rate nationwide.
Seasonal Off-Peak Pressures Leisure-Oriented Lodging, While Motels Remain Stable
Quarter-on-quarter trends present a more mixed picture. As the market transitioned from the summer peak season in Q3 to the winter off-season in Q4, leisure-oriented property types experienced sharp seasonal declines. RevPAR fell by 28.3% for pensions and 14.0% for resorts, reflecting their high dependence on seasonal leisure demand.
By contrast, motels demonstrated relative stability. Although occupancy declined slightly (-0.6%), ADR increased by 1.9%, making motels the only property type to post a quarter-on-quarter increase in RevPAR (+1.3%).
Senior Researcher Yejin Ahn of Yanolja Research noted, “Motels benefit from structurally stable demand, including short-stay urban demand and price-sensitive domestic travel, resulting in lower seasonal volatility compared to other property types.” She added that “in a high-inflation environment, demand for value-oriented lodging has strengthened, while inbound tourism demand has gradually extended into lower-priced segments.”
This trend was particularly evident in Seoul, which was the only region where RevPAR for one- and two-star hotels increased quarter on quarter, supported by spillover demand from foreign visitors.
Outlook for Q1 2026 Remains Subdued as Adjustment Pressures Build
Industry outlook indicators for Q1 2026 fell below the neutral benchmark of 100 across all segments. The hotel ADR outlook index stood at 77.8, while the OCC outlook index reached 78.5. Motels also recorded cautious expectations, with ADR at 85.9 and OCC at 82.0.
Notably, outlook indicators for hotels were lower than those for motels, suggesting that adjustment pressures may intensify in higher-priced lodging segments during the upcoming off-season.
Senior Researcher Yejin Ahn commented, “While the recovery in Q4 2025 is meaningful, disparities across regions and property types remain,” adding that “strengthening region-specific tourism content and improving accessibility will be critical to mitigating downside risks in Q1 2026.”
China Visa-Free Policy: Benefits Concentrated in Mid-Range Hotels
The report also assessed industry sentiment regarding the government’s visa-free entry policy for Chinese group tourists, a key policy issue in Q4 2025. The findings show that policy-related demand was concentrated in mid-range hotels, with limited diffusion into budget lodging segments.
The share of operators reporting a noticeable increase in bookings was highest among four-star (20.0%) and three-star (16.7%) hotels, while motels and one- to two-star hotels reported significantly lower figures, ranging from 3% to 7%, indicating that spillover effects remained limited.
Regionally, policy effects were concentrated in Seoul, Busan, and Gyeongbuk Province, where expectations related to the 2025 APEC Economic Leaders’ Meeting also supported demand. Operators cited increased room management complexity (31.2%) as the most significant operational challenge following the policy’s implementation. As priority policy complements, respondents emphasized the need for stronger incentives to attract inbound tourists to regional destinations (52.7%) and enhanced payment infrastructure support (17.0%).
Senior Researcher Hyowon Yoon concluded, “For the visa-free policy to translate into broader performance improvements across the Korean lodging industry, it must be accompanied by targeted regional strategies and expanded payment infrastructure that enable inbound demand to spread beyond major gateway cities.”
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