Marriott Dongdaemun struggling to fill empty rooms.
The JW Marriott Dongdaemun Square Seoul has faced bleak business prospects amid a sluggish economy further compounded by a dwindling occupancy rate in the first three months of 2018.
In contrast, other five-star hotels have seen their rates jump on the back of the 2018 PyeongChang Winter Olympic Games, according to industry analysts Tuesday.
The failure to attract customers in a "hard-to-miss" opportunity for revenue generation early this year further cornered the second JW Marriott-brand hotel, which opened in 2014 after the JW Marriott Hotel Seoul in southern Seoul.
The hotel particularly suffered from a nosedive in numbers of Chinese tourists last year, following a diplomatic row over deployment of a U.S. Terminal High Altitude Area Defense (THAAD) anti-missile system here.
The 170-room hotel in northeastern Seoul had an occupancy rate between 70 percent and 80 percent according to the hotel, and less than 70 percent according to its competitors. Occupancy rates below 70 percent are considered a major "failure in operation," according to industry insiders.
"Most five-star hotels in the capital city saw up to a 20 percent occupancy rate increase over the past two months compared to a year earlier," said an official at a Seoul-based five-star hotel who declined to be named. "It was almost inevitable given many foreigners visited Korea for the Winter Games, the primary driver of demand increase, a hard-to-come-by opportunity."
Why the Marriott in Dongdaemun remained the "only odd one out," is unclear, the official added, adding it was difficult to identify such an "unseemly" outcome. "Occupancy rate is the primary criterion by which to evaluate hotel operation given revenue amount is not always publicly disclosed," the official said.
"We are required to maintain a rate of between 70 to 80 percent as that number allows safe operation as all other fixed costs, including labor costs, are not easily readjusted. A rate below 70 percent is a major reason you have to fear for failed operation followed by deficit," he said.
In response, an official from JW Marriott Dongdaemun Square Seoul said while the occupancy rate did fall, revenue was unaffected as the average daily rate _ the cost of a one-night stay in a hotel room _ was readjusted accordingly, which competitors say was an illogical "solution."
"While the occupancy rate fell, the hotel saw a 10 percent sales increase, compared to a year earlier, so we see no problem," a Marriott official said.
However, this comment is unverifiable as total revenue is not publicly disclosed, according to a public relations official at another hotel.