After being shunned during the COVID-19 pandemic, hotels in South Korea are once again attracting investor interest. With foreign tourism nearly back to pre-pandemic levels, but the number of available rooms still well below previous supply, the sector’s profitability has sharply improved.
According to sources in the investment banking industry, real estate investment firm BlueCove Investment has been ramping up its hotel acquisitions since the second half of last year.
The firm is currently in the final stages of acquiring the New Oriental Hotel in Seoul’s Myeong-dong district. Of the approximately 22 billion won (about $15.4 million) total deal value, BlueCove plans to fund around $4 million through an equity-based fund and finance the remaining $11.4 million through debt.
Blue Cove, founded in 2019 by Kim Seung-beom, formerly of IGIS Asset Management, currently manages about 2.1 trillion won ($1.52 billion) in assets. The company previously invested in the Grand Hyatt Seoul in June 2023 and successfully exited the investment.
Since then, it has doubled down on hotel investments, having been named the preferred bidder in March for the Shilla Stay Dongtan in Hwaseong, Gyeonggi-do (Province). Last November, it teamed up with U.S.-based Blackstone to acquire the former headquarters of SM Group in Seoul’s Gangnam district, with plans to convert the building into a hotel.
BlueCove isn’t alone in eyeing undervalued hotel assets. Singapore’s sovereign wealth fund GIC is currently negotiating the purchase of three Glad Hotels located in Yeouido, Gangnam, and Jeju Island. The combined transaction value is expected to exceed $421 million. Several global asset managers, including KKR and SC Capital Partners, have also shown interest in acquiring the properties.
By contrast, several S. Korean hotel buildings that had been earmarked for office conversion during the pandemic are now being returned to their original use.
The Tmark Grand Hotel in Seoul’s Jung District, which Hana Alternative Asset Management purchased for about $147.4 million in 2016, struggled during the pandemic as tourist traffic dried up in the Myeong-dong area.
Struggling with financing problems, the hotel closed its doors in 2022. The investment fund soon followed by falling into an event of default (EOD), a situation in which a borrower fails to meet debt obligations.
Since then, Gravity Asset Management partnered with U.S.-based alternative investment firm Angelo Gordon to acquire the property in early 2024. Although the new owners initially considered converting the building into offices, they ultimately decided to reopen it as a hotel.
In September, it resumed operations as the four-star Voco Seoul Myeongdong. A similar shift occurred with The Prima Hotel Jongno—formerly the Aventree Hotel—in central Seoul. Originally slated for office redevelopment, the property has been operating as a hotel again since last year.
Industry analysts say signs of recovery in the S. Korean hotel market are driving increased deal activity.
According to a recent report from JLL Korea, hotel transactions in 2025 are expected to reach around $1.54 billion, buoyed by solid operating performance and expectations of interest rate cuts. The report also noted that foreign capital is likely to continue flowing in, particularly for value-add opportunities such as remodeling and expansion aimed at enhancing asset value.
The rebound in tourism has played a key role in this trend. S. Korea hosted 16.3 million foreign visitors in 2024, recovering to 93.5% of the pre-pandemic peak. The number is expected to climb to around 17.5 million in 2025.
However, around 4,000 rooms in four- and five-star hotels disappeared from Seoul during the pandemic, and less than half of those have returned.
This gap between rising demand and constrained supply has significantly boosted revenue per available room (RevPAR). In 2024, average RevPAR for luxury hotels in Seoul rose 62% compared to 2019. Another 5 to 10 percent increase is forecast for 2025.
