Jeju Island is witnessing a surge in the listing of five-star hotels as economic volatility and softening domestic tourism weigh on the hospitality sector. A confluence of loan maturities, asset restructuring, and profit-taking is prompting owners to bring several high-profile assets to market simultaneously—despite a challenging investment climate.

The demand base for Jeju hotels is heavily skewed toward domestic leisure tourism, with minimal exposure to international business travel, F&B-driven traffic, or MICE (Meetings, Incentives, Conferences, and Exhibitions) segments. This makes hotel revenues in Jeju particularly sensitive to broader consumer sentiment.

Although Jeju's hotel market saw a rapid post-COVID recovery, a mix of political instability, elevated prices, and regional competition - especially from Japan - has led to a measurable drop in visitors since late 2024.

D&D Investment (DDI) is currently preparing to sell the Grand Chosun Jeju Hotel. The asset was formerly operated as the Kensington Hotel until SK D&D acquired it for KRW 115 billion in 2018. After completing a full-scale renovation in March 2021, the property was transferred to the DDI JJ 60 REIT at a valuation of KRW 240 billion.

The REIT is managed by DDI, with Chosun Hotel & Resort (a Shinsegye Group affiliate) holding a 26.2% stake and operating the hotel under a 20-year management contract. A mortgage loan of KRW 150 billion was secured at a 2.7% interest rate during acquisition. With the loan maturing in March 2026, DDI is now pursuing a slae to ensure an orderly exit. 

DL Group is in active negotiations with Singapore's sovereign wealth fund GIC for the sale of the 513-room Maison Glad Hotel, with Gravity Asset Management designated as the preferred bidder.

Separately, Blue Cove Asset Management is planning to launch an open bidding process for the 307-room Parnas Hotel in the first half of 2025. CBRE Korea is acting as exclusive advisor.

While each seller has distinct motivations—deleveraging (DL), loan maturity (DDI), and profit realization (Blue Cove)—the convergence of listings has drawn market attention to Jeju’s underlying hospitality fundamentals.

According to the Jeju Tourism Association, the island welcomed 1.81 million visitors in January and February of this year—a 12.3% year-on-year decline. While foreign arrivals (13% of the total) rose by 11%, helped by an influx of Chinese tourists under visa-free access, domestic tourism dropped by 15%. Industry observers cite increased affordability of travel to Japan as a key driver of substitution.

Given Jeju’s overwhelming reliance on leisure demand, most domestic institutional investors are staying away. Memories of COVID-era underperformance have made retail-driven hotel investments a hard sell. In contrast, international capital—particularly from GIC—is selectively showing interest.

A senior executive at a global asset manager commented,
“Jeju hotels are almost entirely dependent on tourism. That makes them highly exposed to macro swings. In contrast, Seoul hotels benefit from international business demand as well, which provides a more balanced cash flow structure—hence the investor preference, even at tighter yields.”

The current wave of Jeju hotel sales is likely to serve as a litmus test for how investors weigh risk, yield, and operational durability in Korea’s regional hotel markets.

This article was originally published by Corebeat on April 3, 2025