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| The Parkview, the buffet restaurant at Seoul Shilla Hotel/ Courtesy of Seoul Shilla Hotel |
By Kim Se-jeong
During dinner hours, the Parkview, the buffet restaurant at Shilla Seoul is packed with diners.
It is an unusual scene for a restaurant of a five-star hotel amid the race among high-end hotels in the city to open their restaurants.
But, hoteliers and experts say the Parkview's success is not what it appears to be.
"Due to the rising competition, hotels' restaurant business is not making any money," said CITI Choi, CEO of Le Meridien Seoul, a five-star hotel in southern Seoul that opened in September last year. Le Meridien is struggling to promote its buffet restaurant, Chef's Palette.
The lack of profitability among hotel restaurants is due to two factors, one of
which is the rising competition.
The number of hotels and other types of accommodation nationwide increased from 1,073 in 2012 to 1,716 in 2016. In Seoul alone, the number of five-star hotels increased from 21 in 2012 to 28 in 2016.
Hotel restaurants also compete with non-hotel restaurants. People can now more easily find restaurants that serve diverse cuisines and quality dishes through food blogs, the Michelin Guide and other local restaurant guides, which can cause people to overlook hotel fine-dining restaurants.
The industry situation was quite different. Up until 1990s, upscale restaurants which provided diners a variety of dishes and quality service were few, so people turned to hotel restaurants.
In addition, at the time, dining at a hotel restaurant was a status symbol, prompting the growing number of middle-income families to flock to the hotel restaurants.
"In the past, food and beverage accounted for up to 70 percent of hotel sales," said Seo Won-seok, who teaches hotel and tourism at Kyung Hee University.
"Although sales were good, the restaurant business never contributed significantly to the hotel's overall profitability because the restaurant business requires a large number of staff and expensive quality ingredients. And it's not better now."
Should hotels then close down unprofitable restaurants?
Seo said that would be difficult.
"Without the restaurants, hotels will lose their five-star status," Seo said, adding that doing so goes against what Korean people like. "Traditionally, Koreans think five-star hotels should serve food, all kinds of cuisines."
Choi from Le Meridien echoed Seo's sentiment, saying hotels would be reluctant to close down their restaurant because it would damage the hotel's brand power. "Closing them down is like breaking a promise with the guests."
Overseas, hotels have long given up on running restaurants. However, in Korea, amid the intensifying competition, hotels continue their earnest efforts to win customers, such as through renovation, as in the case of Grand Hyatt Seoul.
The new cluster of restaurants in the hotel has become a must-visit place in the neighborhood since it opened two years ago.
"Restaurant trends change so fast in Korea. Hotels have difficulty catching up with the trends, but some have tried and succeeded," a food writer for the Hotel and Restaurant Magazine said.
Unlike Grand Hyatt, Le Meridien is currently creating video contents for Chef's Palette, hoping that the story telling would connect with more potential guests.
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