Korean Telco giant KT’s Midas touch with hotel business  

KT Corp., one of South Korea’s top three mobile carriers, is on a roll in the hotel business despite its late foray into the hospitality industry by turning its old buildings and lots sitting idle in a declining era for landline phones into lucrative hotels.

According to the Korean hotel industry on Thursday, KT Estate Inc., KT’s fully owned real estate developer, will open European hospitality giant Accor’s premium hotel Pullman in Seoul in partnership with Korea’s homegrown hotel chain Ambassador next year.

KT Estate is KT’s subsidiary, which develops and supplies residential and commercial buildings.

The new hotel, tentatively named Ambassador Pullman, will be located in Gwangjin-gu, Seoul where major Korean hospitality group Walkerhill Hotels & Resorts operates two five-star hotels.

Following the hotel opening, KT will own five five-star hotels in Seoul, known for the most expensive real estate prices in Korea.

Even Korea’s leading native hospitality groups, such as Lotte Hotels and Resorts and Shinsegae’s Josun Hotels & Resorts, operate only three five-star hotels, each, in the capital city.

The Korean telco giant has quickly penetrated the hospitality sector despite being a latecomer after successfully redeveloping its old telecom office buildings and plots in Seoul, left empty after the decline of landline telephone services, into hotels.

Many of its buildings have sat on expensive land lots in Seoul for decades, meaning that the company spends almost nothing on land purchasing during redevelopment.  

With the fast expansion of its hotel business, KT Estate’s revenue from the hotel business jumped to 183.6 billion won ($135 million) in 2023 from 29.7 billion won in 2020.

REDEVELOPMENT OF IDLE TELEPHONE SERVICE OFFICE SITES 

On top of profits from its old building redevelopment, the Korean telecom company also enjoys stable fee payments from global hotel chains for renting its buildings or hotel management agreements.

In 2014, KT ventured into the hospitality market by leasing the building redeveloped on the plot for its old telephone service office in Yeoksam-dong, Seoul, to Shilla Stay, a business hotel brand owned by major Korean hospitality group Hotel Shilla.

Later it expanded its hospitality business through management agreements with multinational hotel chains.

In 2018, it redeveloped a plot formerly occupied by another old landline service office in Seoul into a five-star hotel operated as Novotel Ambassador Seoul Dongdaemun.

It opened five-star hotels called Andaz Seoul Gangnam in 2019 and Sofitel Ambassador Seoul in 2021.

Its latest five-star hotel addition is Le Méridien Seoul in Myeongdong, which opened in 2022.

All of them occupied the land previously used by KT’s old telephone service offices in Seoul.

Under management contracts with KT, Hyatt’s Andaz, Accor’s Sofitel and Marriot’s Moxy ventured into the Korean hotel market for the first time. A three-star hotel called Moxy opened in Myeongdong in 2022.

“KT has contributed a lot to the diversification of the Korean hotel market by inviting various multinational hotel brands,” said an official from the Korean hotel industry, expecting KT will add more hotels in Seoul, where it owns many idle plots.

The hospitality business is also expected to create great synergy with KT’s mainstay telecom and information technology businesses.

Novotel Ambassador Seoul Dongdaemun has become Korea’s first hotel to provide various artificial intelligence-powered services, including hotel concierge services, using KT’s IT and AI technologies.  

Write to Ji-Yoon Yang at yang@hankyung.com

Sookyung Seo edited this article.