The rise of the love hotel — Korea’s latest $1 billion business | Make It International

The rise of the love hotel — Korea’s latest $1 billion business | Make It International

This is a love hotel — and it’s big business. Would you stay in a love hotel? Love hotel, would you stay? Oh no, no, no! Depends on how much? So big, in fact, that here in South Korea, it has
just born the country’s latest $1 billion start-up, online budget hotel bookings
platform Yanolja which means “hey, let’s play” in Korean. It is South Korea’s eighth unicorn, and has made a
superstar of its once impoverished founder. I’ve traveled to Seoul, to meet Yanolja’s
CEO Jong Yoon Kim to find out how he and founder Su-Jin Lee got the
country hot for love hotels. South Korea’s relationship with the amorous
accommodation hasn’t always been one of affection. Understanding its new allure requires going
back to its sordid roots. Love Hotels are a type of short-term,
pay-per-hour accommodation. They originate in Japan, where for centuries
they’ve been providing couples a discreet place for intimacy. But in the late 1960s,
the underground industry gained prominence with the launch of the first eponymous “Love Hotel” in Osaka. Adorned with a rotating, neon sign and offering
guests hourly rates for a “rest,” the accommodation tapped into society’s
growing sexual liberalization, and paved the way for a new wave of pay-per-hour love hotels
— each more exotic and erotic than the last. Love hotels – we called it motel in South
Korea – motels used to be a well-known place for young couples to spend their time privately. The industry’s rise coincided with a widespread
tightening of prostitution laws in Asia. That trend didn’t go unnoticed, and quickly
spawned negative associations of love hotels as breeding grounds for illicit activities
and extramarital affairs. But that didn’t stop their
international expansion. Today, few countries have been
left untouched by the craze. The hotels’ ubiquity even scored them
an iconic emoji in 2015. Back here in South Korea, love hotels rose to prominence in the late 1980s with the Seoul Olympic Games.
Their seedy associations have long been a source of embarrassment. But in 2005,
one man sought to change that. For Yanolja founder Su-Jin Lee, love hotels
had always been a source of sanctuary. Orphaned at a young age, Lee started as a
janitor at a love hotel when he was 23. It offered a place to stay and a steady wage. So when an anti-prostitution law passed in 2004 threatened to kill the industry,
he saw an opportunity. I think such kind of experience is very helpful
to understand the nature of the industry. The discreet accommodations traditionally
relied on walk-in customers. So Lee started by creating an online advertising
platform to attract new guests. But it was with the launch of bookings site Yanolja
in 2007 that the business really began to take off. Yanolja, especially Su-Jin Lee, they are thinking what are
the pain points nobody understands or finds out? Lee also offered renovation services under
the Yanolja franchise, which helped love hotels clean up their acts and target new customer bases. Chief among those were two major segments: Young couples and budget travelers
seeking short-term accommodation. In terms of the younger generation, we try
to make kind of the playground for everything. From many surveys, the quality of life, or
quality of the happiness, is very, very low, because the millennials, or many generations,
felt that they do not enjoy enough activities. So, we try to make people go out more frequently. In South Korea, it’s typical for young people
to live with their parents until marriage. With rising living costs and a slumping marriage
rate, that phenomenon has been exacerbated. Estimates suggest 57% of young South Koreans
live at home well into adulthood, making love hotels an appealing escape for couples wanting
to get away from the prying eyes of parents. Meanwhile, growing travel appetites has boosted
demand for new types of accommodation. In South Korea, online travel sales have nearly
doubled in the past five years and the country now represents one of Asia’s
largest tourism markets. Travel industry is really growing
fast in South Korea. It’s because South Korean consumers’
attitudes have been significantly changing, as millennials put their priority on their
working-life balance. In addition, the government limited the maximum
working hours to 52 hours per week from last year. This kind of government activity also encourages
travel industries. Those trends led Yanolja to expand into its
own line regular hotels and guest houses as well. It has recorded an annual growth rate of more
than 70% in the past five years. The platform, which makes its money off of
commission, has 32 million downloads and 3 million monthly active users. It now hosts more than 20,000 partner
accommodations across South Korea. That’s almost half of the country’s some
46,000 registered inns and guesthouses, whose annual revenues exceed $3.6 billion. The hotel is one of the items, but we are
pursuing to realize a total package for the users. So Yanolja is providing restaurant and activity,
leisure tickets, transportation, and the others. That expansion has proven
appealing for investors, too. In June 2019, a $180 million funding round
pushed the company to a valuation of $1 billion, making it the latest travel-tech unicorn to join
the likes of Klook, Airbnb and OYO. I think the reason why we can be a unicorn is
because Yanolja is the number one hotel in Korea. But it’s just the beginning, I think. So we are trying to be a number one globally. Now Yanolja wants to tap into
more growing markets. The business has ventured into leisure bookings
and now offers its renovation services to other commercial properties, ranging from
bookstores to healthcare centers. It has also developed its own hotel
management software to sell to partners and fuel its growth plans across Asia Pacific. We’d like to be a global number one solution
provider for the hotel and the other suppliers. But in its mission to reinvent the love hotel,
there’s still one final goal Yanolja has its heart set on: An initial public offering. That public accolade, it says, would mark the full
transformation of an industry once shrouded in secrecy. I don’t know what’s the best timing, because
we need to consider the market situation etc. But we need to be ready anytime for IPO.

59 thoughts on “The rise of the love hotel — Korea’s latest $1 billion business | Make It International

  1. not sure why they're doing a story on this. love hotels exist in many, many countries. it's not a huge thing in the US because young adults have historically moved out on their own really early.

    for most other part of the world where the kids live at home until they get married (i.e. everywhere that isn't the US and maybe the UK/Canada/Aus), you'll find love hotels.

  2. Actually, Yanolja is not an 'exactly' for only love hotel app. It is more about Hotel Reservation App, such as, hotels combine etc, but in cheaper, lower quality hotels. That's why it is the latest Unicorn here in south Korea.

  3. Living in North America (Canada especially) motels costs almost the same price as decent hotels if buy them from the right website… we would rather make full use of our money at the hotel and enjoy our time inside it and can go in and out until checkout. If we had reasonable rates, we would pay for hourly "motels".

  4. So a pretty motel, wow, give it 10 more billion dollars please, we should just give it a 42 billion dollar valuation just like the most logic business in earth, we work.
    This unicorn economy is soooo not going to blow up in everybody’s face.

  5. Go back to your boring ass country and mind your own dull life. Always some “Lady” trying to crack the egg shell on some Sin that would shock the conservative Western populations…the do gooders…..the self righteous…restricters of life…on patrol to expose and criticize and question what is none of their business. Killed any thing fun or creative pertaining to Sex in their own Female ruled Lands. Head back Home Agent of “ Finding Shame in Everything” we cannot Control.!

  6. Japan had them for 40 or more years…should be well known and they served a purpose ….for affairs or young people living at home or in company boarding rooms…etc…..quite a variety too. Fun stuff.

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