Seoul City Hall’s Premier Hotel Embarks on Ultra-Luxury Makeover...The Plaza Undergoes Complete Renovation After 48 Years [Why&Next]

A transformation after 48 years:
The Plaza faces a test in the luxury competition

The Plaza crafts a new strategy amid the influx of global luxury hotel brands

The Plaza Hotel, a five-star property operated by Hanwha Hotels & Resorts, is embarking on a large-scale renovation for the first time in 48 years. As global luxury hotel brands such as Mandarin Oriental announce plans to enter Seoul, the city is emerging as a fiercely competitive landscape for international hotels, prompting The Plaza Hotel to undergo a revamp to boost its competitiveness.

According to the industry on August 1, three major buildings around Seoul Plaza—the Plaza Hotel, Hanwha Building, and Hanwha Financial Plaza—are scheduled for major renovations. The Sogong 1, 2, and 3 Districts Remodelling Project in Jung-gu, Seoul, has passed the architectural review stage and is currently proceeding with follow-up administrative procedures. Although the construction start date has not yet been determined, significant changes in the hotel’s operating model are not expected after completion.

Sogong 1 District The Plaza Hotel Rooftop Observatory

Transformation After 48 Years...The Plaza Hotel Reexamines Its Strategy

Since its opening in 1976, The Plaza Hotel has held a symbolic location facing Seoul City Hall and Deoksugung Palace, regularly hosting state events and being recognized alongside the Shilla Hotel, Lotte Hotel, and Westin Josun as one of Seoul’s 'four major five-star hotels.' Even today, The Plaza Hotel’s prime downtown location, 319 rooms, and extensive operational experience remain its main sources of competitiveness.

However, the Seoul hotel industry has undergone significant changes over the past decade, placing The Plaza Hotel at a crossroads. While location, history, and five-star status were once key competitive factors, now it is global branding, memberships, and differentiated customer experiences that determine a hotel’s value. As a result, The Plaza Hotel has found itself facing a new competitive environment.

In fact, Hanwha Hotels & Resorts, which operates The Plaza Hotel, has had lackluster financial results. During the COVID-19 pandemic in 2020, the company recorded an operating loss of 95.2 billion won, followed by another loss of 44 billion won in the subsequent year. As the pandemic transitioned to an endemic, it posted an operating profit of 3.9 billion won in 2022, and recovered further to 23.8 billion won in 2023. However, in 2024, operating profit shrank again to 13.8 billion won. Last year, the company recorded 60.8 billion won in operating profit, but this was primarily due to the acquisition of Ourhome and is not considered a visible achievement in the hotel and resort business itself.

This trend was strongly influenced by the 2015 opening of the Four Seasons Hotel, followed by a series of new luxury hotels such as Signiel Seoul, Josun Palace, and Fairmont Ambassador Seoul. Located in central districts such as Gwanghwamun and Gangnam, these hotels have attracted demand from existing luxury hotels through ultra-high-rise views, global chain memberships, and large-scale food and beverage facilities.

As a result, there has been market speculation about The Plaza Hotel’s possible conversion into an officetel or repositioning as a three- to four-star business hotel. However, Hanwha Hotels & Resorts has rejected this speculation, making it clear that it will maintain its five-star luxury hotel strategy. A Hanwha Hotels & Resorts official stated, “The relevant procedures are ongoing, but groundbreaking could take place as early as next year. The Plaza Hotel is a five-star brand owned by Hanwha Hotels & Resorts in central Seoul, and we will maintain its position as a luxury hotel with a five-star or higher rating even after the renovation.”

Aggressive Push by Global Luxury Brands...Will Kim Dong-sun Pursue His Signature Strategy?

The reorganization of Hanwha Group’s hotel business is also supporting The Plaza’s transformation. This month, Hanwha is set to separate its Tech and Life Business Division—led by President Kim Dong-sun—into a new entity called Hanwha Machinery & Services Holdings. Since Kim Dong-sun, Executive Vice President and Head of Future Vision at Hanwha Galleria, is leading the group’s premium business portfolio spanning retail, dining, and hotels, the industry interprets The Plaza’s renovation as closely aligned with the group-level luxury strategy. Hanwha Galleria’s moves to attract more luxury brands, enhance VIP services, and potentially renew the Apgujeong Galleria Department Store’s luxury wing are seen in the same context.

Executive Vice President Kim is pursuing a strategy to integrate food and beverage, retail, and hotels into a single premium consumer ecosystem. He recently brought the American burger brand Five Guys to Korea and is accelerating efforts to capture the high-end consumer market by expanding premium ice cream brands like Benson and growing the group’s wine and restaurant operations. The industry anticipates that The Plaza Hotel will play a pivotal role, not just as an upgraded facility, but as a key pillar in completing the group’s luxury portfolio.

Nevertheless, challenges remain significant. The Seoul luxury hotel market is already fiercely competitive, with Four Seasons, Josun Palace, Signiel, and Fairmont among the established rivals, and global brands such as Capella, Mandarin Oriental, Bulgari, Ritz-Carlton, and Rosewood reportedly planning to enter in the future. Additionally, Lotte Hotel Seoul is launching a large-scale renovation under its “The Grand” banner, leading analysts to believe that simple facility upgrades alone will be insufficient for differentiation. Ultimately, the success of this remodeling hinges less on facility improvements and more on how effectively Kim Dong-sun’s premium strategy can be woven into the hotel’s offerings.

An industry insider stated, “Because President Kim Dong-sun is pushing a strategy that integrates retail, dining, and hotel operations into a single premium business group, The Plaza is highly likely to serve as a key asset for executing that strategy. In the end, the extent to which brand experience can be differentiated after the renovation will determine competitiveness in the hotel market.”

This content was produced with the assistance of AI translation services.