With a growing number of foreign tourists visiting South Korea causing accommodation problems, the hotel construction market has emerged as the most attractive investment destination in the country despite the local housing market slump, industry data showed Friday.

Local real estate investment trusts, companies that own or operate profit-making real estate, inked six new contracts worth more than 900 billion won ($853.4 million) to build new hotels or renew old ones in 2013 alone, compared with three deals worth 200 billion won in 2012, according to the data compiled by the Hana Institute of Finance.

Local mutual-fund firms concluded six deals to build new hotels last year.

Institutional investors such as public pension fund managers were major participants in the hotel-focused REITs and mutual funds.

The Military Mutual Aid Association, South Korea‘s military pension fund, invested 28.1 billion won in a 52.2 billion won mutual fund run by the Korea Investment Management Co. to build the Holiday Inn Express Seoul, a lower-cost brand of Intercontinental Hotels Group Plc.

Luxury hotel operators such as Hotel Shilla have also expanded their businesses to cheaper “business hotels” in order to get in on the boom in hotel construction.

Ora Resort Co., the hotel management unit of Daelim Industrial Co., will lease the 224-room hotel in central Seoul and hold the operating rights for 15 years.

Hotel Shilla ― the luxury hotel unit of South Korea’s largest conglomerate, Samsung Group ― opened the 306-room Shilla Stay, its new business hotel brand, in southern Seoul earlier this month. It will open five more in Seoul by 2016. Hotel Shilla will run Shilla Stay hotels on lease and share part of their profits with the developers.

The boom in hotel construction stemmed from a lack of accommodations for tourists who flock to South Korea, market watchers said.

Last year, a total of 12.2 million foreigners visited South Korea, up 9.3 percent from the previous year‘s 11.1 million, according to the Korea Tourism Organization.

In the first half of 2014, the figure reached 6.6 million, up 19.8 percent from a year earlier.

The remarkable growth is attributable to an explosive rise in the number of Chinese visitors over the recent two to three years.

Arrivals from China shot up to 4.3 million in 2013, up 52.5 percent on-year from 2.8 million in 2012, while Japanese tourists fell 21.9 percent to 2.7 million due mainly to the weakening Japanese yen.

The upward tendency drove the strong demand for hotel rooms, especially in Seoul, which more than 80 percent of the foreigners chose for their destination last year, according to the KTO data. (Yonhap)