Competition is growing among business hotel operators in Korea as they are seeking deeper price cuts and aggressive promotion to lure more foreign and budget-conscious travelers, market watchers said Thursday.

Business hotels offer small rooms at about one-third the price of standard rooms available at brand suites. Some feature stylish rooms with various amenities for fashion-savvy younger clients.

Many of the hotels have sprung up in Myeongdong, a downtown shopping area, and more are set to open later this year to fill a niche demand between five-star hotels and cheap guest houses.

Lotte Hotel, a unit under Korean retail giant Lotte Group, has been running Lotte City Hotel since 2009, while Shilla Hotel, an affiliate of Korea's top conglomerate Samsung Group, later joined the market by launching its first budget hotel, Shilla Stay, back in 2013.

Market watchers say that Shilla Stay's advance into the budget hotel market is sparking price competition as it seems to be offering more discounts than others to play catch-up as a latecomer with aggressive promotion and marketing.

According to major online hotel booking sites, Shilla Stay is offering a one-night stay for 100,000 won ($85.50), compared to about 127,000 won for a room at Lotte City Hotel. On other sites as well, Shilla Stay is mostly offering around 10-20 percent lower prices than the major rival company.

The online prices are much lower than those posted on its official Web site.

Experts say that this might be an "inevitable" choice for Shilla Stay seeking to catch up with other existing competitors.

Shilla Stay officials said they are just trying to provide customers with services at reasonable prices.

"Shilla Stay is a business hotel, which is different from Shilla Hotel designed to serve state guests," a company officials said. "The brand was launched to provide accommodation at reasonable prices."

Intensifying price competition prompted by such aggressive marketing efforts is seen as a boon to budget-conscious travelers.

Some are still voicing concerns that a possible price war could distort the market and also further squeeze the margins for budget hotels facing tougher competition as others are expected to join the relatively fledgling business down the road. (Yonhap)