Calculating minimum wage in hospitality & checking compliance / SPECIAL: Weekly ON, see you soon
Hello, this is Weekly ON, the hospitality tech newsletter. Today feels like any other day — but there's something special we want to share with you. We'll get to that in the SPECIAL section below. For now, let's dive right in! 😉
In this issue
• Living-type accommodations: how to run them profitably • Calculating minimum wage in hospitality & spotting violations • SPECIAL: Weekly ON, see you soon
🏨 Industry Talk
Living-type accommodations: how to run them profitably
Living-type accommodations (LTAs) are back in the spotlight — and not in a good way. Search the term online and you'll notice a spike in negative press recently. The reason: Korea's Ministry of Land, Infrastructure and Transport is ending its grace period on LTA regulations this October 14.
LTAs are classified as "living accommodations" under Article 3-5 of the Enforcement Decree of the Building Act. They look like regular officetels or urban hotels, but by law they can only operate as lodging — not residential units.
The problem: many LTAs were marketed as "habitable" in the past, leading people to use them as residences instead of guest rooms.
In January 2021, the Ministry drafted detailed regulations to curb residential use of LTAs. The grace period ends this October. After that, anyone still using an LTA as a residence could face annual enforcement fines of 10–15% of the property's market value.
Bottom line: LTA owners need to understand where they stand — and what they need to do — before the grace period expires.
Can I pool 30 rooms and hand them to a sales agent? Or just list them on Airbnb or Naver myself?
Short answer: You can't — or at least, you really shouldn't. ONDA consulted attorneys on this. According to a piece by attorney Song Ji-eun, there are three big legal reasons why going solo doesn't work.
Complying with regulations and securing local government approval — none of it is easy. You need a cooperative body of 30+ rooms just to meet the baseline requirements for a business license from local authorities or the Ministry of Health and Welfare. And filing an application doesn't mean you can start operations right away.
I know one LTA that assembled 80+ rooms, but spent over two years untangling legal and administrative issues before they could even open for business. LTAs are one of the most operationally complex accommodation types out there.
Even in practice, running an LTA as an individual is nearly impossible. The LTA properties ONDA operates or manages run like 3- or 4-star hotels. They drive bookings through portals, domestic and international OTAs, direct website traffic (D2C), messaging apps — you name it. They have front desks greeting guests.
Guests don't treat it like staying at someone's "pension." They see it as booking a decent hotel at a fair price.
That's why the government recommends that LTA operators pool at least 30 rooms — or one-third of a building's total — and hire a professional management firm.
Getting a lodging license is just the start. Find a manager who can run digital operations.
Once you've got the sign up and the green light from local authorities, the real work begins. Then and now, the keys to hospitality success come down to location and price. Add clean rooms and friendly service — things guests take for granted — and you've got a winning LTA.
Location was set when the building went up. Can't change that. If your location is weak, you'll have to compete on price — offer guests a deal they can't ignore. As for "clean rooms" and "friendly service," those cost money. Sell as many rooms as you want — if expenses outrun revenue, you're in the red.
That's where choosing the right management partner becomes critical.
You need a firm that reads the market well, prices rooms intelligently to minimize vacancies, and — crucially — knows how to minimize labor costs, which make up the bulk of operating expenses.
After COVID-19, many hospitality workers came to see the industry as unstable and tough. Hiring has become brutal. The challenge: run your LTA efficiently with minimal staff.
How do you solve that? Most operators go for the obvious play: cut other expenses and headcount, maximize online revenue.
Hotels used to be labor-intensive by design. Big properties had bellhops out front, friendly desk agents, 24-hour room service lines staffed around the clock. That was just what hospitality looked like. "Hotelier" was a badge of honor — warm, professional service was the standard.
Problem: all of that costs money. The solution: use digital tools to cut costs as much as possible. A 200-room property that once needed 30 staff? Now you can run it with 5 to 10.
Check out the full story below!
👉 How to turn a profit running LTAs on a lean budget
🍯 Operations Tip
Calculating minimum wage in hospitality & spotting violations
Q1. How is minimum wage set, and where can hospitality operators run into trouble?
Korea's Minimum Wage Commission sets next year's rate every year. The 2024 minimum wage was announced July 19, 2023: ₩9,860/hour — up 2.5% from this year.
Here's the issue for hospitality: most properties negotiate wages annually based on each employee's hire date. But minimum wage law runs January 1 to December 31. So sometimes you need to bump up a worker's pay in January to match the new minimum — even if their hire anniversary isn't until later.
If you keep adjusting new hires' wages to track minimum wage while leaving veteran employees' pay static, the gap shrinks. That breeds resentment among long-tenured staff. To avoid this, keep an eye on the August minimum wage announcement and factor next year's rate into wage negotiations in advance.
Q2. Calculating minimum wage by employment type in hospitality
Minimum wage is set hourly, but hospitality uses hourly, daily, and monthly pay structures. You need to include applicable allowances when determining compliance.
Q3. Allowances that count toward minimum wage vs. those that don't
Hospitality operators often provide perks like "double bonuses" (extra pay for selling the same room twice), meal subsidies, etc. Properties with 5+ employees typically include overtime pay in gross monthly wages.
Here's the trap: even if total monthly pay (including allowances) exceeds minimum wage, some allowances don't count when determining compliance — so you could still be in violation.
If you provide meals or lodging in-kind, or holiday gift money, consider rolling those into monthly wages instead. On the other hand, performance-based incentives like "double bonuses" may count as production-based wages under the Minimum Wage Act and could be included in minimum wage calculations.
Q4. How to check compliance — and what happens if you violate
Compliance is determined by comparing actual wages paid vs. wages calculated using the minimum wage standard. Unpaid wages have a 3-year statute of limitations, so any shortfall is calculated retroactively over 3 years from the audit date.
If a violation is found, the operator faces liability under both the Labor Standards Act (for failure to settle wages) and the Minimum Wage Act: up to 3 years in prison or a fine of up to ₩20 million.
❗️Key point: wage settlement violations under the Labor Standards Act require the employee to press charges (semi-prosecutable offense). Minimum wage violations are not semi-prosecutable — you can be prosecuted even if the employee doesn't want to pursue it, unless they explicitly withdraw the complaint.
Read the full breakdown below!
👉 How to avoid minimum wage violations
💫 SPECIAL
Weekly ON, see you soon👋
Hi, this is Rachel, editor of Weekly ON. I usually keep my intro short and sweet, but today I'm writing my last one.
Weekly ON is also taking a month-long break to regroup. Good news: our Friday morning newsletter, Weekly OFF, will keep going as usual.
Long-time subscribers know this: Weekly ON grew out of our old web magazine, MAGAZINE ON, when we thought — what if we made this easier to read and sent it more often? We switched to a newsletter format, and I still remember launching that first issue with the team.
Since January 2020, Weekly ON has evolved — logo redesigns, new formats. And here we are at issue 94.
Some weeks, picking the right story and putting it together felt tough. But seeing our subscriber count grow, and hearing that people found it helpful — that kept me going. I'd always wonder: what should we cover next? How will readers react?
Thank you for sticking with Weekly ON for over three and a half years. 🙇🏻♀️
My journey with Weekly ON ends here, but I trust you'll welcome the newsletter back after its break.
— Rachel
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