Gyeonggi Province Special Investigation Unit Uncovers 30 Illegal Lodging Facilities Using Commercial Office Spaces for Accommodation

[Suwon Ilbo=Reporter Park No-hun] Multiple illegal lodging facilities operating by leasing officetels and other spaces not permitted for lodging business have been uncovered by Gyeonggi Province investigations.

The Gyeonggi Province Special Investigation Unit announced on the 28th that it conducted investigations on 41 suspected unregistered residential-type lodging facilities, commonly known as residence accommodations, across 10 cities in the province including Goyang and Seongnam from November 30 to December 4, uncovering 30 facilities with 116 rooms.

The total sales of the illegal lodging facilities detected this time amounted to approximately 2.2 billion won.

The violations included ▲28 facilities operating without registration ▲2 facilities failing to comply with administrative disposition (closure orders) due to unregistered operations.

Residential-type lodging businesses target long-term guests by providing cooking facilities in rooms and offering more affordable lodging services compared to hotels.

In the case of officetels, their building code classification designates them as business facilities, making them ineligible to operate lodging businesses under the Public Health Management Act.

These businesses leased officetels, placed towels, toiletries, and furniture to appear as lodging establishments, registered on lodging intermediary websites, and used methods such as inducing guests to prepay accommodation fees online and then providing lodging location, password, and check-in/out procedures via text to avoid enforcement.

Key cases show that facility ㄱ in Seongnam City leased 5 officetels unsuitable for lodging operations and generated illegal sales of 344 million won over 3 years before being detected.

Facility ㄴ in Goyang City prepared a storage warehouse for bedding supplies, leased 15 officetels for illegal operations, and made illicit gains of 120 million won before being caught.

Facility ㄷ in Goyang City leased 2 officetels but registered 7 rooms on lodging intermediary websites. When its own leased rooms were insufficient, it directly booked rooms from other lodging facilities and charged customers a higher price, generating illegal sales of 120 million won over 3 years before being detected.

Facility ㄹ in Ansan City was caught continuing operations despite receiving a business closure order from the relevant administrative agency after its unregistered lodging operations were detected, with illegal sales totaling approximately 600 million won over 6 years.

Most of these facilities operated illegally in officetels and apartments where lodging business was impossible, failing to meet fire safety equipment standards required for lodging facilities such as fire extinguisher installation and flame-retardant interior materials, and were not subject to mandatory fire insurance obligations, creating issues where compensation could not be obtained in case of fire.

Under the Public Health Management Act, both unregistered operations and failure to comply with closure orders are subject to imprisonment of up to one year or fines of up to 10 million won.

Yin Chi-kwon, Chief of Gyeonggi Province Special Investigation Unit, stated, "Illegal lodging operations not only disrupt the lodging business market order but also pose threats to the safety of residents," adding, "We plan to notify the tax authorities to pursue tax collection on gains obtained through fraud and will recommend strengthening penalty provisions to prevent recurrence."