This article was published on March 18, 2025, at 5:39 p.m. on the ChosunBiz MoneyMove site.
Hotel Shilla is moving to sell its subsidiaries. As the duty-free market continues to struggle, the company plans to sell subsidiaries that are less related to its core operations to improve its financial structure.
On the 18th, according to the investment banking (IB) industry, Hotel Shilla recently contacted potential buyers to sell its subsidiaries. Among the assets under review is the subsidiary SBTM, in which Hotel Shilla holds 100% equity.
SBTM is a company established by the spinoff of Hotel Shilla’s travel division. It undertakes services necessary for Samsung Group employees' business trips, such as air and rail ticketing, hotel and meal reservations, and visa work.
An official in the IB industry noted, “I understand that Hotel Shilla is considering the sale of SBTM, as it believes the subsidiary has little correlation and synergy with its core business,” adding, “A corporation that is actually making a profit will likely be up for sale.”
As of 2023, SBTM's annual revenue was 34.8 billion won, with an operating profit of 1.7 billion won and a net profit of 2 billion won.
As of the end of last year, Hotel Shilla had a total of 10 domestic and international subsidiaries in which it held ownership equity. These included SBTM, Shilla HM (formerly Shilla Stay), HDC Shilla Duty-Free, SH Corporation, Rosian, and the U.S. duty-free wholesale company 360.
The reason Hotel Shilla has decided to sell its subsidiaries is to improve its financial structure. In the fourth quarter of last year, Hotel Shilla's consolidated revenue was about 947.8 billion won, similar to the previous year, with an operating loss of 27.9 billion won. Considering that the operating loss consensus (average analyst forecast) was 14.2 billion won, the company’s performance fell significantly short of expectations.
Kim Myung-joo, a researcher at Korea Investment & Securities, said, “With the normalization of domestic demand for overseas travel, airport passenger numbers have exceeded 2019 levels; however, due to high exchange rates and weakened spending power, consumers' expenditure has not recovered.” He explained that this phenomenon is also observed at airports in Hong Kong and Singapore, where Hotel Shilla's performance at airport duty-free shops has been poor, adding that the company is trying to reduce fixed costs (rent) at domestic and international airport duty-free shops, but there is great uncertainty about whether this can actually be achieved.