Sono Hospitality Group is accelerating a business overhaul after putting up a new sign, "Sono Trinity," for the first time in 48 years. The group is moving to fully integrate operations by strengthening the competitiveness of its hotel and resort brands while working to improve the fundamentals of T'way Air, which it acquired last year. Still, concerns about financial strain persist as large-scale investments coincide with uncertainty in the airline industry.
According to the related industry on the 24th, Daemyung Sono, which recently changed its name to Sono Trinity Group, is preparing to renovate "Sol Beach Yangyang," a key resort on the East Sea coast. Sol Beach Yangyang, which opened in 2007, was the first establishment of "Sol Beach," a premium lodging brand that Sono Group introduced with a Mediterranean-style marine resort concept.
Since last year, Sono Group has been accelerating efforts to strengthen the competitiveness of its existing lodging business. In Jul. last year, it opened Sol Beach Namhae, the fourth establishment of Sol Beach, and renovated Sono Belle Gyeongju, which opened in 2006, into the higher-tier Sono Calm Gyeongju. It also acquired the Rene Blue Hotel in Goseong, Gangwon Province, which had been operated under consignment by Walkerhill, and rebranded it as by Sol Beach.
With the group's name change, observers say an integrated strategy spanning lodging and aviation has begun in earnest. The new name, Sono Trinity, combines "Sono," the existing hotel and resort brand, with "Trinity," the new name of T'way Air acquired last year. The move this month to consolidate and transfer all affiliates to the new headquarters in Magok, Seoul, is also seen as an effort to speed up the business reorganization.
Work to restructure the airline business is proceeding in parallel. T'way Air, renamed Trinity Airways, is pushing to shift from a traditional low-cost carrier (LCC) to a hybrid service carrier (HSC) model like Air Premia. As part of that, it is expanding aircraft induction and increasing the share of medium- and long-haul routes to Europe and North America. It also plans to proceed sequentially with aircraft livery and new branding work.
However, as large-scale investments to normalize the airline business continue, concerns about financial burdens are growing. Funds keep flowing into aircraft operating expense, expansion of medium- and long-haul routes, and brand realignment, while the fallout from the war in the Middle East has heightened volatility in oil prices and exchange rates, adding to uncertainty in the airline market.
T'way Air's debt ratio exceeded 3,400% at the end of last year after two consecutive years of losses. That is the highest among LCCs, compared with Jeju Air (754%), Jin Air (423%), and AIR BUSAN (801%). Although it swung to a profit with about 20 billion won in operating income in the first quarter of this year, there are concerns it could slip back into the red in the second quarter due to rising oil prices.
In particular, analysts say the burden on profitability from long-haul routes, which were aggressively expanded since last year, is increasing. Some European routes are reportedly losing hundreds of millions of won per flight. Despite moving to cut expenses through route restructuring, flight reductions, and even implementing unpaid leave, views inside and outside the company suggest more time is needed for a full normalization.
Sono Group has also decided to postpone the initial public offering (IPO) of Sono International until uncertainty in the airline business eases. It is prioritizing T'way Air's return to profit and will adjust the IPO timetable accordingly. Over the mid to long term, the group plans to develop linked overseas hotel resort packages and promotions to strengthen synergies between its existing lodging business and aviation.