이 기사는 2022년 02월 21일 08시02분 thebell에 표출된 기사입니다

KAL Hotel Network, a subsidiary of Hanjin KAL, has decided to shut down Jeju KAL Hotel to stop snowballing losses.

Hanjin KAL said in its regulatory filing on Thursday that it will shut down Jeju KAL Hotel, which is operated by KAL Hotel Network. Hanjin KAL held a board meeting in November 2021 and decided to sell the hotel.

“We have decided to shut the operations down as we need to secure liquidity through the sale of Jeju KAL Hotel, which has been accumulating losses for the past five years due to the Covid-19 pandemic,” said an official at Hanjin KAL. “We plan to use the proceeds from the sale to improve our financial status by repaying debts.”

The company tried to offload the hotel by distributing information memorandum last year, but the process showed little progress. “The decreasing number of hotel guests after the pandemic has put the company under heavy pressure to operate and maintain the business,” an industry source said.

Market insiders are paying attention to whether the sale process will speed up after the decision to shut down Jeju KAL Hotel. It is understood that the company intends to reduce losses by closing operations and focus more on the sale process instead of continuing the loss-making business amid its struggle to find a suitable buyer for months.

Hanjin Group’s planned sales of other hotel assets have also been cancelled amid absence of potential buyers.

Last year, the group decided to sell Paradise Hotel building and land in Jeju, Grand Hyatt Incheon, Jeju KAL Hotel, Seogwipo KAL Hotel and Waikiki Report Hotel in Hawaii.

Hanjin Group’s hotel business has recorded losses even before the outbreak of the pandemic. Hanjin KAL has reported losses each year since 2015, except for 2016, according to the company’s audit report on the consolidated financial statements. The hotel business posted the worst-ever operating loss of 28.8 billion won in 2020, hit hard by the Covid-19 pandemic.

Hanjin Group Chairman Cho Won-tae said in February 2020 that the group will sell non-core assets to improve its financial status. Korean Air Lines’ idle land in Songhyeon-dong, central Seoul, Jeju KAL Hotel and Korean Air’s wholly-owned subsidiary Wangsan Leisure Development were put up for sale. Korean Air reached an agreement with the city of Seoul to sell its land in Songhyeon-dong. (Reporting by Seo-young Kim)