Acquisition of 46.26% Stake in T'way Holdings... Securing Management Control
Yerimdang and Owner Family Shares Purchased for 250 Billion KRW
Chairman Seo's Commitment Since Taking Full Managerial Role in 2023
Challenge Ahead: Delivering Results from Domestic and Global New Business Investments
Daemyung Sono Group, the largest hotel and resort company in Korea, has realized the long-held dream of its second-generation chairman, Seo Jun-hyuk, to enter the aviation industry by acquiring low-cost carrier (LCC) T'way Air. Seo, who has been leading new business initiatives within the group to transform it into a global company, now faces the test of proving his full managerial capabilities.
Seeking Synergy with Domestic and International Hotel and Resort Infrastructure
According to industry sources on the 27th, Sono International, the holding company of Daemyung Sono Group, signed a stock purchase agreement (SPA) the previous day to acquire all 52.34 million shares (46.26% stake) of T'way Holdings held by Yerimdang, Chairman Na Chun-ho of Yerimdang, Vice Chairman Na Seong-hoon of Yerimdang, and CEO Hwang Jeong-hyun of T'way Holdings for 250 billion KRW. As a result, Daemyung Sono Group increased its stake in T'way Air to 54.79% by combining the 28.02% stake held by T'way Holdings with its existing 26.77%, thereby securing management control.
Chairman Seo stated, "The aviation industry must prioritize safety above all else, and we promise to become a safer and more reliable airline." He expressed his ambition to "grow into a global airline that satisfies customers and employees alike through stable management." To this end, he outlined a vision that includes strengthening aviation safety and maintenance capabilities, expanding professional personnel, increasing profitability, and creating synergy between the leisure and aviation industries.
As a detailed plan, the group intends to develop products, promotions, and marketing through travel agencies linked to aviation based on its 20 hotels and resorts operating domestically?including the soon-to-open Sol Beach Namhae?and overseas infrastructure in the United States, France, and Hawaii. They also plan to join a major airline alliance in the future to secure a global network. Furthermore, after acquiring T'way Air, they aim to change the airline’s name and establish a unique identity under 'SONO' to provide differentiated customer experiences and introduce a new paradigm in the aviation industry.
Chairman Seo’s strong will is reflected in Daemyung Sono Group’s entry into the aviation sector. In 2011, while serving as CEO of Daemyung Enterprise (now Daemyung Sono Season), he attempted to acquire T'way Air when it was up for sale but negotiations broke down due to disagreements over the price. In November last year, Sono International acquired an 11% stake in another LCC, Air Premia, and holds a call option to purchase an additional 11% after June, indicating the possibility of securing management rights of another airline following T'way Air.
Aggressive New Business Expansion... Challenge to Prove Profitability
Chairman Seo is the son of the late Seo Hong-song, founder of Daemyung Housing, the origin of Daemyung Sono Group. As of the end of 2023, special related parties including Seo’s mother, Park Chun-hee, Chairwoman of Daemyung Sono Group, hold 64.07% of Sono International’s shares. Among them, Park Chun-hee holds 33.24%, and Seo holds 28.96%.
Seo, who majored in economics at the University of Minnesota, began participating in company management in 2007 as head of the new business division at Sono International (then Daemyung Leisure Industry). Under his leadership, subsidiaries such as Daemyung Station’s funeral services, Daemyung Sono Season’s mattress rental business, and the pet complex cultural space Sono Pet Club & Resort have been sustained. However, ventures into food service brands like tteokbokki specialty stores, chicken, pork belly restaurants, as well as wedding and cultural businesses such as film, failed to achieve success due to management difficulties.
He then shifted focus to overseas new businesses, starting with the entrusted operation of Vietnam’s Song Gia Resort in 2019, followed by acquisitions and operations of the Normandy Hotel in Washington D.C., 33 Seaport Hotel New York, Dame des Jardins Hotel in Paris, France, and Waikiki Resort Hotel in Hawaii. With global expansion in mind, he also led the rebranding of the accommodation brand name from Daemyung Resort, familiar to Koreans, to 'Sono,' an Italian word meaning utopia, to make it easier for foreigners to pronounce.
Since becoming group chairman in February 2023, Seo faces the challenge of delivering results from the aggressively pursued new businesses. Sono International achieved its highest-ever performance during the COVID-19 period in 2022, with sales of 926.1 billion KRW and operating profit of 157.5 billion KRW. However, in the year following Seo’s appointment, sales decreased to 847 billion KRW and operating profit to 97.4 billion KRW. Last year, sales are estimated to have been around 750 billion KRW with operating profit near 100 billion KRW. During this period, the group spent 110 million USD (approximately 140 billion KRW) to acquire the Waikiki Resort Hotel in Hawaii in April and will need to invest several hundred billion KRW more to secure management rights of T'way Air and Air Premia.
An industry insider commented, "Given Daemyung Sono Group’s heavy reliance on domestic businesses like resorts, Chairman Seo appears to be focusing on expanding business areas linked to the global market to secure new growth engines and differentiation. Owning an airline, which has significant influence in the travel and leisure industry, will allow the company to expand tourism products for both domestic and foreign tourists linked to its hotels and resorts, making it easier to attract large numbers of tourists and improve profitability." However, the insider also noted, "The lack of know-how in the high-risk and cost-intensive aviation business remains a critical issue."
A Sono International representative said, "Last month, we launched an in-house dedicated aviation business task force (TF), including external aviation experts. We plan to advance detailed business directions through these TFs."
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