Hotel Shilla Posts 2.5 Billion Won Operating Loss in Q1... "Reduced Deficit Compared to Previous Quarter"

Impact of High Exchange Rates and Economic Downturn... Turned to Losses Year-on-Year
Reduced Losses by 25 Billion Won from Previous Quarter Through Internal Management
Expectations for Visa-Free Entry for Chinese Group Tourists in the Second Half
"Aiming to Improve Profitability Through Enhanced Marketing and Services"

Hotel Shilla recorded an operating loss in the first quarter of this year due to the continued impact of high exchange rates and weakened consumer sentiment. However, by focusing on profitability through internal management of its duty-free and hotel businesses, the company was able to reduce its losses compared to the previous quarter.

Seoul Shilla Hotel Royal Guest House. Courtesy of Hotel Shilla

According to a provisional disclosure on April 25, Hotel Shilla reported a consolidated operating loss of 2.5 billion won for the first quarter of this year, marking a turnaround from an operating profit of 12.1 billion won in the same period last year. Compared to the previous quarter, which saw an operating loss of 27.9 billion won in the fourth quarter of last year, the loss decreased by more than 25 billion won. During the same period, sales reached 971.8 billion won, down 0.9% from the same period last year, but slightly up from the previous quarter’s 947.8 billion won.

Breaking down the results, duty-free sales totaled 827.1 billion won, a 0.4% decrease from the same period last year. While downtown store sales fell by 21%, airport store sales increased by 18.7%. The duty-free division posted an operating loss of 5 billion won, turning to a deficit compared to the same period last year. The hotel and leisure division recorded sales of 144.7 billion won, a 3.6% decrease from the previous year, and operating profit of 2.5 billion won, down 59.7%.

A Hotel Shilla representative stated, “The duty-free division continues to face challenges due to high exchange rates and a deteriorating global economy, but by focusing on internal management, we were able to reduce our losses compared to the previous quarter. Despite the first quarter being an off-season, the hotel division also delivered overall strong results.”

The representative added, “For the duty-free division, we expect the temporary visa-free entry for Chinese group tourists to be implemented in the second half of this year. In response, we will strengthen our sales and marketing activities to improve profitability. For the hotel and leisure division, we will continue to enhance our performance by leveraging our product and service competitiveness.”