Hotel Shilla to Withdraw from Incheon Airport Duty-Free Store: "Losses Too Great Due to Rent Burden"

Board Resolves to Suspend Operations in DF1 Zone at Incheon Airport
"Need to Improve Financial Structure and Enhance Shareholder Value"

Hotel Shilla will return its duty-free store business license at Incheon International Airport. The company appealed for relief from the burden caused by the sluggish market and requested a reduction in rent from Incheon International Airport Corporation, but the request was not accepted.

Shilla Duty Free operated by Hotel Shilla at Incheon International Airport. Provided by Hotel Shilla

Hotel Shilla, which operates Shilla Duty Free, announced on the 18th that its board of directors had resolved to suspend operations in the DF1 zone at Incheon Airport. The amount related to the suspension is 429.3 billion won, representing 10.9% of its recent annual sales of 3.9476 trillion won.

A Hotel Shilla representative stated, "Since signing the contract for the Incheon Airport duty-free store business license in 2023, the duty-free market has undergone rapid changes due to shifts in the consumption patterns and purchasing power of our main customer base. As a result, we requested a rent adjustment from Incheon International Airport Corporation, but this was not accepted. Continuing operations at Incheon Airport would result in losses that are too great to bear." The company added, "After determining that it is necessary to improve our financial structure and enhance corporate and shareholder value, we have made the unavoidable decision to return the DF1 zone duty-free store business license at Incheon Airport."

Previously, in May, Shilla Duty Free filed for mediation at Incheon District Court, demanding a rent reduction from Incheon Airport. However, negotiations broke down as Incheon International Airport Corporation did not participate in two mediation sessions, citing fairness issues with other competitors who had failed in the bidding process. Earlier this month, the court issued a compulsory mediation order to reduce Shilla Duty Free's rent by 25%, but the corporation filed an objection, stating it could not accept the terms.

Meanwhile, Shinsegae Duty Free also applied for mediation to reduce its rent at Incheon District Court in April for the same reason, but those negotiations also failed.