Hotel Shilla Co.,Ltd (008770)

**Business Overview** Hotel Shilla is a leading hospitality and duty-free retail company in South Korea. Its main business segments are largely divided into Travel Retail (TR) and Hotel & Leisure. The TR segment operates duty-free stores under the 'Shilla Duty Free' brand at major domestic locations such as downtown Seoul and Jeju, and Incheon International Airport, as well as overseas locations including Singapore Changi Airport and Hong Kong Chek Lap Kok International Airport, selling global luxury brands such as cosmetics, perfumes, fashion, and liquor. The Hotel & Leisure segment operates three major hotel brands: the luxury brand 'The Shilla', the upper upscale brand 'Shilla Monogram', and the premium business hotel 'Shilla Stay'. It also provides fitness club operations and Business Travel Management (BTM) services. As of 2025, the revenue contribution was approximately 83.1% from the TR segment and 16.9% from the Hotel & Leisure segment. In Q1 2026, the TR segment accounted for 84.4% and the Hotel & Leisure segment for 15.6%. Shilla Duty Free holds the second-largest market share in the domestic duty-free market, and 'The Shilla' brand is recognized as a top-tier hotel both domestically and internationally. **Core Competencies** Hotel Shilla's core competencies are its strong brand power and differentiated service capabilities. 'The Shilla' has solidified its reputation as a top-tier hotel brand both domestically and internationally, evidenced by its selection as No. 1 in the '2025 Korea Brand Power Index (K-BPI) Hotel Sector' and its recognition as a 5-star hotel by 'Forbes Travel Guide' for five consecutive years. Furthermore, through a diversified hotel portfolio encompassing the luxury 'The Shilla', upper upscale 'Shilla Monogram', and premium business 'Shilla Stay', the company addresses diverse customer demands. By expanding overseas through management contracts, it minimizes business risks and secures stable profitability. **Performance Analysis** Hotel Shilla's annual revenue increased by 10.6% from KRW 3.5685 trillion in 2023 to KRW 3.9476 trillion in 2024, and further grew by 3.1% year-over-year to KRW 4.0683 trillion in 2025. While operating income is indicated as '-' in the provided data from 2023 to 2025, net income saw its deficit widen from a surplus of KRW 86 billion in 2023 to KRW -61.5 billion in 2024 and KRW -172.8 billion in 2025. However, in Q1 2026, the company recorded revenue of KRW 1.0535 trillion and operating income of KRW 20.4 billion, successfully turning to a profit year-over-year and signaling an improvement in profitability. **Financial Soundness** Examining Hotel Shilla's financial soundness, the debt-to-equity ratio significantly improved from 394.10% in 2023 to 196.95% in 2024, but slightly increased to 220.14% in 2025. The current ratio remained above 100% at 116.14% in 2023, 122.69% in 2024, and 107.95% in 2025, indicating no significant issues with liquidity. ROE (Return on Equity) was a healthy 14.13% in 2023 but declined to -4.79% in 2024 and -15.63% in 2025, indicating a deterioration in profitability efficiency. **Outlook** Hotel Shilla anticipates improved performance in its Hotel & Leisure segment, driven by the recovery in travel demand and an increase in foreign tourists following the COVID-19 pandemic. The duty-free business has faced challenges due to changes in Chinese tourist spending patterns, rising exchange rates, and the burden of airport lease fees. However, the company is seeking to restore profitability by withdrawing from unprofitable operations and strengthening its profit-oriented operating strategy. The company plans to continue its growth as a global hospitality enterprise by maximizing the prestige of 'The Shilla' brand, expanding its pipeline in optimal locations both domestically and internationally, and attracting diverse brands and products that align with evolving traveler demands.