DL Group, South Korea’s petrochemical-to-construction conglomerate is putting some hotels on the market to raise an estimated 650 billion won ($461.8 million) by selling more of its non-core business and further its exit from the industry.
Glad Hotels & Resorts Co., the group’s subsidiary, is set to collect offers from potential buyers including alternative asset managers and hotel operators to sell three hotels, as well as the operation rights of one branch by the end of this month, according to investment banking industry sources on Tuesday.
Glad Hotels & Resorts aims to sell a tourist hotel on Jeju Island, South Korea’s top vacation spot, and two business hotels in Seoul – one in the capital’s financial hub Yeouido and the other in the central upscale and modern district of Gangnam – as well as the operation rights of a hotel in Mapo, next to Yeouido.
The company plans to consider various sales options such as selling real estate, hotel management rights and the Glad brand.
The group plans to use the proceeds for its core businesses – chemicals, construction and energy.
NON-CORE ASSETS
DL Group has been restructuring its non-core hotel business since COVID-19 dampened the accommodation sector by selling another hotel in Gangnam and the operation rights of another hotel on Jeju in 2021.
The group decided to sell more hotels at higher prices by taking advantage of the recovery in the accommodation industry.
Glad Hotels & Resorts reported an operating profit of 25 billion won last year, up 42.5% from 2022, as sales rose 12.8% to 104.7 billion won. The hotel operator logged a loss of 2 billion won during the pandemic.
The daily average room rate of tourist hotels in Seoul increased 14.2% to 205,461 won per room in August, according to Styleloft, a South Korean hotel consultant.
The group is poised to exit the hotel business upon completion of the sale of the three hotels and operation rights.
“We have yet to decide anything although we are considering the sale of the hotel assets,” said a group official.
By Byeong-Hwa Ryu
hwahwa@hankyung.com
Jongwoo Cheon edited this article.
