[Click eStock] Duty-Free Boom... Hotel Shilla Expected to Approach 6 Trillion Won in Sales This Year

Easing Competition Among Duty-Free Shops Within Seoul Also a Boon

[Asia Economy Reporter Minwoo Lee] Hotel Shilla's sales are expected to approach 6 trillion won this year. This is due to an increase in foreign tourists following improved relations with China and Japan, as well as better conditions in the duty-free shop industry.

Hyundai Motor Securities forecasted on the 8th that Hotel Shilla's sales for this year will be 5.883 trillion won, with an operating profit of 294 billion won. This represents an increase of 2.7% and 10.5%, respectively, compared to the previous year.

This reflects the improvement in performance since the end of last year. Park Jongryeol, a researcher at Hyundai Motor Securities, stated, "With downtown store sales leading the way, the total sales of the duty-free shop sector are expected to grow by 12.7% compared to the same period last year," adding, "Operating profit from duty-free shops is expected to reach 48.3 billion won, a 93% increase from the same period last year."

In particular, the reduction of downtown duty-free shops in Seoul has eased competition, while factors such as a decrease in customer referral fees and an increase in foreign tourist inflow have played major roles. Researcher Park explained, "At the beginning of last year, there were 13 downtown duty-free shops in Seoul, but with Galleria, Doosan, and Top City giving up their businesses, the number has decreased to 10," adding, "Contrary to initial concerns, there were no new duty-free shop operators at the end of last year, and there will likely be no additional new operators for the time being."

This easing of market competition is also expected to contribute to a certain extent to the decline in customer referral fee rates. Researcher Park said, "With downtown store sales leading, the total sales of the duty-free shop sector will improve," and added, "The base effect from the fourth quarter of 2018 and the continuous decline in brokerage fee rates will have a positive impact."

Hyundai Motor Securities gave Hotel Shilla a 'Buy' investment rating with a target price of 120,000 won. The closing price on the 7th was 99,400 won.

This content was produced with the assistance of AI translation services.