Funeral Service Industry Competes to Secure Directly Managed Funeral Halls... Why?

Half of Advance Payments Counted as Liabilities...
Directly Managed Halls Serve as "Revenue Channels"
Investment Expands in Acquiring Funeral Halls and Upgrading Facilities
Community Connection Hubs... Leveraged for ESG Strategy

The funeral service industry is fiercely competing to secure directly managed funeral halls. These directly operated facilities serve as key infrastructure that can convert advance payments, which are liabilities on the balance sheet, into revenue, and also function as strategic bases for ESG (Environmental, Social, and Governance) management.

According to the industry as of March 5, major funeral service companies have recently been expanding their directly managed funeral halls one after another. On March 4, Woongjin Fredit Life opened its first directly managed funeral hall in Seoul, “Shilnakwon Seoul Jejung Funeral Hall.” Shilnakwon is a specialized funeral hall brand launched by Woongjin Fredit Life in 2018, and with this opening, the number of directly managed funeral halls has increased to a total of 16.

Kyowon Life also newly opened and began operating “Kyowon Yeoum Chungju Citizens Funeral Hall” at the end of February. Having advanced into Chungbuk following Seoul, Gyeonggi, the capital area, and the regions of Chungnam, Gangwon, Gyeongnam, and Gyeongbuk, the number of directly managed funeral halls has expanded to eight.

Kyowon Yeoum Chungju Citizens Funeral Hall. Kyowon Life

The background behind the industry’s expansion of directly managed funeral halls lies in the unique financial structure of the funeral service sector. The business model involves customers enrolling in funeral, wedding, or travel conversion services and paying a certain amount monthly, utilizing a prepaid installment transaction method. According to the Installment Transactions Act, half of the collected advance payments must be preserved through deposit at a bank, payment guarantees, or joining a mutual aid association. The remaining half is recognized as a liability, not revenue, on the balance sheet. This is because money received from customers is regarded as an obligation to provide services in the future.

Ultimately, directly managed funeral halls become attractive options for converting advance payments—which are both a primary funding source and a liability—into actual revenue. This is due to the structure in which relatively short-term and recurring sales are generated from fees for using the funeral hall, facility usage, and ancillary service income. A Kyowon Life official stated, “Directly managed funeral halls can help mitigate fluctuations in our core business and secure stable cash flows.”

Accordingly, the industry is actively investing advance payments in acquiring and renovating existing funeral halls or pursuing facility upgrades. There is a trend toward transforming the traditionally dark and somber image of funeral halls into multi-purpose cultural spaces, featuring hotel-level interiors, large parking lots, and comfortable lounges.

Executive Director Yohan Choi of Boram Group (center) and other key stakeholders are posing for a commemorative photo at the sponsorship fund delivery ceremony held last January. Boram Group

An industry official stated, “Directly managed funeral halls provide a stable destination for advance payments and a foundation for generating sales. Securing a space for daily operation within the local community enables natural brand exposure, and funerals can serve as an opportunity for bereaved families or visitors to re-enroll in funeral service plans, creating a virtuous cycle of customer engagement.”

Directly managed funeral halls are also being utilized as part of the industry’s ESG management strategy. Boram Sangjo operates its directly managed funeral halls as “social contribution platforms” that connect with the local community. The company plans to return part of the operating profits from funeral halls to the community. Last January, Boram Sangjo Cheonan Gukbin Funeral Hall donated 20 million won in designated funds to Cheonan city for residents of Ilbong-dong to mark the new year.

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