Jeju KAL Hotel is latest to shut its doors for good

The Jeju KAL Hotel [KAL HOTEL NETWORK]

The Jeju KAL Hotel is the latest hotel surrendering to the pandemic, announcing its closure in April.

The hotel, operated by Hanjin Group’s KAL Hotel Network, told its employees on Friday that it will be shutting down April 30, marking an end to its 48-year history.

The company had announced last December it will be selling the hotel due to a drop in revenue amid the pandemic. In 2020, it logged revenue of 54.5 billion won ($45.5 million), down 51 percent on year. Net losses was 32.8 billion won, up 97 percent on year from a loss of 16.7 billion won.

The venue, including land owned by the hotel and its two buildings, is 12,678 square meters (136,460 square feet) and worth 68.7 billion won as of last November, according to a regulatory filing released along with the announcement.

The KAL Hotel Network is currently in discussions with an unnamed real estate asset management company for the sale.

The company will talk with its labor union to map out plans for employment succession of its workers and decide on employment termination payments.

There are around 300 employees working at the hotel, including those working at the hotel casino.

With the number of international travelers plummeting during the pandemic, other hotels have also given up.

Imperial Palace, a boutique hotel in Gangnam District, southern Seoul, has been temporarily closed since Jan. 1 this year.

The 32-year-old hotel didn’t announce a re-opening date, but announced it will “strive for change through bettering services and upgrading facilities” during the closure.

Its employees are currently on unpaid leave.

The hotel didn’t explicitly state financial reasons for the closure, but greatly suffered during the pandemic. Taesung 21, which operates the hotel, reported a revenue of 18 billion won in 2020, down 58 percent on year. It swung to a net loss of 9.9 billion won, down 1,120 percent on year compared to a net profit of 970 million won.

Sheraton Seoul Palace Gangnam and Le Meridien, both in Gangnam District of southern Seoul, closed last year.

Glad Live hotel, a boutique hotel in Nonhyeon-dong, southern Seoul, was sold to real estate investment firm Tmark for 130 billion won and shut down on Dec. 31 last year. The hotel will reportedly be transformed into an officetel building, a building used for both commercial and residential purposes in Korea.

“Running a hotel requires a lot of fixed costs such as labor, but officetels don’t have much fixed costs, which is one of the reasons why the buyer decides to shut down the hotel,” said a spokesperson working at one of the local hotels.

BY LEE TAE-HEE, JEONG HYE-JEONG [lee.taehee2@joongang.co.kr]