Hotel Shilla Has Found Growth in Duty-Free Shops
Background
Hotel Shilla Company Limited is a Korean firm that started in the hotel business in 1979 and later expanded into duty-free shops.
Shilla is the first operator to hold concessions in Asia’s three largest airports. It now has 25% market share in this segment in Korea and 7% globally.
Business Description
The company is affiliated with the Samsung Group and started out as a hotel business which now operates under The Shilla and Shilla Stay brand. Its main business has, however, become duty-free shops (DFS) where Shilla markets more than 1,300 famous foreign brands and local products, including cosmetics, watches, perfume, clothes, and bags.
Shilla has DFS at the following airports: Incheon in Korea, Jeju in Korea Changi in Singapore, Chek Lap Kok in Hong Kong, and Macau International Airport. It also has downtown locations in Korea, Japan, and Thailand.
Travel agencies that gain commissions from sales bring “daigous,” personal shoppers that buy products overseas for customers in mainland China, contribute well to Shilla’s duty-free sales.
The latest DFS addition at Jeju International Airport celebrated its grand opening on 1 June 2018. Shilla is already present at Incheon International Airport and was just recently shortlisted for two new concessions at Terminal 1. The licenses should be awarded soon, as the current concessions expire in July 2018.
Leadership
Lee Bu-Jin is Co-president and CEO of Hotel Shilla and has been in this position since 2010. She is a daughter of Lee Kun-Hee, the chairman of Samsung Group, and previously employed as President of Corporate Strategy at Cheil Industries. She earned a Bachelor’s degree from Yonsei University, Korea and an MBA from the Massachusetts Institute of Technology, US.
Han In-Gyu is Co-president of Hotel Shilla with Lee Bu-Jin. He has been in this position since 2002. Mr. Han has an MBA from Texas Christian University, US.
World Class Benchmarking
In the past 12 months, Profitable Growth improved to #6 from #9 among 1,280 large Consumer Discretionary companies worldwide.
Profitability has been poor since 2015, the rank inched up to #8 from #9 in the most recent period. Growth jumped to #1 from #8 in the past 12 months.
Asset utilization has been strong and ranked at #2 since 2016. Profit margin is Hotel Shilla’s main weakness and has ranked at #9 since 2015.
Sales growth has ranked above average for the whole time period, the rank has fallen to #4 since 2017 though. Margin change improved to #3 from #6 in the most recent period.
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