Hanatour makes turnaround through restructuring, premium packages

When IMM Private Equity Inc. acquired a 16.68% stake in South Korea’s top travel agency Hanatour Service Inc. for 128.9 billion won ($95.7 million) in December 2019, the Seoul-based asset manager hadn't anticipated the onslaught of the COVID-19 pandemic, which broke out in Korea a month after the deal. 

Through the company’s restructuring and digital transformation amid the pandemic, Hanatour swung to the black in 2023 after losses for three consecutive years, improving earnings faster than its crosstown rivals.

IMM prioritized cost savings after the acquisition. The investment firm led the reduction of Hanatour’s SM duty-free business in 2020 and the divestment of its hotel operation subsidiary Mark Hotel in 2022. The PE manager also sold many of Hanatour's global affiliates and halved the number of its travel agency employees.

After downsizing, IMM accelerated the company’s digital transformation to lure young customers. Hanatour improved the user interface of its website and mobile app, introduced an artificial intelligence-powered chat service and launched live commerce to sell travel packages.

The travel agency in 2022 released HanaPack 2.0, about 30% more expensive than normal holiday packages. The premium package, which doesn’t include optional activities such as shopping and dining at Korean restaurants overseas, made up 60% of the company’s total sales in the first quarter of 2023. 

Hanatour posted 34 billion won in operating profit and 411.6 billion won in revenue last year. The sales nearly tripled from a year earlier, while the operating profit was five times the figure in 2019, before the pandemic outbreak.

The travel agency posted 60.7 billion won in net profit last year, the largest since its inception in 1993. After not paying dividends over the past three years, the company will distribute 77.4 billion won in dividends this year.

Hanatour’s earnings are expected to further improve as more Korean tourists go abroad, an official at IMM said.

IMM began the process of selling Hanatour last month. The equity up for sale could rise to 27.78% if Hanatour Chairman and founder Park Sang-hwan and the firm’s Senior Vice Chairman and co-founder Kwon Hee-Seok divest of the shares they own. Park and Kwon own 6.53% and 4.48% of Hanatour, respectively.

Write to Jong-Kwan Park at pjk@hankyung.com
Jihyun Kim edited this article.