HanaTour, South Korea’s top travel agency, may be selling its hotel and duty-free businesses as part of a reorganization plan. 

According to investment industry sources, the company is reviewing whether to continue running both businesses, while holding on to the building, land and management rights, amid the coronavirus pandemic. 

Meanwhile, the company is cautious on its plans. “It is true that we are considering reorganization plans, but nothing has yet been decided on whether to dispose of the hotel and duty-free businesses,” an official at HanaTour said.

Sources said the company may also turn its focus on improving the quantity and quality of the service it is providing through its online travel agency (OTA) platform. The reorganization has been in the works since private equity fund IMM PE became HanaTour’s largest stakeholder, acquiring 16.7% of the firm last December. 

HanaTour, which has been suffering from the lack of tourists due to the coronavirus pandemic, has been disposing of non-core affiliates. At a shareholders meeting in April, it decided to liquidate its publishing and printing company. Since then, its hotel and duty-free businesses have often been mentioned by market watchers as the next targets for sale.

The company is said to be agonizing over whether to continue to run the two businesses, as there is still considerable room for synergy with its main tourism business. 

“As far as we know, HanaTour plans to sell the three hotels it owns,” an investment industry source said. “In addition, they are reviewing from the ground up whether it should continue to run both airport and downtown duty-free shops.”

HanaTour may need to make a quick decision as its business situation is rapidly deteriorating. Local brokerage houses have recently projected HanaTour will log revenue of 50.1 billion won ($40.7 million) for the April-June period, down a whopping 74.1% for the same period last year.

Other local tour operators have been hit hard by the impact of the virus. The number of outbound travelers was 31,425 in April, down a staggering 98.6% from 2.25 million a year earlier. Foreign tourist arrivals numbered just over 29,000, down 98.2%.

The pandemic has also dealt a harsh blow to local duty-free shops, causing a sharp decline in customers. Industry leader Lotte Duty Free and No. 2 Shilla Duty Free recently shuttered their outlets on Jeju Island – a popular resort destination for Chinese travelers – for one month.  (Reporting by Arrum Rho)