Hyundai Group takes over Banyan Tree Club & Spa Seoul

Hyundai Group has taken over Banyan Tree Club & Spa Seoul as part of efforts to diversify its business lines.

Banyan Tree is a six-star hotel established by real estate developer Urban Oasis, which in 2007 took over and renovated the former Tower Hotel in Jangchung-dong, Seoul.

Hyundai said Friday, “After we were picked as the preferred negotiating partner for the acquisition of Banyan Tree in January, we conducted a five-month due diligence and finalized the purchase agreement worth 163.5 billion won (135 million U.S. dollars), about 4 billion won (3.4 million dollars) less than the original bid.”

The acquisition will be mostly funded by group affiliates Hyundai Merchant Marine, Hyundai Elevator, Hyundai Securities and Hyundai Logistics, all of which will invest in Hyundai L&R, a special purpose company. The remaining amount will come through bank loans.

Hyundai will cut the commission for entrusted management that it pays to Banyan Tree headquarters in Singapore, which manages the hotel, and repay higher-interest loans from savings banks to cut financial costs and improve the hotel`s financial structure.

With its advance into the hotel sector as a turning point, Hyundai has set a business strategy in the hospitality industry by generating a synergistic effect with Hyundai Asan’s experience in hotel operations and the Mount Kumgang tour in North Korea.

A Hyundai Group source said, “Demand for hotel rooms is so strong in Seoul that the city is short more than 50,000 hotel rooms per year,” adding, “We will develop Banyan Tree into a family-oriented resort hotel that will lead in the Korean capital.”

mint4a@donga.com