[Edaily Marketin Reporter LEE GEON-EOM ] NICEHoldings announced on the 29th that it has maintained the credit rating of HotelShilla(008770)’s unsecured bonds at ‘AA-’ and upgraded the rating outlook from ‘Negative’ to ‘Stable.’ The primary reasons for the upgrade in the rating outlook were the recovery of the company’s overall profitability, driven by a marked improvement in operating profit in its core duty-free business, and the prospect of enhanced financial stability based on this recovery.

HotelShilla’s duty-free division narrowed its operating loss from 75.7 billion won in 2024 to 53.1 billion won last year, and successfully rebounded in the first quarter of this year by posting a profit of 11 billion won. The hotel and leisure division, which serves as a cash cow, has also continued to post robust results exceeding pre-COVID-19 levels, driven by a recovery in occupancy rates and increases in average room rates since 2022.

Lee Dong-seon, a senior researcher at Naisinping, stated, “The effects of strengthening the company’s fundamentals—achieved by refraining from excessive competition over referral fees paid to Chinese proxy shoppers (daigou) and significantly reducing fixed costs through a preemptive voluntary retirement program—are becoming visible,” adding “Above all, the bold decision to suspend operations in the DF1 zone at Incheon International Airport—which had been suffering from chronic deficits due to high rent burdens—will solidify the structural profitability trend in the duty-free sector going forward,” he added.

This recovery in profitability is directly translating into improved company-wide financial stability indicators. Reflecting the effects of the 2024 land revaluation, the debt-to-equity ratio stood at 202% and the net debt-to-equity ratio at 36.3% as of the end of March this year, maintaining healthy levels.

The ratio of net debt to EBITDA—a key indicator—has also declined sharply, from 9.9 times at the end of 2024 to 7.8 times at the end of 2025 and further to 5.7 times as of the end of March this year. In particular, the company’s capacity to repay debt has increased significantly following the recovery of a 1903억원 lease deposit in May, resulting from its withdrawal from the DF1 zone at Incheon International Airport.

Senior Researcher Lee stated, explained, “Although the debt-to-profitability ratio is currently technically hovering around the threshold for a downgrade review, the clear recovery in cash generation within the duty-free sector, combined with the direct debt reduction effect from the inflow of a large security deposit, is driving a rapid improvement in this metric in a positive direction.” He added, “We have determined that the company has entered a cycle of self-sustained financial burden relief through operations, and have therefore upgraded the rating outlook to ‘Stable.’”

Nara Credit Rating plans to continue monitoring trends toward an overall easing of competition within the industry—such as competitors scaling back their downtown duty-free store operations—as well as whether HotelShilla can maintain its current trend of reducing customer acquisition costs for its proxy purchasing agents.

It also intends to closely monitor the offsetting effects of declining sales to domestic customers and rising sales to foreign visitors to Korea resulting from the prolonged period of high exchange rates, as well as the actual scale of debt repayment utilizing recovered security deposits.