Millennium Hilton Seoul, a five-star hotel in the middle of Seoul, is reportedly in talks with asset manager Igis Asset Management to sell its luxury establishment for 1 trillion won ($891.2 million), local media reported Tuesday.

CDL Hotel Korea, a Korean branch of Singaporean investment company City Developments Limited and the largest shareholder of Millennium Hilton, is planning to let Igis take over the hotel to turn it into an office building, local economic newspaper the Korea Economic Daily reported. Igis declined to confirm the alleged acquisition.

The hotel saw demand for bookings for accommodation and weddings nose-dive due to the coronavirus outbreak and following travel lockdowns around the world.

“Since the hotel industry has been financially struggling in recent months, hotels are trying to scale down their businesses and transform their hotel properties into residential or office buildings,” an official from a local hotel chain said.

“Because of a financial crunch, even Hotel Shilla, the largest hotel chain in Korea, asked their employees to take unpaid leave,” the source said.

Another source from the hotel consulting segment said that Millennium Hilton has been seeking a new owner for several months.

After completing the takeover scheme, Igis will reportedly renovate the hotel into an office building. To that end, it will attract funds from foreign investors, including Singaporean sovereign wealth fund GIC.

The 22-story hotel with 700 rooms opened in 1983 as Hilton Seoul and was previously owned by Korean conglomerate Daewoo Group before it went bankrupt during the 1997-98 Asian Financial Crisis. It was then acquired by CDL, a subsidiary of Singapore-based property investment firm Hong Leong Group, for 260 billion won in 1999. CDL signed a contract with hotel management services firm Millennium for operation in 2004, thus giving the hotel its current name.

South Korea’s hospitality sector has taken a battering in the coronavirus pandemic. The number of foreign tourists to Korea dropped 85.6 percent to 2.51 million last year, according to the UN World Tourism Organization, a UN agency promoting responsible and sustainable tourism.

Facing financial constraints, hotel chains in Korea have been selling their properties since the outbreak of the coronavirus early last year.

In February, Sheraton Palace Hotel, the first high-end hotel in the affluent Gangnam district, was sold to a consortium led by real estate developer the Land. It will be redeveloped into a residential building. Le Meridien Seoul in Yeoksam and Crown Hotel in Itaewon will be also transformed into mix-used buildings.

Glad Hotel in Nonhyeon-dong and Mercure Ambassador Seoul in Hongdae have been put up for sale recently.

By Kim Young-won (wone0102@heraldcorp.com)