Kim Jun-su of the manufactured boy band JYJ has made a W3 billion profit from selling a hotel on Jeju Island built with massive tax concessions from island authorities in 2014 (US$1=W1,147).
The hotel was included in an investment-promotion zone on the southern resort island that gave Kim around W400 million in tax breaks over the last three years.
According to sources on Tuesday, Kim sold the Toscana Hotel in Seogwipo to a Busan-based company in January. The sales price for the land alone was W24 billion, and it was then sold on to a holding company in Seoul.
The five-story, 56-room hotel was built on a 21,000 sq.m plot and includes a restaurant with ocean views, outdoor barbecue space, heated pool and spas.
Jeju included the hotel in its investment-promotion zone in January 2014, hoping to attract tourists with the halo effect of a K-pop star. Kim was exempt from tariffs, acquisition taxes, registration taxes and other fees. He also got a 50-percent discount on compensation to the island for razing land and farm areas.
But Jeju officials were shocked to learn that Kim had sold the hotel for a premium just three years later.
Kim personally filed the application and promised to use the resort as a venue for various K-pop events like talent-search competitions and concerts. He also pledged to create a W1-billion scholarship fund for locals and establish a non-profit named after the hotel by 2023 to help budding artists.
He made good on none of these promises as business floundered. An island official said, "We plan to hold a review board meeting and revoke the designation of the hotel as part of the investment-promotion zone and look for ways to make him pay the taxes that were waived."
Kim's agency C-JeS Entertainment said in a statement the star "has been funding the operation of the hotel from his own income and decided to sell the hotel because he is being conscripted on Thursday and will no longer be able to generate income to keep the hotel in business."