Japan Airlines (JAL) has sold 79.6% of its stake in JAL Hotels (JHC) to rival company Hotel Okura.
The airline, which was hit by severe financial problems last year, called the deal a "shock transfer agreement."
JAL said the two brand names of its hotels, Nikko and Hotel JAL City, will be unchanged.
Okura is the leading hotel group in Japan with 21 properties, 16 in major Japanese cities and five overseas.
This includes one in Amsterdam, its only property in Europe.
The group, which is a member of the Leading Hotels of the World organisation, said last year that it was looking for hotels in London, Paris and New York.
In a statement, JAL, a member of the oneworld alliance, said there was "intense competition" in the hotel business amid a fall in guest numbers because of the global recession.
It added: "It has become urgently necessary to improve profitability through further service improvements and cost reductions.
JAL said it was "determined" to re-build its business and the decision to transfer a stake to Okura was part of this process.