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Drop in Mainland Visitor Numbers Sees Taiwan Tourist Sector Struggle

An over-supply of hospitality facilities and a fall in mainland visitor levels triggers Taiwan tourism rethink.

Photo: Taiwan: Is its tourism sector taking a tumble? (Xinhua News Agency)
Taiwan: Is its tourism sector taking a tumble?
Photo: Taiwan: Is its tourism sector taking a tumble? (Xinhua News Agency)
Taiwan: Is its tourism sector taking a tumble?

With the number of mainland visitors set to drop dramatically in 2016, Taiwan's tourism industry is said to be struggling to make up the shortfall. The problem has been exacerbated by an over-supply of B&Bs and hotels, all of which are now competing for a share of this dwindling market.

In 2015, Taiwan enjoyed a bumper year for tourism, playing host to more than 10 million visitors. This included some 4.3 million visitors from the mainland, a figure that may drop by as much as 30% this year, according to some reports.

It was its popularity as a travel destination that fuelled the massive growth in its hospitality sector. With mainland visitor numbers now said to be declining – a consequence of increased political tension between Beijing and Taipei – a number of operators are looking at offering discount tour packages, while also looking to woo visitors from other regions.

As well as hotels and B&B's, coach tour operators and car rental companies are also said to be suffering as a result of the drop in visitor levels. Overall, some 44% of tour operators in the territory believe their businesses will struggle to match their 2015 success. A similar concern was expressed by many local car rental companies.

The problem has been made considerably worse by the growth of Taiwan's tourism sector in previous years. The sector now employs some 643,000 people, representing nearly 6% Taiwan's working population. In 2014, tourism accounted for 5.3% of the territory's GDP.

At the end of 2015, the number of hotels and B&B's in Taiwan broke the 10,000 mark for the first time, with the figure said to be still rising. According to the Tourism Bureau of the Ministry of Transportation and Communications, Taiwan had 205,000 hotel and B&B rooms available in 2015. This gave the territory an additional 13,822 rooms compared to 2014, an increase of some 37 new rooms a day. Now, many of these hospitality operators have been forced to cut prices in order to maintain booking levels.

A small number of operators, however, had anticipated the likelihood of such a downturn. This had seen them proactively targetting non-mainland tourists, with Japan, Hong Kong, Macau, South Korea and a number of other Southeast Asian countries seen as the most viable alternatives. In addition, some travel operators have begun to revise their propositions and business models in order to woo more international and local tourists.

A number of B&B's, for instance, have developed supplementary tourist products, often based on offering local cultural experiences. Others have invested in specialty restaurant facilities, typically serving locally grown produce and seafood. Such themed and boutique B&B's are said to be outperforming their conventional rivals.

This trend has been particularly noticeable in Hualien, a popular tourist destination in the east of Taiwan. Here a number of B&B's have adopted themes related to the local cultural and creative parks in order to attract visitors. At present, the most popular tourist attraction in Hualien, Taiwan's largest county, is the Hualien Cultural and Creative Industries Park. Built on the site of a former winery, this is one of five such parks developed by the Council for Cultural Affairs across Taiwan.

The original winery building dates back to 1913, but it suffered huge damage during World War II. Following extensive renovation, it was later designated as a heritage site by the Ministry of Culture, reopening to the public in 2011. Its former offices, factory and warehouse facilities have now been converted into exhibition halls, cultural and creative gift shops, as well as restaurants with a distinctly retro feel.

In Taipei, a number of similar attractions have also been developed. Most notably, the Huashan 1914 Creative Park and the Songshan Cultural and Creative Park, both of which have proved popular with tourists.

Tammy Hsieh, Taiwan Office

Content provided by Picture: HKTDC Research
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