Taipei Times: How has the SARS outbreak impacted your hotel business?
Lai Cheng-i (賴正鎰): Since the SARS outbreak in late April, occupancy rates of The Lalu (涵碧樓) dropped to 70 percent in early May and further slipped to 30 percent in late May. But as soon as Lee Ming-liang (李明亮, co-chairman of the Cabinet's SARS prevention committee) said on May 24 that the public should return to their normal lives, occupancy began to pick up and are now nearly on par with the pre-SARS level.
We've averaged 500 inquiries a day, and about 100 bookings were settled during the first 19 days this month, so we expect business will start to stabilize this month.
TT: Have you reduced your room prices to attract customers during the outbreak?
Lai: While other tier-one hotels have cut room rates to attract customers, we have not offered any discounts throughout the outbreak, period. I think the reason we could buck the downward trend is because we're a mid-sized resort focused on foreign individual travelers and local wealthy customers. They are our primary customers.
Though our business was also hit by the drop in foreign tourists due to the disease, we're glad to see a surge in local visitors filling up some of the space vacated by foreign travelers. In comparison, hotels in bustling urban areas accommodating group tourists and inbound business travelers suffered the most in the last two months.
TT: Even though The Lalu made it to Conde' Nast Traveler magazine's list of the top 80 new hotels this year, there is some question about whether the facility is justified in charging room rates ranging from NT$12,300 to NT$52,500 a night. Are you making money?
Lai: It's true that our room rates are generally about four-times the price of other five-star hotels in Taiwan. But fortunately we are satisfied with monthly sales around NT$35 million to NT$40 million on average since we opened in March last year. Why? Because we only have 96 rooms and we have proved that it's easier to achieve higher occupancy than our rivals, be it in Pingtung's Kenting or in Taitung's Chihpen, which have as many as 400 rooms.
But most importantly, I think we are encountering a trend whereby five-star hotels in urban areas will be gradually squeezed out by resorts and boutique hotels on one hand and cheaper four-star hotels on the other. As the wealthy are able to use professional financial assistance to keep their assets intact during the economic slump, they can afford paying up to more than NT$10,000 a night or more for beautiful mountain and lake views.
Meanwhile, four-star hotels in urban areas have found their niche to stay competitive in the industry by offering economy prices and average service to customers, especially business travelers. In this scenario, we estimate there are around 3 million to 5 million people in Taiwan that fall into our `up-market category.'
Our long-term plan is to do well in the international travel business and we hope the number of foreign tourists will account for 70 percent of all guests by 2005 from the current 35 percent and up to 90 percent within the next five years.
TT: Your hotel was originally named after an indigenous Aboriginal settlement, Kuanghua Island in Sun Moon Lake, which the Thao called, `Lalu.' What's the status of the area surrounding the lake after some scenic spots nearby were damaged by the 921 earthquake?
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