Tourism sector sees lifesaver in visitors from China

The tourism sector appeared excited about the looming arrival of Chinese tourists after the government announced last week the easing of travel rules for people from across the Taiwan Strait. Analysts said the short-term economic benefits are likely to be seen in the service industry, but added the overall effect depends on other factors.

"We expected the opening-up policy to create over NT$50 billion of output value, benefiting the nation's service sector, including tourism, hotels, department stores and airlines," said Tseng Sheng-hai (曾盛海), director of the National Association of Travel Agents (旅行公會全國聯合會).

Tseng said most travel agents mainly want to target upscale Chinese visitors who can afford charges of over NT$60,000 for posh 10-day tour packages.

"These tourists are expected to exert strong purchasing power in Taiwan," Tseng said, citing estimates from Hong Kong that each tourist from China spends as much as HK$2,800 (NT$11,530, US$360) per day on average during their visits to the territory.

The association has been entrusted by the government to negotiate with its Chinese counterparts on the matter, but Tseng declined to comment on when and where talks will be held. A Chinese-language newspaper last week reported that cross-strait discussions will take place in Macau on Aug. 27, but didn't say where it had obtained the information.

Economic boost

The government currently allows only two categories of Chinese people to visit Taiwan -- those who live overseas, and those who live in China but plan to go to Taiwan for commercial purposes or en route to other countries.

The relaxation is expected to allow 365,000 Chinese tourists per year, or 1,000 people per day, to visit Taiwan as their main destination for a maximum of 10 days, coming through either Hong Kong or Macao.

"The estimate of NT$50 billion in production value could be equivalent to 0.5 percent growth on top of the nation's gross domestic product [GDP], which amounts to around NT$10 trillion," said Chou Ji (周濟), director of the Center for Economic Forecasting at the Chung-Hua Institution for Economic Research (CIER, 中經院).

This could be expanded to reach over 1 percent if the nation's service providers reinvest profits from the increasing demand in equipment and manpower, the economist predicted.

"This could mean a lot to the nation's economy as its export growth slows," Chou said, citing the bright economic performances of some of the Asian countries that welcome Chinese tourists, including Hong Kong, Singapore and Australia.

CIER last month lowered its GDP growth forecast for this year to 3.8 percent, while the Taiwan Institute of Economic Research (TIER, 台經院) last week revised its forecast to 3.31 percent, citing weakening export growth.

A boon for hotels

Chinese tourists could be a lifesaver for the struggling hotel industry, which has been suffering from falling occupancy rates in the last four to five years, as an increasing number of Taiwan companies relocate abroad, in turn reducing the number of inbound business visitors.

"We expect the Chinese tourists to add an extra 10 percent to 15 percent to the current occupancy rate of 67 percent in Taipei City, which has dropped from over 70 percent four to five years ago," said Sean Chuang (莊秀石), chairman of the International Tourist Hotels Association of Taipei (台北市觀光旅館公會).