Miramar Garden Taipei banking on keen pricing

The opening of a new hotel situated at the intersection of Jianguo N Road and Civic Boulevard in Taipei could lead to a price war in the hospitality sector.

Miramar Garden Taipei (美麗信花園酒店), which is holding its grand opening today, will be able to offer competitive rates because it was developed as a 50-year build-operate-transfer (BOT) project in line with the government's efforts to boost the tourism sector.

By releasing state-owned land, the government aims to encourage private developers to run hotels that offer reasonable rates to sharpen the sector's competitive edge.

The Huang family outbid six rivals to secure the Miramar Garden Taipei project in November 2003. According to the contract, the hotel's average room rate, excluding breakfast and other service fees, must be capped at NT$2,300 (US$72) -- nearly half that of five-star hotels -- for the first three years. In its fourth year of operation the hotel will be able to apply to the Tourism Bureau to increase its rates in line with market conditions.

Targeting a mix of businesspeople and tourists to take advantage of their respective boom seasons, the hotel was confident that it would be able to corner a share of the market as the sector is not yet saturated, said Linda Chu (朱榮佩), general manager of Miramar Garden Taipei, during an interview last Tuesday.

Developed by the brothers Huang Chun-fu (黃春福) and Huang Chun-fa (黃春發), the hotel cost NT$800 million to construct and is expected to break even in seven years, Chu said.

Chu, 44, was recommended by Spring Park International (春秋國際), the hotel's management consultancy, to take charge of Miramar Garden Taipei's operations. She previously served as executive director of operation-hospitality management services at Formosa International Hotels Corp (晶華國際酒店集團).

Management at the Grand Hyatt Taipei are unfazed by the prospect of increased competition.

"We have the best location in town. Our diversified food and beverage services [nine restaurants] are also a big selling point," said Luanne Li (李佳燕), Grand Hyatt's marketing communication manager.

Grand Hyatt reported one of the highest average room rates for last year at NT$5,460, with an occupancy rate of 80 percent.

"Our market share and revenues are stable," she said.

Sean Chuang (莊秀石), chairman of the International Tourist Hotels Association of Taipei (台北市觀光旅館商業同業公會), said the customers targeted by Miramar Garden Taipei were not people who normally frequented five-star hotels, with the result that the market should not become overtraded.

"Taipei's hotel sector will only gain an additional 200 rooms [from Miramar Garden Taipei], which won't have a major impact," he said.

It takes at least six months to gauge the influence of new market players, he said.

Chuang is also president of Leofoo Development Co (六福開發), which operates the Westin Taipei and the Leofoo Hotel (六福客棧).

Hotels nationwide recorded a healthy average occupancy rate of 73 percent last year. Chuang is optimistic about hotel performance this year, citing government and corporate efforts to attract foreign tourists.

During the January-to-March period, the number of overseas visitors in Taiwan grew by 7 percent from a year ago, according to Chuang.

The Miramar Group is equally bullish. As a follow-up to the Miramar Garden Taipei project, it will launch a hot-spring resort hotel in the scenic Yangmingshan (陽明山) area in October, Chu said.