Following several years of fast growth, the country's high-end motel sector has reached saturation and operators are mulling changes needed to survive, a market veteran said yesterday.
It takes longer to break even and the life cycle for motels has turned out to be relatively short given consumers' fickle preferences, said Timothy Hsu (
He said most motel customers are generally driven by curiosity and a desire to try new services. Newly opened motels generally can register high occupancy rates during the first one or two years, even attracting customers for two or three hours of luxury.
However, after their curiosity has been satisfied, customers generally return to older, more economical establishments, he said.
"The luxury motel market is quite small. Some competitors have been forced to drop out of the high-end market and seek survival in the lower-end section," he added.
WeGo Motel is also considering developing a second brand to target the mid-range motel market in central and southern Taiwan.
Before that, it plans to further raise the bar by building the nation's biggest boutique motel in Taipei's Dazhi area.
The firm yesterday morning held a groundbreaking ceremony for its fourth motel in northern Taipei. The NT$1 billion (US$30.2 million) project, located opposite the Jiannan (
Built on a lot measuring 1,618 pings (5,340m2), the Dazhi motel will house 105 rooms on seven floors, designed with 42 different themes.
"Given the white-hot competition, the key to success is injecting massive investments to attract a larger segment of the market and to enhance service to make consumers feel at home," Hsu said.
Breaking down the total investment, each room in the Dazhi motel is worth NT$10 million, twice the cost of the company's Linsen N Rd outlet in Taipei's old "Combat Zone" area.
Hsu said to strengthen dining and entertainment, each room in Dazhi will be equipped with a dining area, a bar counter and a home theater.
Guests making reservations can enjoy tailor-made services, choosing an individual combination of breakfast, bed and bath.
As the room rate in the Dazhi motel will probably be no higher than the Linsen motel, Hsu estimated it would take seven years to break even -- longer than the Linsen outlet's three-year record.
As soon as the new project is completed, the firm will close down the Linsen motel for a NT$200 million remodeling to boost its competitiveness, he said.
While its expansion plan in Taiwan will continue, WeGo Motel plans to expand its activities across the Taiwan Strait, with the first hotel starting operations in Suzhou in 2008.
The joint venture, in which Hsu's firm controls 33 percent, has purchased land for the construction of a five-star villa resort to target well-heeled tourists, Hsu said.