Formosa International Hotels Corp (晶華酒店), Taiwan’s largest listed hotel operator, plans to more than double room numbers in the next three years as warming ties with China help Taiwan defy a global slump in tourism.
“The opportunity in Taiwan, at least for the next three years, is going to be a lot better than anywhere else in the world,” chairman Steven Pan (潘思亮), 44, said in an interview late Wednesday. “It’s too good to be true, I cannot believe it.”
Formosa Hotels, which is planning to spend NT$2 billion (US$60 million) on its expansion, is betting Taiwan and China will let individual Chinese tourists visit within a year. Current rules only allow tour groups. The two sides agreed on April 26 to expand weekly flights across the Taiwan Strait after visitors from China doubled in March.
Taipei-based Formosa Hotels plans a syndicated loan from local banks to fund expansion to as many as seven hotels from the two it now has. Capacity will increase to about 2,000 rooms within three years from the current 750, Pan said.
Formosa Hotel’s shares climbed 0.5 percent to NT$428 in Taipei yesterday, outpacing a 0.1 percent gain in the benchmark TAIEX index. The shares have advanced 31 percent this year, lagging behind a 43 percent climb in the TAIEX.
Taiwan’s government plans to spend NT$30 billion over the next four years to promote tourism and expects to attract NT$200 billion in private investment, the Cabinet said on April 9.
The government may offer residency to Chinese and other foreign investors to attract funds, the financial regulator said yesterday.
Visitors from China doubled to 85,731 last month from 41,304 in February, according to Taiwan’s tourism bureau. Few of those leisure travelers visited Formosa’s five-star properties, which cost about US$300 per night, Pan said.
“The lowest bid gets all the business, so they just take everyone to the worst hotels,” Pan said. “The next kicker is business travelers from mainland China.”
China Mobile Ltd (中國移動), the world’s largest phone company by subscribers, on April 29 said it would buy a 12 percent stake in Taiwan’s Far EasTone Telecommunications Co (遠傳), marking the first investment in a Taiwanese company by a Chinese government business in 60 years.
Two new three-star properties in western Taipei to open next month will help Formosa grab market share and will be supplemented by three high-end hotels in the east of the city over the next three years, Pan said.
The company also plans to renovate its Taroko Gorge hotel to cut room numbers and add luxury villas, allowing it to raise prices, he said.
Formosa Hotels this week signed a contract to open restaurants with 300 seats at Taoyuan International Airport, boosting profits by 10 percent when they open in July, Pan said.
The food and beverage division, including a restaurant complex next to the National Palace Museum, accounts for around half of its revenue, he said.
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