The nation’s hotel revenue dropped 3 percent to NT$24.06 billion (US$796 million) in the first five months of the year, as a continued decline in Chinese travelers weighed on inbound visits and occupancy rates, analysts said yesterday.
Occupancy rates stood at 63 percent among domestic tourist hotels as of May, a 4 percent decrease from the same period last year, while the number of Chinese travelers plunged 43 percent, Tourism Bureau data showed.
“It is the first revenue decline since 2009, although the economy at home and abroad is improving,” said Andy Huang (黃舒衛), a researcher at global real-estate consultancy Knight Frank.
Taiwan’s icy ties with China accounted for the decline and are likely to continue to hit the industry as more players plan to enter the market, making the field more crowded, Huang said.
Room rates dropped 1 percent and the number of guestrooms occupied fell 4 percent, Huang said, citing government data.
About 600 existing hotels are for sale or plan to close operations, he said.
Hotels in southern and eastern Taiwan bore the brunt as occupancy rates fell 7 percent during the January-to-May period.
Measured by Chinese travelers, the contraction broadened to 48 percent for hotels in southern Taiwan and 63 percent in eastern Taiwan, government data showed.
Groups of Chinese tourists accounted for about 45 percent of hotel guests in those areas, compared with an average of 38 percent nationwide, making them more vulnerable to souring cross-strait ties, Huang said.
CBRE Taiwan, an international property consultancy, said Taiwanese hotels should brace for further customer losses now that Chinese tourist numbers have contracted for 14 consecutive months and show no signs of a reversal.
For the first six months of the year, inbound travel totaled 5.12 million visits, down 5.7 percent from the same time last year, the Tourism Bureau said.
“The trend may deteriorate going forward, making the operating environment more difficult for lodging facilities,” CBRE Taiwan said.
More medium-sized hotels could exit the market and some builders have expressed interest in taking over to build up inventory positions, CBRE said.
Local hotel chains might also find struggling business hotels attractive as they seek to expand market share and boost synergy benefits, CBRE said.
While international hotel chains have generally adopted a conservative view toward the hospitality industry in Taiwan, Japanese hotel chains appear to be the exception due to stable demand from Japanese tourists, CBRE said.
Travelers from north and southeast Asia increased significantly this year, mitigating the pain of falling Chinese tourist numbers, the broker said.
Colliers International Taiwan said investors could shift their attention to resort hotels as some have room rates on par with facilities in central Taipei, but have much lower overhead costs.
AI SPLURGE: The four major US tech companies have lost more than US$950 billion in value since releasing earnings and outlooks, while equipment makers were gaining Four of the biggest US technology companies together have forecast capital expenditures that would reach about US$650 billion this year — a flood of cash earmarked for new data centers and all the gear within them. The spending planned by Alphabet Inc, Amazon.com Inc, Meta Platforms Inc and Microsoft Corp, all in pursuit of dominance in the still-nascent market for artificial intelligence (AI) tools, is a boom without a parallel this century. Each of the companies’ estimates for this year is expected either near or surpass their budgets for the past three years combined. They would set a high-watermark for capital spending
China’s top chipmaker has warned that breakaway spending on artificial intelligence (AI) chips is bringing forward years of future demand, raising the risk that some data centers could sit idle. “Companies would love to build 10 years’ worth of data center capacity within one or two years,” Semiconductor Manufacturing International Corp (SMIC, 中芯) cochief executive officer Zhao Haijun (趙海軍) said yesterday on a call with analysts. “As for what exactly these data centers will do, that hasn’t been fully thought through.” Moody’s Ratings projects that AI-related infrastructure investment would exceed US$3 trillion over the next five years, as developers pour eye-watering sums
Bank of America Corp nearly doubled its forecast for the nation’s economic growth this year, adding to a slew of upgrades even after a rip-roaring last year propelled by demand for artificial intelligence (AI). The firm lifted its projection to 8 percent from 4.5 percent on “relentless global demand” for the hardware that Taiwanese companies make, according to a note dated yesterday by analysts including Xiaoqing Pi (皮曉青). Taiwan’s GDP expanded 8.63 percent last year, the fastest pace since 2010. The increase “reflects our sustained optimism over Taiwan’s technology driven expansion and is reinforced by several recent developments,” including a more stable currency,
COLLABORATION: Taiwan and the US could jointly find solutions to weaknesses in supply chain resilience for critical materials, focusing on mining and initial refinement Taiwan is likely to purchase rare earths from the US in the future, and is also in talks with Australia and Canada to strengthen global rare earth supply chain security, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. Taiwan and the US last month concluded the sixth Economic Prosperity Partnership Dialogue, during which both sides signed a joint statement endorsing the principles of the Pax Silica Declaration, pledging to deepen cooperation in areas including critical minerals. At the time, Kung said the two sides would establish working groups to advance cooperation in areas including artificial intelligence, digital infrastructure, critical materials and
RSS