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.
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