Investors eyeing Taiwan’s hospitality industry should focus on high-end resort facilities or partner with middle-priced international brands amid a growing room glut, Colliers International Taiwan (高力國際) said.
While inbound tourists have totaled more than 10 million annually since 2015, concerns about excessive competition have been growing, as more than 100,000 new guestrooms have entered the market annually since 2014, the real-estate consultancy said last week.
The trend, coupled with a continuing decline in business traveler numbers, has increasingly weighed on occupancy and squeezed profitability, it said, noting that room rates have seen corrections after peaking in 2014 and 2015 for tourist hotels and standard hotels.
There are three categories of accommodation in Taiwan — tourist hotels, standard hotels and homestays — based on their construction and facilities, space, management and service quality, and tourist hotels charge the highest rates, the consultancy said.
Daily room rates stood at NT$4,384 (US$142.66) for tourist hotels, whose occupancy rates averaged 73.2 percent in Taipei last year, which means that each room generated NT$3,209 in revenue, Colliers Taiwan said.
However, room charges less than NT$4,500 per night are not enough to keep rents below 20 percent of sales for a room of 13 ping (42.9m2) in Taipei, especially for grade-A space, it said.
“Room rate improvement thus represents the most important task for hotel operators,” it said.
A sharp decline in the number of business travelers — from 1.06 million in 2007 to 830,000 last year — makes that challenge all the more difficult, it said.
Luxury resort hotels in scenic areas, many of which feature hot spring facilities, have been the exception, as they serve mainly local tourists, it said.
There might also be earnings opportunity for alliances with low or middle-priced international brands whose penetration of Taiwan’s market is low, and this would require lower investment costs, it added.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to
The US stock market has been on a tear, yet the country’s economy is in the dumps. So why do so many people believe — undoubtedly incorrectly — that the stock market has decoupled from reality? The economy many people experience, while bleak, is local, personal and, for the most part, either not publicly traded or plays only a small part in the stock market’s moves. To explain why these personal experiences have so little effect on equity markets, we must look more closely at the market role of the weakest industry sectors. The surprising conclusion: The most visible and economically vulnerable