The hotel industry would bear the brunt of souring cross-strait relations, with occupancy rates expected to take a hit in the second half of this year when the number of Chinese tourists is expected to plunge 50 percent, CBRE Taiwan said yesterday.
The international property consultancy’s downbeat forecast came after Beijing last week suspended a program that allowed individual tourists from 47 cities to travel to Taiwan.
Beijing is reportedly considering extending the restrictions to tour groups.
The number of Chinese visitors to Taiwan could drop by 530,000 in the second half of the year, eroding tourism revenue by NT$20 billion (US$632.34million), CBRE Taiwan said.
COULD GET WORSE
The number of affected potential visitors could rise to 640,000 if the situation deteriorates, it added.
The worst-case scenario suggests a retreat of 51 percent from a year earlier, but either projection would deal a serious blow to Taiwan’s hospitality industry.
Average hotel occupancy rates stood at 64.95 percent nationwide in the first quarter, a gain of 4.5 percentage points from a year earlier, government data showed.
The gauge could fall to 59 percent in the second half of the year, the lowest in 10 years, or down 6 percentage points from the same period last year, CBRE said.
Inbound arrivals totaled 11.06 million last year, with Chinese accounting for 24 percent, followed by Japanese at 18 percent, and a combined 15 percent for Hong Kong and Macau, it said.
The number of individual Chinese travelers has grown in the past few years, totaling 630,000 in the first six months of this year,, or 38 percent of all Chinese tourists, CBRE said.
The figure represents a 24 percent increase from a year earlier, the consultancy said.
“The backdrop will put more profitability pressure on Taiwanese hotel operators, as a considerable number have already cut prices to survive an increase in players,” CBRE Taiwan researcher Ping Lee (李嘉玶) said.
EXITS AND ENTRANCES
Unfavorable changes to cross-strait ties could prompt struggling hotels to speed up their exits from the market, Lee said.
However, the outlook is not wntirely negative, as potential foreign buyers would likely start to evaluate prospective opportunities, Lee said.
Japanese investors are keen to join the local market, Lee added.
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