Taipei Times (TT): The sentiment in the local tourism sector has been good recently since Taiwan was included in the US Visa-Waiver Program. How is that likely to benefit Phoenix Tours International Inc (鳳凰國際旅行社)?
Anthony Liao (廖文澄): Experience has shown that the launch of a Visa-Waiver Program usually helps raise the number of visitors to the destination country by about 30 percent in the first year after it takes effect. Therefore, the US visa-waiver program will definitely boost the company’s business on US routes next year, with revenue from travel to the US expected to increase to account for about 10 percent of our total revenue, from 3.6 percent recorded in the first half of the year.
TT: Do you plan to increase the company’s presence in the US in the near future? Or do you intend to remain focused on the European market?
Liao: We re-established a subsidiary in Los Angeles in March, in anticipation of the visa-waiver program boosting business on the US routes.
Given that the security procedures in the US remain stricter than in other countries, the visa-free program may not benefit the US routes as much as the EU visa-waiver program boosted European routes.
Despite the weak economic sentiment this year, sales generated by the European routes remain the largest contributor to the total revenue of Phoenix Tours, accounting for 33 percent of overall revenue in the first half of this year and likely reaching 40 percent by the end of the year.
TT: Other than the US and EU visa-waiver programs, have you seen any positive drivers for the tourism sector next year?
Liao: Next year will be a “traveling year” for Taiwan, as the government has designated a total of 115 holiday days for the year, including a nine-day Lunar New Year holiday, the longest in recent years.
Moreover, the higher-than-expected sales derived from the company’s online international travel fair — launched a month earlier than the four-day Taipei International Travel Fair [ITF] that opened on Friday last week — provided more proof of strong sentiment toward the tourism sector.
Originally, we expected revenue from the online international travel fair and the ITF to remain flat compared with last year, with revenue of about NT$300 million (US$10.24 million), but the online international travel has exhibited a 10 percent growth in revenue.
Consequently, we have raised the sales target of the online international travel fair and the ITF this year to about 20 percent.
TT: In the first nine months of the year, Phoenix Tours posted NT$2.15 billion in revenue, up 4.96 percent from a year earlier. Is it still possible for the company to reach the 20 percent sales growth target this year?
Liao: I can only say that the company will maintain the same target for now. I still believe the sales performance in the fourth quarter will help the company achieve its goal.
TT: Do you think the slowing economy has caused the company’s revenue and profitability to expand slower than expected this year?
Liao: The travel market has declined slightly this year because of the impact of slowing consumption, but it has not affected Phoenix Tours that much because the company focuses on high-end clients with strong consumption ability.
Our net profit in the first half showed some improvement from a year ago, which also provideds evidence that travel agencies selling high-end products are likely to face fewer risks.
[Phoenix Tours posted a net profit of NT$101.95 million (US$3.4 million), or earnings per share of NT$1.67, in the first six months, higher than NT$70.58 million, or NT$1.16 per share, recorded during the same period last year.]