Sun, Oct 15, 2017 - Page 6 News List

Guesthouse closures are a sign of saturation

By Vincent Chao 趙俊雄

Newspapers earlier this month reported that more than 450 bed-and-breakfasts (B&B) across Taiwan are for sale on the Internet, representing a total value of more than NT$12.3 billion (US$407 million).

Hualien County tops the list with 85 properties for sale, followed by Yilan and Taitung counties, for a total of more than 200 properties for sale in the three counties.

Some B&B operators have been blaming the government for driving Chinese tourists away by refusing to acknowledge the “1992 consensus.” Is that true?

Taiwanese B&Bs originated from Japan and were originally spare rooms that were offered as temporary lodging for tourists as farmers’ children were away from home, to let the tourists stay with the families and eat and do what is on offer.

Sometimes lodgers even had to help the farmers with farm work and they were often treated as members of the family.

When they departed, they would pay what they felt was reasonable for their stay and farmers simply saw the money as extra income.

After Taiwan opened to Chinese tourists in 2008, demand for hotels soared, crowding local tourists out of hotel accommodation.

As a result, more Taiwanese have turned from the noisy hotels to B&Bs, which often offer a better environment, ecological tourist sites and cultural features. Because of this, many investors started to hunt for land to build B&Bs.

According to Tourism Bureau data, the number of applications to build B&Bs in Hualien County was only about 30 to 40 per year before 2013, but in the past five years, 915 have been added and there are now almost 4,000 rooms.

The figures would be even higher if illegal B&Bs were taken into account. Some so-called supersized “five-star B&Bs” have even been built on good farmland, which has transformed the original idea behind B&Bs.

This also violates the Act for the Development of Tourism (發展觀光條例), which defines a B&B as “a lodging facility run as a family subsidiary business, using the spare rooms of self-used residence to provide tourists with a rural living experience.”

“Such lodging facilities usually incorporate local culture, natural landscape, ecological environment, environmental resources, and agricultural, forestry, fishery or livestock farming activities,” the act says.

As competition has led to the construction of more B&Bs, the sector has turned into a mature and highly competitive market, a natural trend based on market supply and demand.

Some people have pointed out that the biggest problem of Taiwan’s B&B market are the high prices, saying that Taiwan’s B&Bs are more expensive than their Japanese counterparts, yet they are inferior in terms of quality and services.

As these facilities are unable to create customer value, newspapers report that more than 2 million Taiwanese have taken to camping instead of staying at B&Bs.

If B&B operators do not change their business model, the situation is likely to deteriorate even further.

The percentage of Chinese tourists who choose to stay at B&Bs is relatively low.

However, as investment has flowed into the B&B sector, it has become swamped, just as happened with the “Portuguese egg tarts” phenomenon, and perhaps prospective B&B operators should stay out of the market for the time being.

Vincent Chao is a doctoral student at National Chung Cheng University’s Department of Business Administration.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top