Taipei Times (TT): My Humble House Hospitality Management Consulting Co (寒舍餐旅) in August launched a soft opening of its Mu Jiaosi Hotel (礁溪寒沐酒店) in Yilan County. Would you explain why My Humble House decided to enter an arena that already has excessive competition?
Wilhelm Tsai (蔡伯翰): Demand is not a problem in Jiaosi as it has become the most favored destination of domestic tourists in northern Taiwan following the completion of the Hsuehshan Tunnel. The tunnel shortens the traveling time between Taipei and Yilan to 45 minutes by car.
Mu Jiaosi Hotel represents the company’s first foray into the resort market and is its first property outside of Taipei, where our properties, Sheraton Grand Taipei Hotel (台北喜來登大飯店) and Le Meridien Taipei (台北寒舍艾美酒店), serve mainly business travelers.
Photo: Crystal Hsu, Taipei Times
With 190 guestrooms, the new facility seeks to offer travelers a different choice in line with our strategy to merge the arts and humanities with fine living and dining experiences. Although there are already a great number of hostels and small hotels in Jiaosi, upscale resort facilities are quite limited. If it proves successful, we will open more Mu properties elsewhere.
TT: Why did the company create its own brand rather than cooperate with international chains as it has done in Taipei?
Tsai: The location recommends against the strategy since domestic tourists account for 85 to 90 percent of visitors to Jiaosi.
International brands are helpful in attracting international business travelers as evidenced by the Sheraton Grand and Le Meridien, where our partnership with Marriot International Inc supplies 40 percent of the guests, thanks to its vast loyal membership.
Mu is courting mainly affluent Taiwanese individuals and families at room rates on par with that of the Hotel Royal Chiaohsi (礁溪老爺大酒店), Evergreen Resort Hotel in Jiaosi (長榮鳳凰酒店) and Wellspring By Silks (晶泉丰旅).
Competitive charges might help win customers away from those facilities.
Mu Jiaosi Hotel is in a convenient location, within walking distance of the railway station, the bus station, Tangwei Brook Park (湯圍溝公園), Wufengchi Waterfall (五峰旗瀑布) and the beach.
However, we are not giving up on international travelers. We are working with travel agencies to get overseas tourists to travel from Taipei to Jiaosi during their stay in Taiwan by offering discounts and other incentives.
The goal is achievable since hot springs are a big attraction among Asian travelers.
Jiaosi is known for its hot springs just like Taipei’s Beitou District (北投) and New Taipei City’s Wulai District (烏來), but visitors can do more in Jiaosi due to its more diversified tourism resources.
TT: How will the Mu Jiaosi Hotel affect My Humble House financially and are there other new ventures in the pipeline?
Tsai: The new facility will boost the company’s revenue, but the contribution might not be significant until next year, since its grand opening is slated for later this quarter.
We are in the process of fine-tuning the services and amenities.
The property is a joint venture with Transglobe Life Insurance Co (全球人壽), which won the superfices rights to the land in 2013. It is less expensive for financial institutions to acquire plots of land, especially in popular locations, because they have access to capital at a lower cost.
The life insurer is limiting its role to landlord, allowing My Humble House to take full control of the hotel’s operations. It is a win-win strategy for both sides.
It might take eight to 10 years for us to recover the investment. We spent NT$770 million decorating the new hotel.
Food and beverage will also be a growth driver for the company, as visitors can enjoy popular dishes at the restaurants at Sheraton Grand and Le Meridien, where the food and beverage operations generate about 60 percent of the revenue.
We will go ahead and expand in Taiwan, and likely in overseas markets when the time is ripe.
We plan to launch a boutique hotel on the intersection of Songjiang Road and Nanjing E Road in Taipei in the fourth quarter of 2019. The property will be a partnership with Continental Development Corp (大陸建設), and will also be run under our own brand now that we have gathered sufficient know-how and experience.
TT: How is My Humble House coping with the sharp decline in the numbers of Chinese tourists visiting Taiwan and a continued fall in the number of business travelers?
Tsai: It has definitely had a negative impact on the industry, but our properties have proved resilient due a diversified customer mix and little dependence on tourism groups. In fact, occupancy rates at Le Meridien are better this year than last year.
It is true more hotels are expected to join the market, but the less competitive ones will bow out, I believe. I am not particularly worried about the market correction. It will not last forever.
In my view, some hotels are not fit to be lodging facilities given their location, floor plans and original purposes. They are hasty and poorly planned attempts on the part of property owners to capitalize on the surge in the numbers of Chinese tourists in previous years. They are suffering after Taiwan’s ties with China soured.
Some of those hotels sought to cooperate with My Humble House, but we refused.
We shut down two independent restaurants this year because they demanded too much energy and attention, despite the modest scale of the businesses. We prefer to focus on hotel management, our core business.
TT: Can the government’s New Southbound Policy help fill the void left by the falling numbers of Chinese visitors?
Tsai: Tourism authorities have introduced measures to attract tourists from Southeast Asia and we have tried to expand our reach. We have seen more visitors from Thailand, Vietnam and Singapore, but the numbers are not significant.
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