Life Travel & Tourist Service Co (五福旅遊) yesterday announced plans to shrink its payroll by 20 percent to cope with a severe business slowdown due to travel restrictions at home and abroad.
The Kaohsiung-based company, which has 629 employees in 23 offices across the nation, said it has no choice but to shed about 100 positions because of the restrictions on international travel, a key revenue driver.
The announcement came two weeks ahead of the government’s distribution of stimulus vouchers intended to shore up consumer activity, including domestic travel.
Life Travel had survived on the government’s relief funds, which expired last month. It said the tourism industry needs greater assistance from the government, if it is to survive.
Life Travel’s cumulative revenue in the first five months of the year totaled NT$896.77 million (US$30.28 million), down 67.74 percent from the same period last year, the company’s stock exchange filing showed.
The company posted a net income of NT$15.38 million in the first quarter, down from NT$25.9 million in the same period last year, with earnings per share declining from NT$0.88 to NT$0.52.
Life Travel’s board of directors agreed in March to forfeit compensation from last year’s earnings and top executives took a pay cut.
While the company had received government subsidies over the past three months, there is “nothing coming from the government in July,” CEO Hsieh Hung-ming (謝宏明) told the Central News Agency yesterday.
Tourism operators can depend only on themselves to “survive,” he said.
Other major travel agencies have also reported sluggish business this year, with Lion Travel Service Co (雄獅旅行社), Phoenix Tours International Inc (鳳凰旅行社) and Richmond International Travel & Tours Co (山富國際旅行社) posting revenue declines of more than 60 percent from January to May compared with the same period last year.
If Taiwan’s border controls stay in place, the local travel agency industry can only afford to hire 10,000 staff members, Providence University Department of Tourism associate professor Huang Cheng-tsung (黃正聰) said, implying that the industry, which employs about 44,000, would have to downsize further.
Five-star hotels in Taipei have also continued to struggle even as resort properties elsewhere in the nation have seen a rebound.
Regent Taipei (台北晶華酒店), the flagship property of Formosa International Hotels Corp (晶華麗晶酒店集團), has cut prices for its cruise-like vacation package for the summer from NT$3,980 per person to NT$2,990.
Ambassador Hotel Taipei (台北國賓大飯店) is inviting guests to stay at the facility for NT$4,000 per night and get a second night for free. Alternatively, guests can stay at an executive suit for NT$6,000 and enjoy a free dinner at A Cut steakhouse from July 15.
Occupancy rates at Taipei hotels are less than 20 percent, compared with 65 percent for resort facilities near popular tourist attractions in east Taiwan.
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