Asian Cities Report | Taiwan Hospitality Savills World Research2H 2017 Taiwan Asian Cities Report Taiwan Hospitality 2H 2017 savills.com.hk/research savills.com.hk/research 01 Asian Cities Report | Taiwan Hospitality 2H 2017 GRAPH 1 Tourism in Taiwan Kong, Macau and South Korea, Number of inbound arrivals, 2008–1H/2017 The number of foreign visitors to coupled with over 85% of tourists Taiwan marginally increased, by from these countries preferring to 2.4% year-on-year (YoY) to 10.69 travel independently. In addition, while China Japan Southeast Asia Hong Kong & Macau Others Total % YoY (RHS) million in 2016, with Chinese visitors the rising political tension across 12,000 30% accounting for 33% (3.51 million), the Taiwan Strait has caused group 25% Japan for 18% (1.9 million) and Hong tourism from China to drop by 23%, 10,000 Kong and Macau for 15% (1.6 million). FIT from China only declined by 2%. 20% The tourism industry had previously 8,000 15% been in decline for two consecutive Inbound tourist % YoY years, due to rising political tensions consumption 6,000 10% between China and Taiwan. However, The contribution of tourism to GDP 5% was US$13.37 billion (4.84% of total 4,000 in 1H/2017, conditions again proved to be difficult, with the number of GDP) in 2016, down by 7% compared No. of inbound arrivals ('000) 0% with 2015. This is due to the decline 2,000 overseas tourists falling by 5.66% -5% YoY. The drop is mainly attributable to of the average daily expenditure for 0 -10% the reduction in visitors from China, inbound travellers, decreasing by 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H/2017 which decreased by 40% (0.85 million), US$15 to US$193 per day, largely shrinking their share of total inbound due to a decline in retail spending by Source: Taiwan Tourism Bureau, Savills Research & Consultancy travellers from 40% to 25%. these visitors. In terms of expenditure categories, accommodation The increase in foreign visitors from accounted for 36.8% of daily expenditure, followed by shopping GRAPH 2 other Asian countries somewhat eased the impact of the decline in tourists (30.2%) and food and beverage Inbound tourist consumption by country from China. From 2010 to 2016, the (16.6%). Japanese and Singaporean and expenditure type, 2016 average annual increase in the number visitors (who are willing to spend more of overseas tourists (except Mainland on accommodation) spent more than Accomodation Shopping Other spending arrivals) was 11%. In the first half other travellers, with daily expenditure US (USD149) of 2017, growth reached 16% and of US$241 and US$229, respectively. the number of arrivals from several South Korea (USD188) Asian countries achieved double- The decrease in the number of Singapore (USD229) digit growth, such as Vietnam (113% mainland visitors resulted in a YoY), Thailand (82% YoY), Philippines reduction in the shopping sector. Hong Kong & Macau (USD183) (77% YoY) and South Korea (30% Mainland travellers prefer tour groups and usually stay in two- or three-star China (USD198) YoY). While the government continues to promote the “New Go South” hotels due to limited accommodation Japan (USD241) policy, the number of foreign visitors budgets. In 2016, they spent US$198 is expected to hit 10 million again in per day, with approximately 49% of Total (USD193) 2017. the daily spending on shopping (at 0% 20% 40% 60% 80% 100% US$96 per day this was 65% higher Characteristics of than average), and accommodation Source: Taiwan Tourism Bureau, Savills Research & Consultancy visitors only accounting for 23%, lower than The growth of foreign visitors is the average. mainly attributable to leisure travellers. According to a survey by the Taiwan New supply GRAPH 3 Tourism Bureau, leisure travellers in At the end of 1H/2017, the total International tourist hotel occupancy rates, 2016 accounted for 70.7%, while only number of hotels in Taiwan was 3,338, 2009–1H/2017 6.7% of visitors were here on business. providing 180,744 rooms. By grade, Even though the government has hotels accounted for 96.3% of total Taipei City Kaohsiung City Taichung City Total promoted MICE (Meeting, Incentive, supply and international tourist hotels 80% Convention, and Exhibition) for years, and tourist hotels only accounted for there are less than 1 million visitors 2.3% and 1.4%, respectively. 40% of 75% here for business, conference and supply is concentrated in the major exhibition purposes. Of these visitors, metropolitan areas, especially in 70% 35% are from Japan and 13% from Taipei City (17.4%), Kaohsiung City 65% the US. (12.2%) and Taichung City (10.8%). Small towns or rural areas with tourist 60% By traveller type, the free independent attractions, such as hot springs, traveller (FIT) sector has grown fastest beaches or national parks are also 55% in the past few years. In 2016, the popular with hoteliers, who focus on share of FIT increased significantly domestic clients. For example, 6.6% of 50% 2009 2010 2011 2012 2013 2014 2015 2016 1H/2017 by 5.6 percentage points (ppts) to total stock is located in Yilan County, 76.4%. This is due to strong growth due to its famous hot springs and easy Source: Taiwan Tourism Bureau, Savills Research & Consultancy in the number of tourists from Hong access to Taipei City. Tainan City, a 02 Asian Cities Report | Taiwan Hospitality 2H 2017 historical city in the south of Taiwan, Chinese tourist number fell, occupancy GRAPH 4 has 242 hotels, equivalent to 7.2% of rates in Kaohsiung were more directly International tourist hotel room rates, the total stock. affected. 2009–1H/2017 In the past 12 months, 129 hotels, with Average room rates decreased to Taipei City Kaohsiung City Taichung City Total a total of 8,603 rooms, were launched NT$3,793 per night in 1H/2017, 5.5% 6,000 and total supply increased by 4.8%. down from 1H/2016’s average of Five of the 129 new hotels are in the NT$4,014, decreasing for the first time 5,000 international tourist hotel and tourist since 2009. Taichung’s room rate fell 4,000 hotel categories. Dancewoods Hotels most out of the three major cities. They & Resorts and Yilan The Walden are provided more discounts to attract 3,000 located in Yilan, while the other three customers, which led their room rate NT$ per room hotels are located in Taipei, Tainan to fall by 8.3% YoY to NT$2,366, 2,000 and Pingtung. In order to reduce although it successfully increased the preparation time for new hotels, occupancy rates by 3.15 ppts in a 1,000 some hoteliers chose to renovate old struggling tourism market. Taipei buildings. S Hotel, located in the heart City used to benefit from abundant 0 2009 2010 2011 2012 2013 2014 2015 2016 1H/2017 of Taipei City with 102 rooms, was business travellers and was the first remodelled from an old office building destination for tourists. However, it also Source: Taiwan Tourism Bureau, Savills Research & Consultancy and positioned as a boutique hotel. saw a 6.9% drop in room rates, falling HOTEL CHAM CHAM (198 rooms) and back to 2012 levels. Room rates of Flora Hotel Main (56 rooms), which several selected leading international used to be hotels, were renovated by tourist hotels, including W Hotel, Le TABLE 1 new operators and re-opened as well. Meridien, Far Eastern Plaza and the Westin Taipei, declined. However, the Newly opened tourist hotel rooms, 2016– The fall in Chinese tourist numbers, Regent Taipei has seen a small growth 2017 coupled with a huge boom in hotel in room rates, due to 45% of their hotel supply, was intensified the competition room demand coming from Japanese in the hotel sector, causing both tourists, with only 7.2% relying on Hotel Location Room Type the occupancy rate and room rate mainland Chinese tourists. Dancewoods Hotels to decline. In order to differentiate Yilan County 104 Hot spring hotel and Resorts themselves from their competitors and Hotel market outlook attract domestic customers, more and In the short term, the relationship more operators are creating theme between Taiwan and China is not The Walden Yilan County 103 Kids-friendly hotel hotels. In addition to hot spring hotels, set to improve, and the promotion of which are popular with the domestic Taiwan tourism in other Asian countries S Hotel Taipei City 102 Boutique hotel market, hoteliers are recently looking to cannot cover the loss. The fast growth target niche markets such as cyclists, trend experienced in the past few Grand Bay Resort Pingtung County 234 Kids-friendly hotel families, teenagers and scuba divers. years will not return, and the entire By providing more leisure facilities tourism industry, including hotels, or activity packages, customers stay travel agencies, tour bus businesses, longer in the hotel and increase F&B jewellery shops and duty free stores, Source: Taiwan Tourism Bureau, Savills Research & Consultancy sales. Grand Bay Resort and Yilan The will face challenges. Several hotel Walden, both newly-opened hotels, are development projects have been or kid-friendly, providing swimming pools, cancelled. From 2016 to 2017, only kids’ clubs, and family rooms. six of 20 tourist hotels were launched TABLE 2 on schedule, as nine were postponed Selected international tourist hotels in Taipei, Occupancy rate and and five were cancelled. In the next 1H/2017 vacancy rate three years, more hotel projects In 1H/2017, the occupancy rate for which are under construction or in the Room rate/night Occupancy rate Hotel No. of rooms Taiwan’s international tourist hotels planning stage, will reconsider their (NT$) in 1H/2017 market position or postpone their decreased by 2.55 ppts to 64.79% W Taipei 405 8,561 75.9% YoY, according to statistics released construction schedule.