Taiwan’s Travel Industry Grapples With Uncertainty

With no end to the pandemic yet in sight, it may take years for the travel industry to fully recover. In the short term, the leisure market has the best prospects.

As Taiwan faces a difficult coronavirus outbreak, imagining the future of travel in the country is a challenge. After all, besides containing the outbreak, the government is also focused on helping travel businesses survive this difficult period.

Looking ahead is crucial to the industry’s future prospects, though. The pause in international arrivals gives Taiwan a chance to rethink its tourism strategy, which has focused in recent years on maximizing the number of visitors. In 2019, a record 11.84 million people visited Taiwan, up 7% year-on-year. The vast majority were leisure travelers, who spend less than those who travel for business purposes.

“Taiwan is a newcomer in global tourism, so you need to start out with some volume,” says Steven Pan, chairman of Formosa International Hotels Corp. (FIH), which owns the Regent, Silks, and Just Sleep brands.

That approach likely reached its zenith with the Chinese tourism boom of the 2010s. In August 2019, Beijing forbade individual Chinese from visiting Taiwan to signal its displeasure with the state of cross-Strait relations. Given that relations between Beijing and Taipei have only worsened since then, China is unlikely to ease the ban even when the pandemic ends.

Kitty Wong, president of Taipei-based destination management company K&A, told Taiwan Business TOPICS that Taiwan’s travel industry can still thrive without large numbers of Chinese visitors. “The hotels lost all these guests, but that was the largest impact,” she says. “A lot of the sites they preferred to visit could not accommodate such large numbers of visitors anyway.” Such sites include the National Palace Museum, Taroko Gorge and Sun Moon Lake.

In the MICE segment (events such as meetings, incentive travel, conventions, and exhibitions), Wong believes Taiwan could benefit from targeting niche markets. “Taiwan is not a hub [for MICE],” she says. “This is something we need to face. We cannot focus on huge groups. We need to know who we are and who our clients are.”

She suggests that Taiwan consider targeting the LGBTQ+ market, given the island’s liberal stance on marriage equality and other LGBTQ+ issues.

As one of Asia’s most queer-friendly destinations, Taiwan has an opportunity to market itself to LGBTQ+ travelers. Photo: Martti Chen

Compared to the typical leisure traveler, those who go to exhibitions or conventions do not just spend more during their visit, they also are more influential, Wong observes. “This is what the Tourism Bureau doesn’t understand – they market Taiwan to backpackers. That’s not how to attract influencers.”

In the short term, Taiwan will likely focus more on the leisure than the business travel market because the former will recover faster and Taiwan is better equipped to serve it. GlobalData, a London-based consultancy, estimates that international business travel fell 75% in 2020. A survey by the firm published in June found that 43% of respondents said that their firms’ corporate travel budgets would “reduce significantly” over the next 12 months. Some of it may never return.

Businesses “will continue using communication technologies and carefully consider the necessity of using precious capital for flights and other travel expenses,” Craig Bradley, a GlobalData analyst, said in a June press release.

In contrast, leisure travelers face fewer constraints. That is especially so for the premium market, a segment that has not historically been Taiwan’s strength, though changes are afoot. FIH’s Pan says that the pandemic has forced Taiwan’s hotels to boost the quality of their offerings, which will be a boon for them when border restrictions are eased.

“COVID forced hotels to come up with high-end services and experiences that the premium market is accustomed to overseas and offer them in Taiwan,” he says. For instance, the Regent Taipei now offers glamping (resort-like camping) trips for select guests.

Even if many of those people start to travel overseas again in the future, reducing growth in domestic tourism, hotels can still offer the new experiences to international luxury guests, Pan says. In that sense, “COVID has transformed Taiwan’s hotel industry.”

At the same time, Taiwan can increase efforts to boost overall arrivals from neighboring countries. One of the most important is South Korea, the fourth-largest source of international arrivals in 2019 and the fastest-growing major market. South Korean arrivals rose more than 20% in 2019.

The television program “Unseen Taiwan,” which promotes Taiwan’s natural scenery and local culture, premiered in South Korea on June 26. In addition to highlighting famous sites like Alishan, Hehuanshan, and Sun Moon Lake, the show features mountain climbing and cycling in a bid to appeal to South Koreans’ affinity for the great outdoors. A prominent South Korean mountain climber will narrate part of the show, according to Taiwan’s Tourism Bureau, which worked on the project together with South Korea’s Munhwa Broadcasting Corporation (MBC).

Home sharing on hold

In the several years prior to the pandemic, home sharing grew briskly in Taiwan in tandem with the broader tourism market. Airbnb accounted for much of the growth. Airbnb’s guest numbers in Taiwan reached 1.61 million in 2018.

Last year, Airbnb pivoted to the domestic market with bookings growing considerably in “non-metropolitan areas,” according to a June 2020 Apple Daily report. In 2019, 75% of Airbnb’s Taiwan bookings were in metropolitan areas, the report said.

However, the domestic coronavirus outbreak in Taiwan has dealt a severe blow to the home-sharing market. Cheng Ming-ming, founder and CEO of travel-activity platform KKday, notes that Taipei remains Airbnb’s largest market in Taiwan, but that current regulations forbid B&Bs to operate in the nation’s cities. “You can’t do it legally, so they [Airbnb] must convince the government to change the regulations.” But with Taiwan’s hotels ailing, “the government will be even more cautious than before about changing regulations to accommodate a home-sharing business model.” 

In September 2020, the Taipei City government launched a crackdown on the use of short-term rental units for home isolation or quarantine. The city government said that owners of short-term rental units who rent to people under a home isolation or quarantine order would be fined NT$3,000 to NT$15,000. It also vowed to publicize the names of violators and addresses of any properties involved.

“From an economic standpoint, you can see why an apartment would be appealing in this situation,” says CK Cheng, founder and CEO of vacation-rental platform AsiaYo. “It’s less expensive than a quarantine hotel and usually offers more space, but it’s problematic from a disease-prevention perspective.”

Since then, Airbnb hosts have been exiting the market, Cheng observes. The combination of regulatory travails and pandemic-induced drop in business has reduced the platform’s attractiveness to hosts.

“They won’t be able to make it in every market,” he says of Airbnb.