A surge in outbound travel, labor shortages, and unclear value propositions are among the top challenges afflicting the hotel industry.
More than five years since the pandemic struck, Taiwan’s hotel sector has yet to fully recover. International arrivals to Taiwan were halted for two and a half of those years – one of the longest border closures in the world – causing an outflow of talent from hotels as disillusioned workers sought greater job security in more stable industries. Many have not returned. Data from the Taiwan Tourism Administration show that international arrivals to Taiwan hit a zenith of 11.8 million in 2019 before cratering during the pandemic. In 2024, there were just 7.9 million arrivals, or down about 33% from five years earlier.
Meanwhile, outbound tourism from Taiwan has surged. So-called “revenge travel” – as Taiwanese rushed to make up for years of confinement – fueled a rapid rebound in outbound tourism, which swiftly returned to pre-pandemic levels.
About 16.9 million Taiwanese went overseas in 2024, compared to 17.1 million in 2019, signaling an emerging new trend: When Taiwanese have a choice between domestic and international destinations, they increasingly select the latter. “A lot more Taiwanese are traveling overseas than international visitors are coming to Taiwan,” says Steven Pan, chairman of Regent Hotels & Resorts.
Hotel occupancy rates reflect these changes. Nationally, the occupancy rate of tourist hotels is about 61%, compared to 67% in 2019, according to the Tourism Administration. New Taipei City is the sole market where the occupancy rate in 2024 exceeded that of 2019.
Scenic regions of Taiwan that weathered the pandemic relatively well, thanks to a boom in domestic travel, are now suffering a tourism drought. Local factors have further crippled the island’s top attractions. In the case of Hualien, a major earthquake in April 2024 forced the closure of Taroko Gorge National Park, a coveted destination among international and domestic travelers. The park’s occupancy was just 34% last year – the lowest of any market in Taiwan. At the same time along the east coast, Taitung was marginally better at 45%, while Pingtung was just over 50%.
“Taroko Gorge is Taiwan’s number-one international tourist attraction, and so the closing of the park significantly impacted the Hualien market,” Pan says.
For hotels outside of Taiwan’s large cities, a lack of international industry competitiveness is a primary challenge. Michael Wu, CEO of the MyTaiwan Tour Travel Service, notes the prevalence of bed and breakfast (B&B) properties in Taiwan offering similar services.
For instance, a Booking.com search for mid-July accommodation on Taiwan’s outlying island archipelago of Penghu has 381 choices, just one of which is a large international hotel brand. By contrast, the significantly more popular Philippine island of Boracay features 344 options with at least seven prominent international brands, including Hilton, Hyatt, and Marriott. Boracay generates about US$1 billion in tourism revenue annually and welcomed around 2 million visitors in 2024.
“In Taiwan, people don’t tend to think about the tourism industry as a whole,” Wu says. “Instead, they focus on their own small business. While many B&Bs can survive this way, it affects the competitiveness of the overall hotel sector.”
He highlights the southern beach community of Kenting as emblematic of this issue. While Kenting’s golden sand beaches and turquoise ocean are beautiful, its accommodation options are expensive for what they offer and uncompetitive when compared with the equivalent in the Philippines, Malaysia, Thailand, or Japan’s Okinawa islands.
According to Taiwan’s 24-hour Chinese-language cable news channel SETN, Kenting’s 50% occupancy rate in the summer of 2024 was its lowest in 27 years. State-run Central News Agency (CNA) reported in February that two local hotel chains would withdraw from the Kenting market after their leases ended this year.
Labor shortage
Taiwanese hoteliers say that the most pressing challenge their industry faces is a shortage of workers. The lack of skilled workers further aggravates existing service problems, perpetuating a vicious cycle.
Government statistics published by CNA in June show that hotels had a shortfall of 8,000 workers in 2024, including a shortage of 5,500 workers in housekeeping functions. In some cases, the labor shortage was so severe that hotels had to reduce the number of rooms on offer.
Foreign workers are not allowed to work in the hospitality sector, despite the acute shortage of domestic talent. In May 2024, then-Minister of Labor Ho Pei-shan said that the Ministry opposed changing the policy out of concern that it might adversely affect working conditions for the middle-aged, elderly, and women.
She emphasized that Taiwan’s workforce participation rates for these demographics were below those of Japan and South Korea. Foreign workers would only be considered for the hospitality sector if those groups’ workforce participation did not increase, she added.
Industry executives are skeptical that Taiwan can address its shortage of hospitality workers with the existing domestic talent pool. “It’s difficult to find talent for hotels because young people in Taiwan have been coddled by their parents,” MyTaiwan’s Wu says. “It is not easy for them to serve others – it is a Gen Z problem.”
In Tainan, where Taiwan Semiconductor Manufacturing Co., the world’s leading chip foundry, plans to build a new advanced manufacturing facility, the Regent’s Silks Place hotel is only hiring full-time for management positions. Pan says the hotel cannot fill rank-and-file entry-level jobs “because TSMC needs a lot of people – they are hiring every able-bodied person in Tainan and they pay double the normal salary of the service industry.”
The resilient tech sector, which thrived during and after the pandemic, has attracted many young Taiwanese who once might have considered working in hospitality, analysts say. “Fewer and fewer young people want to work in hotels – it is becoming a serious problem for the industry,” says Ping Lee, head of research at CBRE Taiwan, a leading commercial real estate services and investment firm.
Pan acknowledges that the central government has taken an initial step to ease the labor shortage by allowing student interns from overseas to work in hotels. However, these students can only work in Taiwan for up to 12 months before returning to their home countries.
In a March report, Taiwan’s CommonWealth magazine noted that the inability of foreign students to work long-term in Taiwan leads to high turnover at hotels that employ them. For instance, Kaohsiung Marriott recruits 50 foreign students per year, but only a few stay on after graduation, the report said.
Uncertain prospects
Looking ahead, Taiwan’s hotel industry faces uncertain prospects given the labor shortage and strong competition from other Asian destinations. Still, there are some bright spots. One of these is Taipei, where occupancy reached 69% in 2024. While that figure is lower than 2019’s 75%, it is still considered respectable by industry standards.
For Regent, its Taipei hotel is breaking records, with double-digit growth in the first five months of the year. “It is a reversal of the ‘tale of two cities’ during the pandemic, when Taipei hotels had a hard time [given their dependence on international visitors] and the rest of Taiwan did reasonably well,” Pan says. “Now, Taipei is outperforming the rest of the country.”
As the top destination in Taiwan for international business travelers, Taipei is benefiting from the broader health of the Taiwanese economy, which expanded 4.6% annually in 2024 and 5.5% in the first quarter of 2025.
However, the outlook for leisure travelers in Taipei and Taiwan overall is less bullish. In particular, the decline in Japanese visitors is concerning given that they historically have been one of the most important inbound tourism markets for Taiwan. Just 1.3 million Japanese visited Taiwan in 2024, compared to about 2.2 million in 2019.
One factor explaining the decline is currency: The Japanese yen has been consistently weak since 2021 (having lost one-third of its value), raising the cost of international travel for Japanese while the New Taiwan dollar hit a three-year high against the U.S. dollar on June 27. At the same time, high demand from Taiwanese for airline tickets to Japan is driving up airfares, further dissuading Japanese from visiting Taiwan, Pan says.
The China market, once by far the largest for Taiwan, continues to contract given the poor state of cross-Strait relations. About 438,000 Chinese tourists visited Taiwan in 2024, down from 2.7 million in 2019.
Analysts are more optimistic about South Korea, which CBRE’s Lee says is “a strong and stable market.”
At a June industry conference held in South Korea, Taipei and Seoul set a goal of jointly surpassing 3 million visitors this year (a combined total of South Koreans traveling to Taiwan and Taiwanese arrivals in South Korea). At the conference, Tourism Administration Deputy Director-General Huang Shih-fang said that the number of South Korean visitors to Taiwan has recovered to more than 80% of the pre-pandemic level.
Meanwhile, industry executives urge the Taiwanese government to open up the industry to foreign labor, given unfavorable and likely irreversible demographic trends. Taiwan currently has one of the world’s lowest birth rates at 0.8, and its population is shrinking.
“This is going to become a bigger issue unless the government changes course and opens the gates for workers from Southeast Asia and India,” says MyTaiwan’s Wu. He notes that Taiwan is set to become a super-aged society this year, with more than 20% of the population older than 65.
To that end, Tourism Administration Director-General Chou Yung-hui said in late May that it might be possible to employ migrant workers in hotels starting in the second half of 2025. However, the Tourism Administration has not released any further details, and it is unclear how it and the Ministry of Labor, which would be the government agency to take the lead on the policy, will coordinate the efforts.
