The hidden fears of the blooming hospitality industry

By J.Fan

The topic of Chinese investors and tourists has an alarming effect upon the small island nation. Taiwan’s tourism industry depends largely on the Chinese tourists, thus in recent years, more Chinese investments poured into the industry. Many newspapers in Taiwan have reported that the majority of the newly built hotels are linked to the monopoly of Chinese investments.

South Beauty, a Chinese restaurant chain, has been granted permit by the Invest Commission of MOEA, to invest NT$350 million in the hospitality industry in Taiwan. It is a sole proprietorship, while most Chinese investment in Taiwan is done by joint partnership, percentage base or “off the table”. This is not the first time a sole proprietorship of Chinese investment took place in Taiwan. Luodao Inn from Xiamen, China, invested $320 million in their hotel expansion in Kimen County, Taiwan and the president of Fantasia Holdings Group Co., Limited Tseng Bao-bao, who is the niece of the previous vice president of the People’s Republic of China, invested in U Hotel Taipei.

Hospitality industry has been a hot item for Chinese investors. They have continued to acquire and invest in hotels all across Taiwan. “Chinese investors could hold more than 30% of the hotels in Taichung and monopolize the Chinese tour group market. The situation might not look obvious in Taipei but it is getting worse in the middle, southern and eastern parts of Taiwan,” commented Taichung Hotels Association Chairman Wang Bao-guo.

Taiwan Tourism Bureau has calculated that at least 47 new hotels will be opened from 2014 to 2017. However, the hotel managements have told the press that the number of Chinese tourists cannot keep up with the speed of the constructions of new hotels. Since September, the occupancy rate and average hotel price have decreased in comparison to the previous years. The previous chairman of Taiwan Visitors Association Stanley Yen expressed his concern over the hidden danger of the tourism industry’s current structure. He suggested the government, the hospitality industry and the tourism industry to look beyond the Chinese tourists, expand the sources of tourists to more than one country, diversify the risks and break the illusions of increasing quantity of Chinese tourists.

Increase in the new construction of hotels does not guarantee future profits and higher quality in tourism. More Chinese investments in the tourism industry has amplified the speculation over the rampant monopoly of Chinese capital investments.

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