For the past two-and-a-half years, Taiwan’s travel industry has grappled with an uncomfortable truth: Its reliance on international visitors has become a liability amid broad public support for a closed border policy. Until this spring, when the hyper-infectious Omicron variant made doing so impossible, the Tsai Ing-wen administration pursued a popular de facto zero-COVID policy, relegating the reopening of Taiwan’s borders to the backburner.
Although strong domestic demand has generally buoyed hotels and bed-and-breakfasts (B&B) in Taiwan’s scenic rural areas, many urban properties, which employ a majority of Taiwan’s hospitality staff, have suffered. Hotels in Taipei and large cities like Taoyuan and Kaohsiung need the international market – especially higher-spending business travelers – to thrive.
Data compiled by property consultancy CBRE show occupancy rates have fallen in all of Taiwan’s large urban areas from 2019, most precipitously in the three aforementioned cities. In the capital, the occupancy rate was 32.7% in the first quarter of 2022, compared to 74.7% during the same period in 2019. Taoyuan’s occupancy rate was 43.9%, down sharply from 72.2% in the first quarter three years ago. Meanwhile, the rate in Kaohsiung plunged to 41.1% in the January-to-March period, compared to 63.2% in the first quarter of 2019.
In contrast, Yilan’s occupancy rate in the first quarter increased slightly to 55.2% from 54.7% three years earlier, while Taitung’s rose from 57.7% to 64.8%. These areas, as well as Hualien, Nantou, and Tainan, have traditionally been popular with domestic tourists. Taiwanese have availed themselves of government subsidies to visit the country’s scenic locales more than usual as international travel decreased to nearly non-existent levels.
Unsurprisingly, Taipei hotels did not benefit from the subsidies since the capital is not a top draw for domestic tourists. CBRE’s data show that a whopping 86% of the capital’s hotel demand in 2019 came from overseas visitors. Similarly, around 85% of guests at Regent Taipei, one of Taipei’s best-known five-star hotels, are international. “Due to border controls, we lost the majority of room revenue,” says Steven Pan, chairman of Silks Hotel Group, Regent’s parent company.
“Taipei hotels have really had a tough time; most of the closings have happened there,” says Ping Lee, head of research at CBRE Taiwan. “It was a pity that The Sherwood closed,” she says of one of the capital’s oldest five-star hotels, which shut down permanently on February 15 after more than 32 years of business. “It had a unique charm and was popular with Western business travelers and dignitaries.” The Sherwood’s guests over the years included former British Prime Minister Margaret Thatcher and erstwhile U.S. President George H.W. Bush.
Lee sees a confluence of factors that have prevented Taiwan from welcoming back international visitors. On the one hand, the government zealously pursued a COVID elimination strategy – initially due to the clear health benefits but later, after vaccines became widely available, for political reasons. “The government constantly told the people that Taiwan did very well controlling the virus, and that should be the goal,” she says. It was understood that the success of this approach depended on minimizing international travel.
Meanwhile, Taiwan’s economy performed well because of high global demand for its exports, which boomed despite the closed border. The travel sector, accounting for a much smaller share of GDP, suffered but did not drag down the economy. Taiwan’s GDP grew 6.28% in 2021, its highest rate in 11 years. Given such strong economic growth, the government has felt little pressure to relax border restrictions.
Culture also plays a role in Taiwan’s hesitancy to reopen. Kevin Chiang, president of Ever Rich Duty Free, notes that East Asian countries generally take a more cautious approach to infectious diseases than the West. He points out that except for South Korea, Northeast Asian countries have been slow to reopen. “Taiwan benchmarks itself against these countries – especially Japan,” he says. Japan has yet to drop most restrictions on international visitors, though it has started allowing chaperoned group tours.
Further, coordination between the different stakeholders responsible for border controls has been deficient. “The CECC [Central Epidemic Command Center] just provides the baseline, the core policy framework. The airport authorities, airlines, and government departments have to fill in the details,” says Chiang. With wide discretion to carry out their respective duties, in his view different stakeholders have sought to prove their individual prowess rather than collaborate to devise a seamless integrated approach. “Everyone is trying to do something to show they are doing their job and wants to avoid being blamed for anything that could go wrong,” he notes. 
Crucially, unlike in some Western countries, Taiwan’s major political parties have not had widely divergent views on pandemic control. As a result, the ruling party has not felt strong pressure to enact significant policy changes, says Chiang. The fact that this is an election year (for the mayoral positions in major cities) has also entered into the Tsai administration’s calculations. CK Cheng, founder and CEO of travel-booking site AsiaYo, notes that the government has long benchmarked its success in containing the coronavirus based on case numbers. While that strategy worked in the pandemic’s earlier days, Omicron has rendered it obsolete.
“Unfortunately, Omicron cases will not come down soon, so some people will believe Taiwan has done poorly fighting the virus and will blame the government,” he says. With that in mind, though the government knows the risk posed by Omicron “is not serious at all for most healthy vaccinated people” – CECC data show that 99.6% of cases since January 1 have been asymptomatic or mild – “they think that proceeding cautiously will make the elections a lot easier for them.”
Despite the lack of international visitors, some enterprises in Taiwan’s travel industry have managed to thrive. Silks Hotel Group is one of them. Revenue from its Taipei hotel restaurant outlets and the Regent Galleria’s high-end retail complex have helped make up for lower room occupancy. Outside Taipei, the group’s resort hotels such as Silks Place Taroko and Wellspring by Silks have “achieved exceptional numbers due to high market demand from local tourism,” says Steven Pan. Silks Hotel Group as a whole has experienced positive growth this year compared to 2021.
For its part, AsiaYo changed its business model once it became evident that cross-border business would be diminished indefinitely. The company pivoted from focusing on licensed vacation rentals to offering a variety of niche booking services to the domestic market. Cheng notes that during the pandemic, Booking.com and Agoda have downsized in Asia to cut costs. While the priciest hotels still prefer those platforms, two and three-star properties have been eager to sign up with AsiaYo.
The travel-booking startup now also caters to pet and child-focused B&Bs, as well as camping and glamping (luxury camping). Cheng expects that AsiaYo will be the top booking platform for both camping and glamping by the end of 2023. For glamping, the top destinations are Nantou, Hsinchu, and Yilan. “People are stuck in Taiwan and have no place to spend their money,” he says of surging demand for the activity.
Another niche that AsiaYo has cultivated is quarantine hotels. Of rivals in this segment, Cheng says that “competition is weak.” That may be a slight understatement – most other booking platforms have not developed a regularly updated, comprehensive selection of quarantine hotels in Taiwan. AsiaYo also appears to be the only actor to have built a user-friendly English-language platform to book a quarantine hotel. The main alternative to the company’s resource seen by Taiwan Business TOPICS is a Microsoft Excel spreadsheet compiled by government authorities. 
Meanwhile, Taiwan-based travel activity booking platform KKday has benefited from its international footprint. KKday’s business outside Taiwan has recovered, in some cases to pre-pandemic levels or even higher, says founder and CEO Chen Ming-ming. As an example he cites Singapore, the first East Asian country to scrap mandatory quarantine and COVID testing for overseas arrivals. KKday’s outbound Singapore business in Europe and North America has surpassed 2019 levels, and Chen expects the same could occur elsewhere in Asia once more countries fully reopen.
KKday’s domestic business performed solidly in the first quarter of the year before declining amid the second quarter’s Omicron surge. However, the second-quarter drop was nowhere near as severe as during the same period last year, when Taiwan’s vaccination rate was in the single digits. By June, business recovered quickly and nearly reached March levels. “A lot of people have been infected, and now that they have recovered, they want to go out and travel,” says Chen.
All sources interviewed by Taiwan Business TOPICS for this report are adamant about the need for the Taiwan government to provide a clear roadmap to relaxation of remaining pandemic-era travel restrictions. They lament the government’s reluctance to take this step but express hope that the relative mildness of Taiwan’s Omicron wave and economic considerations will spur the Tsai administration to fully reopen before the end of the year.
Silks’ Pan urges the government to prioritize the resumption of normal visa issuance for both business and leisure travelers, even if a brief mandatory quarantine is initially required. Citizens of many countries “traveling for business and tourism [to Taiwan] were exempt from visas before the pandemic started,” he says. “If inbound travelers are willing to follow our government’s quarantine policies, then our borders should be open for them to come in.”
As for border restrictions, Pan says they should be eased as quickly as possible. “In order for our industry to return to pre-pandemic levels, our government’s border control policy is the most important factor.” With more clear direction from the government, “operators could better prepare themselves for the recovery of tourism.”
The current unclear government guidance renders hoteliers unsure of how much recruitment is necessary for a bounce-back, notes Achim von Hake, a veteran of Taiwan’s hospitality sector and general manager of the HY Development Co., which is developing a hotel in Hualien. “Hotel operators face a challenge finding qualified professionals in the service industry. During the pandemic, many have left the industry and there is a very small pool of available talent.”
KKday’s Chen notes that strict border controls allowed Taiwan to stamp out community transmission in 2020 and safeguard both public health and the economy at a time when vaccines were not yet available. At the same time, he points out that airline pilots – unvaccinated at the time – who did a shortened three-day quarantine were likely one of the reasons for Taiwan’s outbreak in the spring of 2021. “The government remembers this mistake and believes it caused the outbreak last year,” Chen says. With these experiences in mind, although the pandemic appears to be in its twilight now, “the government still believes requiring international arrivals to quarantine is the correct policy.”
Nevertheless, Chen expects that external factors will ultimately compel the government to reopen soon. Not only are many other countries returning to normalcy, but Taiwan also faces its strongest economic headwinds in many years amid high inflation and supply chain disruptions. Given the jittery state of the global economy, growth in Taiwan’s export orders may slow significantly in the coming months. At that point, “there will be pressure to open up the country to boost domestic demand,” he says, adding that business travelers should be the priority – they spend more than leisure travelers and “businesses have to be able to sign contracts.”
Faced with these realities, Taiwan will have to allow quarantine-free entry eventually, hoteliers note. “Quarantine is not attractive for anyone,” says von Hake. “It is not cost-effective, it is not affordable, and it is time-consuming.”
Von Hake notes that leisure travelers from Japan, a significant source of visitors before the pandemic, stay in Taiwan for an average of five days. If these tourists are required to undergo four nights of quarantine (the current requirement under the 3+4 policy, as the first day is counted as day zero), “it does not make any sense” to even book the trip, he says.
The government should “work in line with international regulations,” says von Hake. “Travelers should provide certain proof [that they are not infected with COVID-19] and then be allowed to pass through immigration and customs and be free to go.” 
Published monthly by the American Chamber of Commerce in Taiwan, Taiwan Business TOPICS is a source of balanced, reliable, and insightful news and analysis on issues of concern to Taiwan’s business community.

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