Taiwan's Pandemic Hit Hotel Industry Needs a Lifeline - The ...

The Covid-19 outbreak that began in mid-May has brought hotels to their knees. Without a larger relief package, some may not survive. For most ... CorporateInfoABOUTUSWhatWeDoOurTeamBRANDSTheNewsLenseverylittled.INSIDESportsVisionCool3cAgentMovieBecomingAcesohsowowProgramSERVICEAd2TaketlaTNLResearchCr.EDSharePartyDaEXS.CIMCADVERTISEWITHUSContentMarketing&AdsPartnershipCooperatewithoriginalcontent＆contentmediaWORKWITHUSNEWS日本版New中文 2021/08/09,EconomyTaiwanBusinessTOPICSMagazineTaiwanBusinessTOPICSispublishedmonthlybytheAmericanChamberofCommerceinTaiwan,andcoverscurrenttopics affectingbusinessconditionsinTaiwan,anIndustryFocussectiononaparticularindustrialsector,andotherreportspreparedbythemagazine’sstaffofexperiencedprofessionaljournalists. MoreSubscribeAddtoFavoriteFormostofthecoronaviruspandemic,domestictourismhasbeenabrightspotforTaiwan’shotelindustry.ManyhotelsandB&BsoutsideofTaipei–whichismorereliantontheinternationalmarket–hadarecordyearin2020asTaiwanesevacationedathomeinsteadofoverseas.Allthatchangedovernightinmid-May,whenthegovernmentimplementedaLevel3nationalalertinresponsetoasharpuptickinCovid-19cases.Themeasuresdonotforbidtravel,buttheydobanindoordiningandrequireculturalandentertainmentvenueslikemuseumsandamusementparkstoclose.Sincethealertwasannounced,occupancyratesatmajorhotelshaveplungedintosingledigits,anunprecedentednadir.Worseyet,hotelscannotfallbackontheirrestaurantsforreliefastheyhaddonepriortotheoutbreak.Foodandbeveragerevenueisjustafractionofthenormalamount. RoomoccupancyatTheSherwoodTaipei,forexample,is8-9%,whileF&Brevenueisdown80%fromthepre-outbreakperiod,saysthehotel’sformergeneralmanagerAchimvonHake.“Whatreally,reallyhurtwasthebanonindoordining.Thatwasthelaststraw,”saysStevenPan,executivechairmanofFormosaInternationalHotelsCorp.(FIH),whichownstheRegent,Silks,andJustSleepbrands.TherestrictionshaveforcedFIHtotemporarilysuspendoperationsatsomeofitshotels,whileothersarebeingusedtoaccommodatemedicalpersonnelorforquarantines. “Rightnow,thehotelindustrymightaswellbeonLevel4,”saysPan,referringtoTaiwan’shighestCovid-19alertlevel.“Theonlythingwecandoisfooddeliveryandtakeaway.”RandyZupanski,generalmanagerofShangri-La’sFarEasternPlazaTaipei,saysthatthehotel’seventbusinesshasgroundtoacompletehaltfortheforeseeablefuture.“WeddingsforJulyandAugustareallcanceled.” Heaskshowhotelscanmaintainstaffifthereisnobusinesscominginandnoworkforthemtodo.Foratime,“they[staff]canusetheirannualleaveandtheycantakevoluntaryunpaidleave.Butatacertainpoint,whatdoyoudo?”CKCheng,founderandCEOofvacation-rentalplatformAsiaYo,saysthathotelsinTaiwancurrentlyfallintothreecategories.“25-30%havesuspendedoperations,another25-30%havedrasticallyreducedoperations,andtherestarethinkingaboutchoosingoneofthosetwooptions,”hesays.MountainviewfromSmith&WollenskyTaipei'srestaurant AfterTaiwanenteredLevel3,AsiaYo’sbookingsfell95%year-on-year.Morethanone-halfoftheB&Bsthatusetheplatformhavetemporarilyshutdown.“WhatreallysurprisedusisthatsomeB&BsarenottakingbookingsthroughAugust,whichshowstheyarenotoptimisticatallaboutthesituation,”Chengsays.Evenquarantinehotels,propertiesthathaverejiggeredthemselvestoaccommodateoverseasarrivalswhomustspend14daysinquarantine,aresufferingnow.Ontheonehand,therearefeweroverseasarrivals.TheLevel3alertbansforeignerswithoutaresidencecertificatefromenteringthecountry,andgiventhatTaiwanisnolongerCovid-free,Taiwaneselivingabroadarereluctanttovisit.Thegovernmentdidrelaxhomequarantinerulesforaperiod,permittingonepersonperroomratherthanonepersonperhousehold.Giventhechoiceofspendingthe14-dayquarantineathomeorinahotelatatypicalcostofNT$1,500-NT$3,000anight(dependingontheproperty),manypeoplewillchoosetheformeroption. YettheMinistryofTransportationandCommunications(MOTC)pushedaheadwithaplantomake20,000additionalhotelroomsavailableforquarantinepurposes,creatingasupplyglut.AccordingtoTheTaipeiTimes,theaverageoccupancyrateatquarantinehotelsfellto39%inearlyJunefrom59.7%onMay19,thedayTaiwanimplementedtheLevel3restrictions.Occupancymaybeginincreasingagain,however,asseveralconfirmedcasesofthecoronavirus’moretransmissibledeltavariantforcedthegovernmenttonixthehomequarantineoptionaltogetherinlateJune.Allinternationalarrivalswillnowneedtostayinquarantinehotelsorgovernmentquarantinecenters.Strongerreliefneeded Amidthesetoughcircumstances,hotelierssaythattheyneedsubstantialgovernmentsupporttohelpthemstayafloat.Yetthusfar,thereliefpackageforthetourismindustryisnohigherthaninthespringof2020,whenthesituationwaslessdire.Atthattime,thegovernmentoffereduptoa40%wagesubsidy–amaximumofNT$20,000peremployee–forhotels(aswellastouroperatorsandrestaurants)thatmaintainednormaloperationsandprovidedvocationaltrainingtotheirstaff.PhotoCredit:CNAThenationalCovid-19epidemicalertwasloweredtolevel2fromthe27thtoAugust9th,andthe1stwasthefirstSundayaftertherelegation.ManypeoplewentshoppingaroundtheXinyiDistrictofTaipeiCity.August1,2021Shangri-La’sZupanskisuggeststhatthegovernmentevaluatehotels’subsidyneedsbylocation.“TheoverheadcostofoperatingahotelindowntownTaipeiismuchgreaterthaninalessprimelocation.Aone-size-fits-allsolutiondoesn’tmakeanysense,”hesays.FIH’sPanurgesthegovernmenttoprovidesubsidiescovering75-80%ofemployeesalaries,rentreductionsforhotelsonstate-ownedland,andtaxbreaksof18to24months.Hesaysthatbecausebusinesseshavebeenhitsomuchharderthisyear,amassivesupportpackageiscalledfor. “Thereliefpackageshouldcoverdoublethenumberofpeoplebecauseindoordininghasshutdown,”hesays.Thecurrentsupportpackage,whichlaststhroughJulyandprovidesthesame40%subsidywagesubsidyaslastyear,“isnotevenclosetoenough.”Panworriesthatunlessalargereliefpackageisforthcoming,thenation’shotelindustrycouldseeawaveofclosuresthatfomentsabroaderunemploymentspike.Temporarysuspensionsofoperationscouldbecomepermanent,hesays.“Alotofhotelownerswillbethinking,‘Hey,shouldIjuststayshut?’Itmightmakemoresense”fromafinancialperspective.BytheendofMay,40hotelsinYilanCountyhadshutdownand50inHualienCountyhadeitherpartiallyorcompletelysuspendedoperations,accordingtoTheTaipeiTimes.ChenMing-ming,founderandCEOoftravelactivitybookingplatformKKday,saysthegovernmentneedstofinanciallysupportthehotelindustryuntilarecoverybegins.Heacknowledgesthatitcouldtakeseveralmonths,asTaiwanhastofirstgettheCovid-19outbreakundercontrolbeforeitcaneaserestrictions.ItwilltakestillmoretimebeforemostTaiwanesefeelcomfortabletravelingagain. LikeFIH’sPan,headvisesthegovernmenttosubstantiallyincreasethereliefpackage.“Manycountriesprovide80%ofanemployee’ssalary,whileTaiwanhasgivenonly40%,”Chensays.Ifthesubsidiesarenotincreased,hotelsthatarenotfiscallyfitmaygobankrupt,headds.WaitingonarecoveryTocontainthecurrentoutbreakofCovid-19,Taiwanhasreliedprimarilyonrestrictingpeople’smovementandcontactwithoneanotherwhilerampinguptestingandcontacttracing.Thestrategyhasbornefruit,withcasenumberssteadilyfallingfromadailypeakofnearly600inlateMaytomostlydouble-digitsbytheendofJune.However,vaccination–likelytheonlywaytoeffectivelyendthepandemicinTaiwan–remainsaworkinprogress.DeliveryofvaccinestoTaiwanhasbeenslow.AsoflateJune,onlyabout8%oftheisland’s23.5millionpeoplehadbeeninoculated.Theslowrateofvaccinationhassomehoteliersconcerned.“Beforethisoutbreak,manypeopledidn’tevenwanttotakethevaccine,”saysShangri-La’sZupanski.“Noweverybodywantstotakeit,butsupplyisinadequate.“TheFood&Beveragebusinessandeventswon’tcomebackuntilthepopulationissomewhatvaccinated,”hesays.“Wemightbeinthissituationforawhile.”DuringTaiwan’slongCovid-freestreakin2020,whenitdidnotrecordalocalcaseformorethaneightmonths,Shangri-La’seventbusinessdidwell.However,itdroppedoffsharplyinDecember2020andJanuary2021,whentheviruscreptbackintothecountry.AlthoughTaiwanmanagedtoavoidalargeoutbreak–notablybycontainingaclusterofinfectionsataTaoyuanhospital–eventsatthehoteltookseveralmonthstorecover.Basedonthatexperience,evenifTaiwancontainstheCovid-19outbreakinJulyandsomeeventsarepermittedagain,“wewon’tseeanybuildupofeventsuntilOctober,”Zupanskisays.PhotoCredit:CNATaipeiCityrelaxesdiningrestrictionsasdailyreportedcasesdecrease.August8,2021ForhotelsinTaipei,businesslevelswillreturntoa“manageablesituation”onlywhenborderrestrictionsareeased,andinternationaltravelisrestored.Heexpectsthattohappeninmid-2022.Indeed,Taipeihotelscouldnottakefulladvantageofthedomestictourismsurgethattookplacebetweenlastyearandearly2021.Sincethepandemicbeganinearly2020,“Taipeihotelshavehadareallytoughtime,”saysPingLee,headofresearchinTaiwanforpropertyconsultancyCBRE.“Withoutinternationalguests,theycanonlyfillsomanyrooms.”Forinstance,TheSherwoodTaipeireachedabout50%occupancyonweekendswithitspopularstaycationpackages,butweekdayswerenotasbusy,saysgeneralmanagervonHake.TheRegentTaipei’soveralloccupancywas50%in2020,comparedto80%in2019,saysFIHchairmanPan.DatacompiledbyCBREshowjusthowdependenthotelsinthecapitalcityareontheinternationalmarket.Inthefirstquarterof2019,occupancyinTaipeihotelswas74.68%.Bythefirstquarterof2021,ithadfallento30.24%.CBREestimatesTaipeihotelswillsuffertheirworstyearonrecordin2021.Incontrast,occupancyinTainan,apopulardomestictourismdestination,hadslightlyincreasedto64.49%intheJanuary-Marchperiodfrom63.16%twoyearsearlier.PhotoCredit：Smith&WollenskyMountainsideviewfromSmith&WollenskyTaipei'srestaurant.WhiletherestorationofinternationaltravelremainsintegraltoTaipeihotelsinthelongrun,arevivalofthedomesticmarketwouldlikelybesufficientintheshortruntowardoffdisaster.Oncetheoutbreakiscontained,thequestionbecomes,whendopeoplefeelitissafetotravel? “ItistruethatTaiwaneseareveryriskaverse,”observesAsiaYo’sCheng.Yetbasedonpastexperience,hesaysthereisreasonforcautiousoptimism.HenotesthatTaiwan’stravelmarketcrateredduringtheSARSoutbreakinthewinterandspringof2003,butrecoveredbyJune.Lastyear,itplummetedinMarchandAprilasthepandemic’sseveritybecameclear,butpickedupinMayandbyJunewasonarecord-settingpace.“Whenthereboundcomesthistime,itwillbestrongandfast,”hesays.ThisarticlewasoriginallypublishedonTaiwanBusinessTOPICS.TheEnglisheditionofthisarticlewaswrittenbyMatthewFulco.READNEXT:TheDiplomaticStruggleOverTaiwan’sNameintheOlympicsTNLEditor:JonHum(@thenewslensintl)Ifyouenjoyedthisarticleandwanttoreceivemorestoryupdatesinyournewsfeed,pleasebesuretofollowourFacebook. TheNewsLensInternationalEditionLatestUpdates：Thailand:GrowingCovidCrisisHeatsUpPoliticalTension9monthsagoTags：TaiwanCOVID-19hotelgovernmentsubsidy