The tourism market in Taiwan is very subject to the cross-straits issue. In 2018, the total number of overseas travellers increased by 3% year-on-year (YoY) to 11 million. Surprisingly, the number recorded a double-digit growth (12% YoY) in the first eight months of 2019, owing to a 27% increase in mainland visitors, the highest growth since TPP took office. Visitors from Japan and Hong Kong both recorded rises of over 5%.

However, the recovery swing was not sustained. Due to the approaching presidential elections, the impact of geopolitical issues on the tourism market has been amplified. This August, the China government announced a ban on independent Chinese visitors to Taiwan and lowered the permit quota for group travellers.  The result was that China tourist numbers declined by 47% YoY in September. The impact was greater because independent travellers have more purchasing power compared with group travellers.  We expect the total number of overseas travellers might fall further by 5% in 2020, if China keeps this policy unchanged. 

In order to stimulate the market, other than targeting Southeast Asian travellers, the Taiwan government allocated over NT$5 billion to promote domestic tourism which is estimated to bring in over NT$38 billion of business overall. As a result, hotels have witnessed a significant growth in occupancy rate (OCC). However, we believe that the effect is temporary and difficult to sustain.