Analyse of the sector 30/11/2010
Price discounting is a central strategy

Price discounting continued to play a central role across all areas of travel in 2009, boosting bookings throughout the year. Discounts were used to stimulate sales in the face of an ongoing sluggish economy and weakened purchasing power. The speed and convenience of Taiwan High Speed Rail also continued to force transport competitors to maintain deep discounts. The many typhoons, floods and landslides which plagued Taiwan in 2009 also discouraged domestic tourism in many areas of the country. As a result, heavy discounting was employed by accommodation operators in order to attract visitors to their areas once again.

 

China – Taiwan flights help support tourism growth

 

After Taipei ended its sixty-year ban on direct flights between Taiwan and China, the launch of direct flights across the Taiwan Straits in 2009 led to China becoming a very vital source of inbound arrivals for Taiwanese travel and tourism. China arrivals supported tourism growth, particularly as visitor arrivals from other source markets declined and even though arrivals numbers failed to meet government and insert expectations. Taiwanese visits to China also experienced strong growth. In the second half of 2009, direct flights between Taiwan and China changed from being charter-only flights to mostly scheduled. Flight routes, frequencies and airline choices were numerous, which resulted in low load factors and overall sluggish demand.

 

Taiwan High Speed Rail continues to impact domestic tourism

 

Since 2007, Taiwan High Speed Rail has changed the way Taiwanese travel domestically. Taiwan High Speed Rail changed from being mostly novel to a chief option for fast and convenient travel between Taiwan’s major cities. Consumers are now more inclined to take more day trips and travel longer distances on day and short trips. The affects on the industry were profound. Domestic air travel saw a drastic reduction in fights and routes in 2008 and only began to stabilise in 2009. Bus/coach operators continued to be forced into aggressive price discounting even as fuel prices rose considerably. In contrast, the success of Taiwan High Speed Rail presented opportunities to travel retailers to develop packages in collaboration with other companies to take advantage of travelling by this rail service.

 

Bad weather poses greater threat than usual

 

In 2009, typhoons, floods and landslides made a greater impact on Taiwan than in previous years. Taiwan’s mountain regions, and to a lesser extent the east coast and parts of southern Taiwan, all suffered the affects of such bad weather. Some of the damage in the mountain areas was as a result of overbuilding and a lack of enforcement of regulations. In response, the central government proposed a new legislation which strengthens restrictions on buildings and is designed to improve regional sustainability.

 

Future growth buoyed by gradual recovery in consumer confidence

 

Price discounting will continue to play a key role in the early forecast period and until economic growth becomes more robust and consumer confidence shows signs of recovery. During this period, tourism companies will further develop collaboration efforts within and outside the travel industry to stimulate sales. Smaller players are likely to struggle until growth returns, leading some to exit the industry which will result in additional consolidation within travel and tourism. China will also continue to play an increasingly important role across all areas. Toward the end of the forecast period, consumer confidence is expected to be significantly stronger and allow for less price-reliant strategies.