Leisure Recreation Tourism Industry

The Analyses & Investment Opportunities in Leisure Recreation & Tourism Industry Department of In vestment Services, Ministry of Economic Affairs Table of Content I. Global Trend of LR&T Industry ............................ 1 II. The Status Quo of LR&T Industry in Taiwan................ 3 (I) (II) Demand and Supply of LR&T Industry........................................ 3 Gap in Industry Supply Chain, Investment Niche and Prospective Foreign Investors ........................................................................ 4 (III) Major Suppliers in Taiwan ........................................................... 6 III. Optimal Choices for Foreign Investors ......................... 9 (I) Hotels and Resorts...................................................................... 9 (II) Aerial Industry ........................................................................... 10 (III) Water Resources Concerned Industries of LR&T ..................... 11 IV. Successful Examples of Cross-national Strategic Alliance and Foreign Investment in Taiwan....................... 12 (I) (II) Starwood Hotels & Resorts Worldwide ..................................... 12 Mori no Kaze Hotel Iwate .......................................................... 13 V. Industrial Investment Incentives ................................. 15 VI. Industry-Academia Collaboration in Taiwan ............. 16 I. Global Trend of LR&T Industry Global Leisure Recreation and Tourism Indusrty(LR&T Industry) has been growing with a rapid speed since 1996. Except for those external caused of global economic recession in 2001, Iraqi War in 2003, and epidemic of SARS, the industry still remained an acsending annual growth in the numbre of global travelling visitors and exxpenditures for tourism. As the World Tourism Organization (WTO) and the World Travel & Tourism Council (WTTC) stated, more than 70 million directly-employed labors involved in this industry in 2006, and even the number of international travelling visitors reached 840 million. The output value of tourism industry, was up to 10.4 % of global GDP and 12.2% on global export output value. Within 10 years, the compound annual growth rate of the entire tourism industry will go up with the percentage of 4.3% per year. Therefore, tourism has been the primary root of nation expenditures earning for many countries. And tourism industry has played a vital role for a nation’s economic state for sure. In addition, in a perceivable future, with supports from economic developing rising regions and tourism, this entire industry would maintain itself in a steady growing situation. And, by 2020, global tourism population will reach the number of 1.56 billion. No wonder, this so-called Tertiary Industry keeps developing domain with its natural beauty and human cultural resources. Besides, Asia-Pacific Regin is seen as the region that grows faster than other regions, only next to African Region. From the estimated report presented by WTO and Pacific Asia Travel Association (PATA), tourism market of Asia-Pacific Region held over 7% of market growth rate during 2006 to 2007. And in 2007, there are approximately 380 million visitors coming to Asia-Pacific area for travelling. 1 Foreign Tourists Numbers to Asia-Pacific Region Countries in Recent Years Unit¡G10 Thousand Countries/Year 2003 2004 2005 2006 Japan 521 614 673 733 South Korea 475 582 602 616 Singaproe 613 833 894 975 Malasia 1,058 1,570 1,643 1,755 Thailand 1,008 1,174 --HongKong 1,554 2,182 2,336 2,525 China 9,166 10,904 12,029 12,494 Taiwan 225 295 338 352 Source¡G Annual Report on Tourism issued by Tourism Bureau, Ministry of Transportation and Communication, and project data, 2008/1 2 II. The Status Quo of LR&T Industry in Taiwan (I) Demand and Supply of LR&T Industry From the report ” Travel & Tourism Competitiveness Report ” of WEF, it conveys the message that there are 130 countries under the list of evaluation, and Taiwan ranked 52nd globally among 130 countries worldwide, and 7th among Asian nations. It is noted that among Asian countries, Taiwan ranked next to Hong Kong, Singapore, Japan, Malaysia, and Thailand. Compared with the ranking in 2007, Taiwan go greatly backward on tourism development. If we observe this entire toursim industry by the points WEF’s 3 main classifications, according to the report's human, cultural and natural resources sub-index, Taiwan’s ranking descends from 23rd globally to 79th. On the Regulatory Framework Sub-Index, Taiwan’s ranking goes backward from 45th to 69th, while the ranking on Commercial climate and Infrastructure Sub-Index falls from 28th to 29th. In LR&T Industry of Taiwan, according to different categories of customers, this whole industrial market can be devided into two primary parts, internal need (Leisure Recreations) and external need (Tourism). Overall, although in recent years, foreign visitors’ number has been climbing up with the rate of 5% every year, sometimes even 10% for each year, until now, there are over 60% of tourism industrial market coming from Leisure Recreation farms of internal need. Based on the average of visitors origin, governmental policies and global ranking, tourism industry still is a vital industry to pay much attention to in the future. As to the part of foreign visitors market, speaking on the purpose of arrival, “Visiting purpose” of foreigners is 43% of total visiting numebr, and 3 there are 27% for “Business Commercial Purpose”. If we speak on the 5 biggest origins of visitors, 33% of visitors coming from Japan, 12% from HongKong and Macao, 11% of people from the United States, 6% from Korea, and 5% of visitors from Singapore. As for the visitors of China, although we can see a prosperous expectation from that tourist market, the regulations and limits of laws has shortened the number of China visitors. There were only about 100,000 people from China coming to visit in Taiwan, which was less than 3% of the total visiting number. In point of industrial supply, tourist activities industry has created the chances for more than 200,000 people being employed annually on standard, among which, food and beverage industry, ground transportation industry, and hotel industry create much more working opportunities. (II) Gap in Industry Supply Chain, Investment Niche and Prospective Foreign Investors The main target for LR&T industry in Taiwan is to attreact those international tourists with higher spending power. And it is estimated that Mandarin tourists will possibly have chances to visit Taiwan, which will boost the development of Taiwan’s LR&T industry. Further, continuous expanding local market is important as well. To go with the related flagship projects and investment of local authorities, it is suggested that to make up the gap within LR&T industry in Taiwan remains its priority. Amazing so far has undertaken the project of hotels and holoday resorts at the seashore of Feng-Gui in Penghu County. The investment amount is estimated to hit billions. Janfusan, which owns Janfusan Fancyworld, Nice Prince Hotel, hopefully manages the business in Penghu for Amazing. The investment project in Penghu is the first case for Amazing to invest in Greater China, and also is the first investment case on five-star holiday resorts by foreign business. Besides, Amazing signed memorandum 4 of understanding (MOU) with Janhusan at Dec. 2007, in an attempt to build up a LR&T consulting company, for the business license on tourism casino. Other foreign potential tourism hotels such as HOMEINNS (the biggest budget chain hotel), AMAN (interested in projects in Eastern Taiwan), ACCOR (showing interests in BOT) all approve Taiwan’s potential in LR&T industry. LR&T industry in Taiwan focuses on event-oriented activities, recreational travelling activities, and specific-theme schedules. .1 Developing Event-oriented Activities There are 5 tourism flagship activities in Taiwan including Taiwan Lantern Festivals, Religious Activities, Aboriginal Activities, Traditonal Hakka Activities, and Special Interests. And the tourism flagship activities of every counties and cities in Taiwan such as Yilan International Chidren’s Folklore & Folkgame Festival, and Keelung Mid-summer Ghost Festival. 2. Development of Specific Themes Based Travel (1) Botany Tour Taiwan abounds with diverse botany landscapes and many kinds of outdoor activities. Such as the highest North-East Asian Mountain- Jade Mountain that attracts many mountain climbers, whale watching on east and north-east coasts, and boating activity on Siouguluan River. (2) Taiwan Culture Tour There are many historical and cultural sightseeing tours in Taiwan can attract foreign visitors to visit. Such as Taiwanese historical interests and spots (including ancient momuments once colonized by foreigners and 5 aboriginal cultural villages),and festivals and scenic spots of religious, cultural activities (ex: Yanshui beehives rockets fireworks festival, temples, Mazu patrols and pilgrimages in lunar March, ect.) . (3) Longterm Stay Recreation Longterm Stay Recreation Industry is specifically set up for specific customers (Especially for Japanese retirees ). (4) Medical Tour Cooperating with Chinese medical treatment in Taiwan and authorized hot springs to develop hotspring therapy and Chinses medicine treatment, and adopting the integration of medical equipment (such as health care, LASER treatment for nearsighted, and knee joints displacement) as main stream of the tour, medical tour in Taiwan are planned to be getting more global competitiveness in the world. (5) Other Unique Tours in Taiwan Railways tour, leisure farms tourism, teens tour, and honeymoon tour, these all are categorized and set up with specific Taiwanese advantages. Besides, water activities such as surfing, scuba diving, and sailing are as popular as biking activity is in Taiwan. (III) Major Suppliers in Taiwan 1. Hotel Industry There are 60 international hotels in Taiwan (approximately 18,000 rooms), 29 normal hotels (about 3,000 rooms), and other 3218 hotels including hostels, B&Bs, and youth centers. Besides, there are 8 more toursm 6 hotels (1,500 rooms) in applying process or preparations, and it is estimated that investment cost about NT$7.6 billion. 2. Tourist and Entertainment Industry LR& T Industry, an integrating industry of capital, strength of human efforts and full of information, is the leading head industry to prosper local economy, but this kind of industry tends to be internal need market. In order to catch up the rapid speed of customers’ favors and needs, many business runners in this LR&T Industry have to change their situations according to environmental changes, and to keep updating facilities or re-investing to maintain its competitiveness in this industry. Now, in Taiwan, there are 21 large entertainment and amusement business runners mainly spreading in the west of Taiwan. 3. Travel Agencies Until the end of year 2006, there are 2126 travel agencies in Taiwan, including 89 are integration travel agnecies. And it is estimated that there are 3.8 thousand employees working in tourism field. Visitor Expenditures Statistics of Taiwan Entry/Year 2002 2003 2004 2005 Foreign Visitors 45.8 29.8 40.5 49.8 Expenditures (Unit¡G hundred million US$) 2006 51.4 Foreign Visitors Number (Unit¡G 10 thousand) Total Expenditures for Domestic Tourism (Unit¡G hundred million NT$) 298 (235) 68.5 225 (181) 63.1 295 (283) 73.8 338 (280) 59.8 352 (286) 68.9 Domestic Visitors Number (Unit¡G hundred million) 1.06 1.02 1.09 0.93 1.08 7 Total (Unit¡G hundred million US$) 114.3 4.06% 92.8 3.25% 114.3 3.45% 109.6 3.09% 120.2 3.30% Percentage of GDP Source¡G Annual Report on Tourism issued by Tourism Bureau, Ministry of Transportation and Communication, and IEK p.s.¡G ( ) Refers to the total foreign visitor number without overseas Chinese. Expenditures for Entire LR&T and Foreign Visitors in Taiwan Unit¡G hundred million NT$ Entry/Year Accomodation Foods Transportation and Communications Entertainment Shopping Others(including tourist service) Total 2002 624 / 198 1203 / 608 950 / 371 335 / 170 792 / 285 290 / 194 4194 / 1826 2003 522 / 144 950 / 432 829 / 346 251 / 97 652 / 175 256 / 86 3458 / 1278 2004 552 / 155 1322 / 646 925 / 376 356 / 111 788 / 249 148 / 76 4091 / 1613 2005 490 / 194 1167 / 699 886 / 440 256 / 126 764 / 350 266 / 94 3829 / 1903 Source¡G Annual Report on Tourism issued by Tourism Bureau, Ministry of Transportation and Communication, Taiwan Institute of Economic Research, IEK p.s.¡G There are two different numbers in every blank refering to Taiwan Entire Leisure Tourism and the Consumming Amount of Foreign Visitors in Taiwan. 8 III. Optimal Choices for Foreign Investors (I) Hotels and Resorts Following toursim industrial projects of Taiwanese Gorvenrment and local governments, more tourism hotels and resorts are establishe in off-shore islands, Taipei County, and east Taiwan. First, the four major developing projects in Taipei County are “Exclusive 4-and-5-star hotels”, “Taipei County Arena Investment Project”, “Jin Jiuo Cable Railway”, and “Tamshui Fisherman’s Wharf ”. And the most compellent part is on the project of building up the Super Hopsca District in Hsin-Ban District. This is the project to build up the district of Hsin-Ban as a metropolis with the combination of sightseeing, life, and entertainment, and Taipei County also works on hotel business investing recruitment with international hotels, according to “5-star Hotel BOT Project”. Second, “Sustainable Developing Program for East Taiwan”, taking tourism industry as its heart core, is expected that by well presenting the natural resources and characteristics, East Taiwan enables to develop many excellent life industries such as tourism and resorts, organic agricultural industry, cultural creativities, and marine biotechnology, etc.. And among the sustainable developing program, “International Resorts Project” is one of the vital project combined with landmarks spots and international tourism cases. Integrating the aboriginal cultures, foods, and music altogether and then embellishing them with the potential beauty of east coast of Taiwan , the developing program is going to develop a large tourism paln. As to the developing strategies, by means of introducing international brands of resorts and hotels into east coast region of Taiwan, and transmitting the local beauties to the world, it is expected that more international visitors 9 will come to visit this wonderland. Therefore, when it comes to the time of hotel business recruiment, international brands of tourism business will be the first consideration to take. Meanwhile, international technical tourism project teams, professional construction teams, and international leading investors of tourism are will be invited to create the accomplishment of industrial collaboration. Of course, if any foreign investors are interested in developing emotional therapy and health care (such as aromatic therapy), hot spring villa, leisure agricultural industry, and the field of deep ocean water application, etc., all are welcome to participate in. (II) Aerial Industry Aerial Industry is mainly focused on the opening of foreign investors stockholdings rate and the types of business affairs (Offering non-governmental enterprises chances to run and manage airports and small commercial airplanes). Currently, to Taiwanese airlines, foreign investors shareholdings simply just invest in business, and have nothing to do with the right of business running management. With the suggestions from Council for Economic Planning and Development and foreign chamber of commerce, Ministry of Transportation and Communications has passed the protocol of civilian air low in 2006 deciding to open up higher shareholding rates, from 33% to 49%, for foreign investors to invest in Taiwanese airlines; by means of that, many foreign investors would be interested in investing in Taiwanese airlines making Taiwanese airlines gain more chances to practice and carry out trategic unions with foreign airlines, also to learn more foreign technical knowledge, and to make more diverse financial raising means. Besides, according to the reviced cilian air law, non-governmental enterprises are authorized to run and manage airports and small commercial 10 crafts. This will greatly benefit foreign investors coming to invest in Taiwan. First, once the right of running and management is handed to non-governmental enterprices, the limits that government set before would would be made a breakthrough. And foreign investors’ shareholding rate would also be set up to 49% as its upper limit. Furthermore, private and commercial planes are expected to be open for non-govermental enterprises. Although it cost hundreds of millions to build up a private airplane (only used for private, it is not allowed to carry on business), the advatages of time saving and privacy keeping have made many domestic enterprises pay attention on it. As to commercial planes would be managed by airlines, the airlines could be able to provide charter flight service (maximum capacity: 19 passengers ) for clients. (III) Water Resources Concerned Industries of LR&T Local governments and private enterprises now make lots of great efforts on investing in the development of deep sea water applications, including “Yilan Marine Biotechnology Park”, “Hualien Deep Sea Water Park”, and “Hualien Deep Sea Water Hotel” and “Hualien Marine Biotechnology Park”. Other deep sea water projects are being pursued by private enterprises in Tiatung County, as well, in the arrangement of BOT project. It is estimated that private enterprises have already invested over NTD 10 billion in recent years to develop Taiwan's deep sea water resources. Therefore, foreign investors are able to develop and invest in LR&T Industry in east coast of Taiwan according to investors’ core occupassional works (deep sea water technology, deep sea water extending applications, etc.) . 11 IV. Successful Examples of Cross-national Strategic Alliance and Foreign Investment in Taiwan (I) Starwood Hotels & Resorts Worldwide Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisurecompanies in the world with approximately 890 properties in more than 90 countries. Starwood Hotels is a fully integrated owner, operator and franchisor of hotels and resorts with internationally renowned brands. In Taiwan, there are 3 succefful investments accomplished by Starwood Hotels & Resorts Worldwide, Inc.. In 1981, under the name of Lai Lai Sheration Hotel and collaborated with Starwood Hotels & Resorts Worldwide, Inc. to provide 5-star facilities and services, Lai Lai Sheraton Hotel’s control of the hotel officailly tranfered to the management of Humble House Hospitality Management Consulting Firm in 2002. And then, the name was changed to Sheraton Taipei Hotel. Owned by RSL Enterprise Co., Ltd. and operated by Starwood Hotels & Resorts World Wide Ince., Four Points by Sheraton Chung Ho, Taipei is the first international chain hotel in Taipei County and the first Four Points by Sheraton established in Asia by Starwood Hotel & Resorts World Wide Ince. Designed by HBA (Hirsch Bedner Associates design consultants), the modern and exquisite interior of the hotel provides business and leisure guests with 126 comfortable rooms, and Chinese and Western cuisine restaurants. Four Points by Sheraton Chung Ho, Taipei stands by its brand core value of “Honest” “Uncomplicated” and “Comfort” with reasonable pricing and international service standard. The Sheraton Yilan Resort, Taiwan, opening in the end of 2008, prodiveds180 spacious guest rooms, 39 oriental and family hot spring houses, and over 1,300 square meters of highly flexible meeting and function space, 12 The hotel will be situated in a breathtaking mountainous setting with spectacular views of the Pacific Ocean, the city of Yilan, the surrounding landscapes, and tea plantations. (II) Mori no Kaze Hotel Iwate Recent years, taking hot spring has become a popular activity in Taiwan. Although hot spring industry is part of Japanes culture, from this point, the hot spring industry in Taiwan also enables to attract many Japanese visitors to travel in Taiwan; however, due to historical factors, the hot spring industry in Taiwan has less Japanese culture emerged. Mori no Kaze Group, one of Japan's leading hot springs resort companies, has noticed that the likelihood of Chinese tourists being permitted to make tours of Taiwan is another major motivation for the development of this resort, and signed the contract with Taiwan's Meiho Water Resort in Taitung County's Chihben hot springs district to develop and invest Taiwan hot spring industry. By means of cross-shareholding, Mori no Kaze Group can get 5% of interests in shareholding. With the cost of the construction land, it requires an investment of approximately NTD$ 3 billion on the hotel establishment, and Japanese bakns have agreed to finance for the entire investment project. This is a major development project, and marks the first time Japanese and Taiwanese companies have cooperated to build a hot springs resort. Throught the collaboration and business and culture exchanges from each other, the better and more comfortable hot spring culture will be invented and cultivated in Asia. The resort is going to be named as “Mori no Kaze-Taitung”, and buitl in beautiful Taitung County on Taiwan's east coast. With 388 rooms decorated in Southern Islands Ocean Style, the resort is going to build up the biggest 5-star tourism hot spring in Taitung, Taiwan. 13 Besides, Mori no Kaze also plans to pursue other hotel development projects in Taipei, Taichung and Kaohsiung. In addition, the resort of Kaze-Taitung will be expected to welcome 60,000 Japanese tourists a year once it opens, this is according to the commitment from North-East branch company of JTB, the biggest tourism group in Japan and the second of the world. 14 V. Industrial Investment Incentives Collaborating with governmental affiliated policies, Taiwan, currently, plans to work on business investments and recruitments, other facilities updates, and forming complete industrial development sets at different locations to carry out the infrastructure in Taiwan. Altogether, the main preferences include cost deduction of investments, preferential financial loans, preferential rents for lands, etc., and the preferential items/policies would be not alike according to different arears and industries. Taking Taipei County as an example. Taipei County present the BOT project that in the BOT arrangement, anyone qualified to apply preferentail policies can follow the regulations to get the preference of 5-year tax free. And then, to the part of cultural creativities parks, local governments are in charge of land lending, people renting lands from local governments only needs to pay the rental without bearing any burdens such high price of land cost. Take a look on East Taiwan. Counties on the east side of Taiwan can have chances to cultivate marine tourism industry. Such as Yi-lan, Hwa-lien, and Taidong, etc., in the arrangement of BOT project, can develop and invest prosperous marine tourism industry through the project. Also, on the west side of Taiwan (ex: Changping Industry), government is providing the preferential program on rentals encouraging tourism to promote the industry (ex: the introduction of museum), and attract more visitors to come here making it become an entertainment environment with social education purpose. 15 VI. Industry-Academia Collaboration in Taiwan Taiwan actively promotes its development of Leisure Recreation and Tourism (LR&T) industry by integrating the strength of government institutions, juridical persons and industrial associations. Promoting Units for LR&T Industry in Taiwan Institution Tourism Bureau,Rep. of China(Taiwan) Industrial Development Bureau, MOEA Commerce Industrial Services Portal, MOEA Water Resources Agency, MOEA Department of Investment Services, MOEA Council for Cultural Affairs, Taiwan Council of Agriculture, Executive Yuan Sports Affairs Council, Execytive Yuan Department of Health, Executive Yuan Taiwan Visitors Association Travel Agent Association of R.O.C., Taiwan Taiwan Tourist Hotel Association Taiwan Hotel Association Taiwan Convention & Exhibition Association Industrial Economics & Knowledge Center¡A IEK Corporate Synergy Development Center the Taiwan External Trade Council Footwaer & Recreation Technology Research www.bestmotion.com Institute The Graduate Institue of Recreation,Tourism leisure.ncyu.edu.tw/faculties_staff/dai/dai3.htm and Hospitality, National Chiayi University Source¡G organized in the present Study¡A 2008/02 Website www.taiwan.net.tw www.moeaidb.gov.tw gcis.nat.gov.tw www.wra.gov.tw www.dois.moea.gov.tw www.cca.gov.tw www.coa.gov.tw www.sac.gov.tw www.doh.gov.tw www.tva.org.tw www.travelroc.org.tw www.tourist-hotel-asso-taiwan.org.tw www.roc-hotel.org.tw www.taiwanconvention.org.tw iek.itri.org.tw w1.csd.org.tw Development www.taiwantrade.com.tw 16