Taiwan Resorts Bet on Hospitality as Hotel Price War Looms

Photo Credit: The One Nanyuan
Why you need to know

Taiwanese resorts must double down on service amid the prospect of a price war.

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By Alex Barker

The last decade has been full of ups and downs for Taiwan’s hospitality industry. Initially driven by a surge in Chinese tourism thanks to president Ma Ying-jeou (馬英九)’s strengthening of cross-Strait ties in 2008, the following years saw the construction of hundreds of new hotels and resorts across Taiwan.

Recent years, however, have been less kind. Political strains with China have a seen a decrease in the number of mainland tourists, while the steady advancement of the resort industry in Southeast Asian nations such as Thailand has begun to draw both vacationers and trained hospitality staff away from Taiwan.

In the face of increased foreign and domestic competition, Taiwanese resorts are working hard to bring guests back. This means redoubling efforts to focus on customer service – already seen as a Taiwanese competitive advantage – as well as increasing foreign-targeted marketing. Meanwhile, many smaller resorts are finding success by drawing upon Taiwan’s unique cultural and artistic legacy.

Global brands in Taiwan

The Westin Tashee Resort, located in Taoyuan, exemplifies the increasingly international face of the Taiwanese resort industry. Westin acquired the original Hong Xi golf course – once considered the top course in Taiwan – along with its hotel and residential community in 2013. After two years of extensive remodeling, including consultation with the international design agency BGA, the resort was relaunched in 2015.

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Photo Credit: Westin Tashee
The Westin Tashee in Taoyuan offers golf for the grownups and a wide variety of activities for the kids.

The goal, explains General Manager Keven Chen, was to rely on a modern, stunning design to “create a unique experience from the moment you step in our hotel.” While the original golf course continues to be a strong pull for guests, Westin aims to attract a greater number of customers with amenities that include 205 rooms, dual Chinese and Western-style restaurants, an outdoor chapel for weddings, in-house spa, five large break-out meeting rooms, and even the largest Westin “Kid’s Club” in Asia.

A diversity of available facilities allows the Westin Tashee to accommodate a wide variety of functions and age groups. The resort is working to attract a greater number of weddings, which can make use of the hotel’s large ballroom and grounds to “create the feeling of ‘destination wedding’ right here in Taiwan,” says Chen.

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Photo Credit: Westin Tashee

While Taiwanese still account for approximately 90 percent of the Westin Tashee’s guests, management hopes to have foreigners account for 15-20 percent by the end of 2018. While expanding marketing efforts towards the Japanese, Korean, Hong Kong, and Singaporean markets is a critical piece of this goal, the Westin Tashee is also seeking to build partnerships with Taiwan’s foreign chambers of commerce – including AmCham – to host events and offer special package deals for chamber members.

At the opposite end of Taiwan, the venerable Caesar Park Hotel Kenting is a different type of resort experience, drawing guests from around Asia in search of sunny days and wide, sandy beaches. Established in 1986 and originally under Japanese management, Caesar Park Kenting at the time of its inception represented a level of facility quality and service that was unmatched in Taiwan.

Following the Japanese recession in the 1990s, the resort was sold to a Taiwanese owner, though the rigorous service quality standards endured. General Manager Catherine Chen attributes the resort’s continued success to this background. “The Japanese ideas of [Standard Operating Procedures] and Total Quality Control have provided a strong foundation for our service model,” says Chen. “Though as time has gone on, we’ve adapted our model to be more flexible, which allows us to address each guest with a personal touch.”

The 280-room Caesar Park has all the features expected of a top-tier beach resort, including an outdoor swimming pool, spa, and fitness center. Yet Chen continues to believe that these features come second to ensuring an unsurpassable level of customer service. “Other resorts can always try to outdo your facilities,” she says. “You can build a big swimming pool, but someone will build one even bigger and replace you. But good service? That can never be easily replaced.”

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Photo Credit: Caesar Park

The success of this approach can be seen in the reaction of Caesar Park’s guests, 25 percent of whom are yearly returners. Even child guests who participate in the resort’s “Kid’s Club” receive a hand-written note on their birthday from their “buddy” – the resort chaperone who accompanies them during their stay – and parents often plan their return trips around the availability of the buddy who previously spent time with their child.

Drawing on culture and history

While the Westin and Caesar’s Palace might represent the new face of Taiwan’s global resort industry, The One NanYuan presents a different, though equally compelling take on hospitality. Located near the southern edge of Taoyuan County, NanYuan is based upon the sprawling estate built by the late United Daily News magnate Wang Tih-wu (王惕吾) in 1985.

The architecture of the estate is based on the style prevalent in Wang’s home province of Zhejiang, while incorporating aspects of Taiwanese-style Minnan architecture. NanYuan contains an extensive garden inspired by classical Chinese poetry and Han-dynasty art, while its building interiors include numerous pieces of artwork and examples of fine local craftsmanship. The estate is sumptuous enough that former Prime Minister Margaret Thatcher and Soviet leader Mikhail Gorbachev both stayed there during their respective visits to Taiwan in the early 1990s.

After Taiwanese design and lifestyle brand The One acquired NanYuan in 2007, several parts of the garden and buildings were refurbished, while the manors were converted into guest rooms. Additional structures were added, such as a large outdoor wooden pavilion designed by the famous Japanese architect Kengo Kuma.

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Photo Credit: The One Nanyuan
The One NanYuan in Hsinchu relies predominantly on day guests.

With only 20 rooms available per night, The One relies heavily on day guests. Intimate daytime tours are delivered to roughly 200 guests per day, with content arranged around the different architectural and landscape styles on display at NanYuan. The resort’s restaurant also offers exceptional cuisine based on a fusion of Chinese and Western flavors, with ingredients sourced seasonally from around Taiwan.

“Most of our guests are in their mid-forties,” explains Brand Development Manager Albert Ma. “We’re tucked away in the mountains, focused on art and Chinese culture. This isn’t as inviting for a lot of Taiwanese youth, but we find that there is an increasing demand in Taiwan for a quiet environment and a slow tempo to relax in.”

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Photo Credit: The One Nanyuan

Local culture and quiet reflection are also ideals shared by the Volando Urai Spa and Resort in New Taipei City. Situated on the bank of the Nanshi River in Wulai, Volando was launched in 2011 as a combination spa and resort, piping water directly from the natural hot springs in the Wulai area. Unlike its competitors, however, Volando has heavily incorporated artistic performances as part of its offerings to guests.

These events range from one-off occasions such as musical performances, to a daily ceremony entitled “Silent Chess,” in which two performers dressed in traditional Buddhist robes meditate on a board floating upon a large, open-air hot spring pool. With their eyes closed, the performers play musical bowls for an enraptured audience before culminating the presentation with a Taiko drum performance.

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Photo Credit: Volando
The Volando resort in Wulai specializes in offering cultural performances.

“All of our staff are trained in performing,” says General Manager George Tuan. “We truly see our specialty as cultural and artistic events. Everyone in Taiwan has hot springs, but nobody has the kind of cultural aspects we offer.” Volando’s staff is also representative of Taiwan’s rich cultural heritage, including several Aboriginal performers, choreographers, and musicians.

Beyond cultural performances, Volando also makes use of its short distance from Taipei to offer daytime spa sessions through its spa “Dasha,” named after the Atayal word for the deep green color of the Nanshi River. As Taipei area locals make up a large portion of daily spa-goers, this contributes to a larger gap between on and off-season attendance, given the Taiwanese preference for hot springs during the cold winter months. To counter this trend, Volando increases the number of special events during the spring and summer.

Volando’s decision to specialize in cultural and artistic performance seems to be paying dividends. In 2013, the resort received accreditation from the French boutique hotel brand Relais & Chateaux, one of only two Taiwanese hotels to have received this honor. Moreover, foreign guests now make up more than 50 percent of Volando’s clientele. The majority of these guests, explains Tuan, come from Korea, Japan, Singapore, and Hong Kong, though Europeans and Americans comprise 10 percent of Volando’s visitors.

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Photo Credit: Volando
Opportunities for growth

Across the board, the resort managers interviewed by TOPICS continue to foresee the same challenges facing the hospitality industry as a whole. They see the current over-capacity of resorts and hotels in Taiwan as set to intensify with the scheduled opening of an additional 30 international hotels in the next three to five years. Without a corresponding increase in the number of tourists and vacationers, the industry could soon be facing the closing of many hotels due to a shortage of guests.

Exacerbating this problem is a lack of sufficient qualified hospitality staff to run and operate resorts. “There will be increased demand for hotel personnel while we are coping with fewer customers, which could possibly lead to a price war,” says Westin Tashee General Manager Keven Chen. “A price war, in combination with the rapid entry of many new hotel managers, could have an adverse effect on the general quality of Taiwan’s resorts.”

Much of the fundamental challenge stems from the loss of guests and staff to Southeast Asia. While the price of overnight stays between luxury hotels in Taiwan and Southeast Asia is similar, the developing economies can offer lower prices for food, beverages and other goods. Another issue seems to be realizing that in many regards, countries like Thailand, Malaysia and Bali have caught up and in certain cases even surpassed Taiwan in areas such as infrastructure development or visa application ease.

"In Kenting, we have the added problem that our nearest airport – Kaohsiung – does not service international airlines, so the majority of our guests must take the HSR from Taipei, then take a bus to the resort,” says Caesar Park Kenting General Manager Catherine Chen. Moreover, some potential tourist markets are deterred by long visa processing times, while Thailand offers visa issuance upon arrival in its airports.

One reason for optimism is that the Taiwanese resort industry does not seem to be particularly affected by a lack of mainland Chinese tourists, most of whom travel in large tour groups that typically stay in hotels located near urban centers or sightseeing destinations. While the trend may be having on impact on the hospitality industry as a whole, “fewer Chinese tourists really doesn’t present a challenge for us,” confirms NanYuan Brand Development Manager Albert Ma.

To avert a crisis, resort managers encourage the government to increase its marketing abroad, especially in geographically accessible markets such as Korea, Japan and Singapore. Ideally, such a strategy would be complemented by a larger Taoyuan International Airport to accommodate more international airlines and greater traveler volume. At the same time, the local hospitality industry should incentivize new graduates and trained hospitality personnel alike to stay in Taiwan by increasing salary as well offering more opportunities for on-the-job training, position advancement and inter-departmental mobility.

Finally, Caesar Park’s Chen suggests that Taiwanese resorts should zero-in on their unique attributes rather than constantly attempt to copy other successful business models. “Be clear on what your market segment is rather than trying to do everything equally well,” she says.

That advice also goes for the Taiwanese hospitality industry as a whole. Taiwan is still recognized throughout Asia as being at the forefront of excellent service delivered with a warm, personal touch. Given that courtesy towards guests is a fundamental part of Taiwan’s culture, says the Westin’s Keven Chen, it makes sense to build on this asset. After all, “the main difference between Taiwanese and nearby countries is that other countries might focus more on their natural settings,” he says. “But the true beauty of Taiwan is the people.”

Read Next: What Gives with Taiwan's Low Wages?

The News Lens has been authorized to repost this article. The piece was first published by Taiwan Business TOPICS. (Taiwan Business TOPICS is published monthly by the American Chamber of Commerce in Taipei.)

TNL Editor: David Green (@DavidPeterGreen)

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