The government should promptly introduce new relief measures for the local tourism sector, particularly for hotels that rely heavily on foreign tourists and business travelers. Current government relief offered to the local hospital industry is inadequate and does not address the losses that resulted from the local COVID-19 outbreak.
There are signs that these hotels are entering a make-or-break period. Imperial Hotel Taipei on Friday last week said it plans to shut down on Oct. 31 after 54 years in the city’s downtown area, as border controls and dining restrictions hit hotels with plummeting occupancy rates and empty dining rooms. Imperial, one of the three oldest hotels in Taiwan along with the Grand Hotel and Ambassador Hotel, holds many fond memories for the city’s older generation.
Imperial Hotel is not the only one succumbing to the COVID-19 pandemic. Since March last year, eight well-known hotels, including The Place Yilan, operated by Hotel Royal Group, have closed due to heavy rent burdens and loss of business. Fullon Hotel Taipei is to shut down next month.
Formosa International Hotels (FIH) chairman Steven Pan (潘思亮) called on the government to provide financial relief and stipends to cover employees’ wages. The hospitality industry is “critically ailing,” he said, as almost all Formosa hotels were forced to lower salaries or cut jobs in hope of surviving “this industry winter.”
Aided by asset disposal gains, FIH is the only hotel chain in Taiwan that managed to eke out a profit in the first half of this year, Pan said. FIH in June sold its stake in Domino’s Taiwan to Australia-listed fast-food operator Domino’s Pizza Enterprise for US$61.2 million to bolster its finances.
The government policy is to pay 40 percent of hotel employees’ salaries, or NT$20,000 per month per employee, from May to last month. The program is the same as last year’s, when COVID-19 infections were much lower in spring and restaurants were allowed to operate as normal.
Rather than providing subsidies, the government offered a higher credit line for each hotel, up to NT$50 million from NT$30 million, and doubled the special loan ceiling for hotels to pay employee salaries to NT$20 million with interest subsidies extended by one year.
All this financial support is far from sufficient, as reflected in the climbing number of people on unpaid leave from the hospitality industry. About 57,781 workers were furloughed as of the middle of this month, from 56,687 people at the end of last month, according to Ministry of Labor statistics. That is the highest level since March last year, when the COVID-19 restrictions were not as strict. Hotels and restaurants suffered the brunt, with 24,346 workers forced to take unpaid leave after the relief program ended last month, ministry statistics showed.
Some might say that the government’s upcoming “quintuple stimulus voucher” program, which offers NT$5,000 to each citizen, could be a catalyst for the hospitality industry starting in October, as people become more willing to travel and eat out.
However, the stimulus measure might do little for the industry, as local consumers could choose to stay at hostels or other types of accommodation, rather than hotels that target international travelers. Also, the Ministry of Transportation and Communications is weighing relaunching the travel subsidy program as it did last year, and the likelihood of a quick recovery for the local tourism sector is slim.
Other types of relief measures and stimulus programs are required to help the tourism and hospitality industry revive from, or survive, the pandemic.
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