Taiwan’s 2016 rise in electronics, chemicals and machinery exports bolstered an 11% year-over-year increase in total exports—the strongest performance in five years. Industrial activity is up, as is business investment.
By emerging market standards, Taiwan’s economic growth is modest. It’s hampered by low consumer spending—a reflection of slow wage growth and weak confidence. Overall economic growth was 1.4% last year and is expected to hit 1.7% in 2017, on track for predicted growth of 2.6% by 2020.
Business travel industry insight
The cross-straits market between Taiwan and mainland China drove strong growth in international travel from 2010 to 2016, when a deterioration in political relations between the two countries decreased Chinese demand. Taiwan’s tourism industry does not want to become overly dependent on China and is trying to develop inbound travel from the U.S., Singapore and Japan.
Domestic trips accounted for 20% of the US$16 billion spent on business travel in 2016. Travel within Taiwan fell by 7% in 2015, and is unlikely to grow through 2017. In contrast, outbound travel, which accounts for 46% of total spending, has grown by around 10% per year since 2012. It’s expected to remain the market’s strongest performing business travel segment through 2020.
The closure of Taiwan’s third-largest airline, TransAsia, disrupted air travel in 2016. Supply now is concentrated in airline groups led by China Airlines and EVA Air. Each accounts for around 30% of the flights from Taiwan’s two main cities, Taipei and Kaohsiung. Far Eastern Air Transport (FAT) provides some competition, but it currently lacks the international reach of its two rivals.
Tourist arrivals from mainland China fueled hotel expansion, but international chains are still poorly represented—accounting for less than 1% of hotels. Marriott is expanding rapidly, opening properties in main cities, as well as smaller markets like Hualien, Taichung and Tainan. AccorHotels is taking a different approach, signing up local hotels to its “selected by” program. Through this strategy, Accor now is affiliated with more than 50 hotels in Taipei alone. Its portfolio includes local chains like Beauty, Fullon and Green World hotels.
- The prospects for business travel are improving as rising confidence sparks business investment.
- Far East Air Transport’s expansion into international markets will bring competition to China Airlines and EVA Air and more alternatives for business travelers.
- A dip in the number of mainland Chinese visitors has reduced hotel demand. The decline in occupancy presents an opportunity for travel managers to negotiate favorable rates.
- Any strain in political relations between Taiwan and mainland China adds uncertainty to the Taiwanese business environment.
- The collapse of TransAsia strengthened the positions of China Airlines and EVA Air, reducing competition in the short term.
- International hotel chains are limited outside Taiwan’s major cities.
BCD Travel’s Research & Intelligence experts translate the trends driving international business growth in new markets. Talk to your account manager about how BCD Travel can support your company’s growth and get your travelers where they need to be across the globe.