l As cross-Strait relations enter a period of uncertainty roughly four months before Taiwan’s next presidential election, a number of recent developments clearly indicated that exchanges between the two sides, particularly tourism, are slowing down.
l From Taipei to Kaohsiung, the economic impact from the drop in the number of Chinese tourists was both direct and immediate. In fact, a growing number of hotels around the island have received cancellations from Chinese tour groups, raising industry-wide concern that the decline—and the cancellation orders—will continue.
l These cancellation orders have affected not only hotels around the island, but related industries—food, transportation, and retail—are also experiencing a marked decline in business.
l The situation has been particularly serious in Taiwan's southern cities like Kaohsiung, where hotel occupancy rates started to drop since the beginning of August. The cancellation orders have reached nearly 10,000 rooms in recent weeks. Furthermore, reservations for September have dropped about 45 percent year-on-year.
l These unexpected cancellations by Chinese tour groups have, in turn, forced many retail shops and restaurants to scale back on stock and hold off on hiring more workers.
l Among the possible economic factors for the drop in the number of Chinese tourists, Taiwan's Tourism Bureau’s recent decision to lower the Chinese tour group fees per person—from US$80 to US$60 per day—had the biggest impact. The lowering of group fees has subsequently led to a decline in profit for many Chinese tour companies, which has made them less willing to operate tours to Taiwan.
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