In the World Economic Forum’s 2019 Travel and Tourism Competitiveness Report released in early September, eight of the 10 top-ranked countries were Western nations, led by Spain in the top spot and followed by France and Germany.

Japan finished a whisker behind in fourth to emerge as Asia’s top performer, while Taiwan ranked 37th, falling seven notches from the 30th spot it occupied in the previous rankings two years ago.

Taiwan’s decline was the second biggest, behind that of Sri Lanka, among the 22 Asia-Pacific economies covered in the report, and the biggest in the Eastern Asia-Pacific. In contrast, China improved two spots to 13th and South Korea moved up three spots to 16th.

Why did Taiwan take such a big tumble while other neighboring economies moved up the ladder?

In the WEF report, issued every two years, Taiwan’s travel and tourism sector has typically fared poorly in the survey’s “natural and cultural resources subindex” relative to other countries, and 2019 was no exception. It ranked 58th overall in the sub-index among the 140 economies surveyed, down from 34th previously, and was only 87th for “natural resources,” defined as “natural capital” (landscape, natural parks and richness of the fauna) and “the development of outdoor tourism activities.”

But Taiwan’s big fall this year was also “due to significantly tightened visa requirements (37th to 119th), waning cultural resources and business travel (26th to 36th) and recalibrated figures showing a drastic reduction in protected areas (20th to 118th),” the report said.

Big Fall in ‘International Openness’

The “Visa Requirement” indicator, which falls in the “International Openness” category, covers the percentage of the global population able to enter the destination country for tourism without a visa or with a landing or e-visa. Though Taiwan has eased visa requirements for visitors from Southeast Asia over the past two years, similar treatment has not been offered to many other countries. That caused Taiwan’s ranking for “International Openness” to fall to 60th this year from 23rd two years ago. 

The “Total Protected Areas” indicator in the “Natural Resources” category is defined as the percentage of total territorial area devoted to natural land conservation areas of over 1,000 hectares and marine conservation areas. It was in this indicator that Taiwan fell from 20th two years ago to 118th this year because of its recalibration.

Taiwan’s lower ranking was due in part to factors beyond its control. Natural and historical tourism resources generally depend on a country’s climate and its past and the actions of a people’s ancestors. But simply looking at raw tourist arrival data cannot measure “travel comfort,” a practice that highlights the problem of “overtourism” that concerns a growing number of countries.  

In fact, rankings can fluctuate over time, but if a more pragmatic way to judge a tourism sector is revenue and profit, then Taiwan has also been found wanting.

Tourist Numbers Up but Revenue Down

Successive Taiwan administrations have focused attention on visitor numbers as a key to their tourism policies. 

During Chen Shui-bian’s presidency in 2002, the government initiated a six-year plan to double the number of overseas visitors to Taiwan to 5 million by 2008. The Ma Ying-jeou administration celebrated when Taiwan attracted more than 10 million visitors for the first time in 2015, largely through better relations with China. Of the 10.44 million overseas arrivals that year, 4.18 million were from China.

After President Tsai Ing-wen took office in May 2016, Beijing started taking measures to restrict the ability of its people to visit Taiwan to put pressure on the Tsai government, which was less accommodating to China than its predecessor. Most recently in August, Beijing blocked travel by its citizens to Taiwan outside of tour groups.

These maneuvers pushed down visitor arrivals from China to 3.51 million in 2016, 2.73 million in 2017 and 2.70 million in 2018. To make up for the loss of about 1.5 million Chinese tourists a year from their peak in 2015, the Tsai administration aggressively pursued visitors from countries targeted by its New Southbound Policy, a policy designed to deepen ties with Southeast Asia, South Asia and Australia and New Zealand. The approach has worked to some extent. 

According to the Tourism Bureau’s annual “Survey Report on Visitors Expenditure and Trends in Taiwan,” visitor numbers rose from 9.91 million in 2014 to 11.06 million in 2018, and those numbers were up another 12 percent in the first eight months of 2019. 

At the same time, however, revenue from overseas tourists actually fell during that period from US$14.6 billion in 2014 to US$13.7 billion in 2018, a drop of about US$1 billion.

Why is it that an increase in overseas arrivals has not delivered higher tourism revenue?

The increase in visitors from the New Southbound Policy in fact made up for about 70-75 percent of the dropoff in big spending Chinese visitors, but there has been little change in the number of visitors from the West, who have greater spending power.

That has prompted the question of whether this single-minded focus on overseas visitor numbers has cost Taiwan the chance to transform its tourism sector to a higher-end model. (Read: The Impasse of Taiwanese Tourism?)

Are Domestic Travel Subsidies Effective? 

With revenue from overseas travelers stagnant and even on the decline, the government has turned to domestic tourism to make up the gap, but the results are debatable. 

The Tourism Bureau is spending NT$3.6 billion in the fourth quarter on an expanded program to subsidize fall and winter travel within Taiwan by the country’s citizens. The program applies to both independent and group tour travelers, and tour operators can get discounts on park admissions. Even vouchers for purchases at night markets will be available. 

Compared with similar programs in 2018 for winter travel (with NT$95 million in subsidies), another program expanding winter travel subsidies by another NT$1.3 billion, and an NT$800 million initiative to subsidize summer travel, the NT$3.6 billion gambit in the fourth quarter has really upped the ante. 

Initiatives to boost visitor from the 18 New Southbound Policy countries have helped offset the loss of Chinese tourists, but there has been little change in Western visitor arrivals. (Photo by Chien-Tong Wang/CW)

In the WEF report, one of the general categories used to gauge tourism competitiveness is “Prioritization of Travel & Tourism,” and a key indicator within the category is “Travel & tourism government expenditure.” Taiwan ranked 114th in this metric, similar to its 110th-place finish two years ago, indicating relatively low spending on tourism promotion as a percentage of the government budget. In that context, is putting heavy money into subsidies for domestic tourism really the best way to optimize the use of limited public funds?

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Many hotel and B&B operators who stand to benefit from the program are not especially happy with it because domestic travel is concentrated on the weekend and promoting it only increases room demand on days when demand is already at its peak. Demand for rooms during the week is normally tepid and likely to weaken further now because the independent Chinese travelers Beijing recently blocked from visiting Taiwan often traveled around the country on weekdays. The subsidy program does little to address this gap.

Subsidizing domestic travel to pump up visitor numbers is kind of like robbing Peter to pay Paul, and constantly promoting night market snack food can only attract one-time customers. Do these strategies really showcase what is unique about Taiwan?

Perhaps the decline in Taiwan’s travel and tourism sector’s competitiveness offers the country the perfect opportunity. It now has an excuse to take a step back and carefully ponder what kind of tourism industry it wants and create a new vision that goes beyond simple numbers.

Translated by Luke Sabatier
Edited by Sharon Tseng