Taipei's Grand Hotel still in the
red By Ting-I Tsai
TAIPEI - In August, when Korean actor Bae
Yong-joon paid his second visit to Taiwan, the nation's
symbolic center of hospitality, the five-star
Grand Hotel in Taipei, enjoyed a 100% occupancy
rate for three days straight. It achieved this
unusual feat by offering Bae its US$4,800
presidential suite, usually reserved for visiting
heads of state.
During his stay, the hotel
turned itself into Bae's fan club by hanging
posters of him around the hotel's lobby and
allowing his fans to get as close to him as
possible, even allowing them to dig into the same
breakfast dishes he had ordered. The superstar's
popularity, however, did
little to improve the Grand Hotel's occupancy rate
in August, which ended at 67.64%, lower than the
average 70.41% for Taipei City's international and
standard tourist hotels in the same period.
Taiwan took some 20 years to emerge from
the Kuomintang (KMT) dictatorship; but
commercialization of the mysterious hotel has been
far more difficult than Taiwan's democratization.
Even as the influence of the
Chiang Kai-shek family fades, politics and
old-fashion bureaucracy still surround the hotel's
operations.
The Grand Hotel, designed to
look like an example of traditional Chinese palace
architecture, was built on a hill overlooking
northern Taipei in order to impress visiting heads
of state by the then-ruling KMT regime in 1952.
The location was chosen for its good
fengshui, as the site had been a Japanese
shrine since 1901, and a pair of 100-year-old
golden dragons that are believed to have belonged
to the shrine are still preserved in the hotel's
Golden Dragon Hall. As part of its efforts to
enhance its Chinese historic image, the hotel
decorated its eight main floors based on the eight
dynasties of Chinese history, including the Han,
Tang, Sung, Ming and Qing, with paintings,
furniture and key chains distinct to each. Since
the dragon is an important symbol of Chinese
royalty, the hotel uses 200,000 dragon sculptures
for decoration, both inside and outside the hotel.
In order to build up the hotel, the KMT
authorities created the non-profit Duen-mou
Foundation of Taiwan, which received funds from
the then-Taiwan provincial government and was
entitled to use the provincial government's lands
freely, without having to pay commercial taxes for
the hotel's operation. As with the KMT's
dictatorial governance of Taiwan, the hotel's
management was totally dominated by the wife and
niece of KMT chairman Chiang Kai-shek until the
early 1990s.
As the hotel wasn't supposed
to serve "ordinary" customers, it operated without
a hotel license until 1999, when the Grand Hotel
Corporation was founded. Government figures show
that the hotel hasn't made a profit in the past
decade, apart from 2001, when it made $900,000. It
lost $9 million in the following year, and $4.6
million in 2003.
Beginning in 1997, after
a series of problems, the government began to
intervene in the hotel's operations. While the
hotel was being renovated in 1995, a fire
destroyed its roof; senior managers appointed by
Chiang's niece were found to have embezzled about
US$1 million; and occupancy rates had slumped to
40%. Stanley Yen, president of The Landis Group
and one of the most prominent figures in Taiwan's
hospitality industry, was hired to reform the
hotel in 1998. However, he quit after 16 months,
frustrated by the union's resistance to change.
"At the last stage [of my tenure], I
realized [that] it was impossible to accomplish a
complete reform within a short period of time,"
Yen noted in his book, published in 2002. Yen had
intended to enact a series of reforms, the first
of which would have established fundamental
standards for the hotel. It would then have taken
between four and nine years to reach the standard
of five-star hotels in downtown Taipei, and
further develop the Grand into a "prestige hotel"
in Taipei. He pointed out that the hotel demanded
a lot more funds to modernize its equipment and
create a professional staff. Yen's plan left with
him, and the government hired former minister of
economic affairs, Christine Tsung, as the hotel's
chairperson in October 2002.
In August
2003, 500 customers of the hotel's restaurant
apparently suffered food poisoning after attending
a wedding banquet. As the foundation's funds fell
sharply from $171 million at the end of 1998 to
$128 million in 2003, more and more voices blamed
the senior management for the hotel's poor
performance. "The management has been so poor.
Employees have been very nervous," said a board
member of the hotel's union, which has some 540
members. A former senior manager of the hotel, who
declined to be identified, said: "[Christine
Tsung] simply knows nothing about management at
all."
Tsung was unavailable for an
interview as, according to a hotel official, she
was busy campaigning for the ruling Democratic
Progressive Party for Taiwan's December 3 local
elections, and no other senior managers were
entitled to comment on the hotel's affairs. Tsung
was one of the few senior managers of Taiwan's
five-star hotels who didn't entertain the
66-member delegation led by Chinese National
Tourism Administration director Shao Qiwei, which
recently paid a 10-day visit to Taiwan to examine
the possibility of adding the island to a list of
approved destinations for Chinese tourists.
Entertaining mainland Chinese tourists is
considered one of the hotel's last chances to
raise its occupancy rate. In order to attract
the mainlanders, the hotel has planned to open
its two 180m-long secret underground tunnels -
constructed in 1973 to help Chiang Kai-shek to
escape in case hostilities broke out - to Chinese
tourists staying in the hotel, according to hotel
spokesman Chen Hsing-chung.
The Control
Yuan, which monitors the efficiency of Taiwan's
bureaucracy and investigates instances of
corruption, concluded in December 2004 that the
government should push for the privatization of
the hotel's Duen-mou Foundation in order to "walk
out from [under] the historical burden" as soon as
possible.
But the Tourism Bureau, which
supervises the hotel's operations, said the
decision to privatize should be up to the hotel.
Bureau spokesman, Chiu Chan-kuang, said: "The
government has little influence on the hotel's
management". But this neglected the reality that
the government holds more than half the seats on
the hotel's board. "Politics has dominated the
hotel for so long. We simply want to keep our
jobs," said a representative from the worker's
union, which has opposed privatization of the
hotel.
Ting-I Tsai is a
Taipei-based freelance writer.
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the influence of the
Chiang Kai-shek family fades, politics and
old-fashion bureaucracy still surround the hotel's
operations. 
