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By Crystal Hsu and Ted Chen / Staff reporters
Leofoo Tourism Group （六福旅遊集團） said that its premier property, Westin Taipei （台北威斯汀六福皇宮）, is to cease operations at the end of this year because it has failed to make positive earnings contributions for the past 20 years.
The group announced its decision on Tuesday after receiving notice from the property’s landlord, Cathay Life Insurance Co （國泰人壽）, that the lease, due to expire on Dec. 31, would be terminated.
“We are grateful to all employees and customers for the past 20 years and will apply the experience and know-how we have learned to the group’s other hotel brands,” chief operating officer Lulu Chuang （莊豐如） said in a statement.
The high-end facility on Taipei’s Nanjing E Road had an occupancy rate of nearly 70 percent last year, with an average daily room rate of NT$6,387 （US$219）, outperforming its local peers, Chuang said.
Despite the strong showing and assorted awards it has received, the hotel failed to make earnings contributions since its establishment in 1999, the statement said.
Westin Taipei has formed a task force to ensure the rights of customers would not be affected before the closure, it said, adding that it would continue to roll out discounts and promotions.
The group last month ended a contract to build an upscale resort hotel in Tainan.
Chuang last week said the group is seeking to restructure its finances this year in the hope of returning to profit next year.
Although Westin Taipei generated 39.74 percent, or NT$1.29 billion, of Leofoo Tourism Group’s annual revenue last year, it has been operating in the red, Chuang said.
Shuttering the lossmaking facility would not affect the company’s operations, but would free up resources for other endeavors, she said.
Apart from a slump in Taiwan’s tourism sector, the hotel has also been pressured by annual rental increases, leading to a net loss of NT$240 million last year, Chuang said.
In addition, Leofoo Tourism Group is facing NT$400 million in breach of contract penalties for its failure to meet dining revenue targets set by its landlord.
Cathay Life yesterday denied claims of rent increases.
The life insurer said that since the 20-year lease agreement with Westin Taipei was inked in 1999, the company had voluntarily cut the rent by 7.3 percent in 2004 in consideration of a SARS outbreak that year.
The rent was further reduced by 20 percent from 2009 to last year, the life insurer said.
Cathay Life said that it has committed significant resources to supply the land and build Westin Taipei, and that its leasing and profit-sharing arrangement are typical and structured to account for the risks it has taken on.
The life insurer, which is also a landlord to other hotels, said that it would renovate the 20-year-old property and seek new partnerships to improve asset utilization.
新聞來源：TAIPEI TIMES
