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August 18, 2017

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Cabinet issues warning over 'zero dollar' tour subsidies

TAIPEI -- The government will cancel subsidies to tour agencies serving the domestic market if they are found to offer customers "zero dollar" tour packages, Cabinet spokesman Hsu Kuo-yung (徐國勇) said on Thursday.

Hsu said such tour packages run counter to the intent of the government's subsidy program, which was introduced to address the difficulties faced by local travel agencies in the wake of a fall off in the number of travelers from mainland China.

Last month the government announced it would provide subsidies worth NT$300 million (US$9.54 million) to businesses in the tourism sector that have suffered losses due to the steep decline in the number of Chinese tour groups and help them to produce tour packages aimed at local travelers.

However, since the subsidy program was launched, some of the target tour operators have reportedly been offering customers "free-of-charge" tour packages for those in tour groups, to boost the amount of subsidy to which the company is entitled.

A "free-of-charge" tour group, also called a "zero dollar group," refers to a group in which participants pay little or nothing to participate. To make up the cost of organizing such tour groups, the travel agencies also take customers shopping at stores from which they receive a payment.

These tour packages have been criticized for their general low quality and the damage they are causing to the travel sector through unfair low-price competition.

The Tourist Bureau confirmed that it has recently received reports from tour agencies about operators promoting domestic tour packages that require no tour fees to boost customer numbers.

This business strategy may violate travel industry regulations if it is determined to be unfair competition or involve inaccurate and false advertising, the bureau said, indicating it has launched an investigation into the matter.

At a press conference after a Cabinet meeting, Hsu said it was regrettable that some travel agencies are generating profits through the government subsidy and commissions from store owners.

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