Tam­sui is mobbed on holidays, and when ­Fullon Hotels and Resorts opened its blue-and-white cruise-liner-shaped resort next to Fisherman’s Wharf last June, the hotel became an instant hit. Perhaps its most eye-catching feature is the “Lovers’ Tower,” a 100-meter-tall “mast.” A fully enclosed platform carries up to 80 passengers at a time to the top of the mast for unobstructed 360° views of Tamsui and the sea.

The hotel opened the Happy Garden restaurant in early 2012, hiring the renowned Cheng Yen-chi as its executive chef. Happy Garden combines fine dining and intimate décor, but its main draw is its Cantonese cuisine, Chef Cheng’s specialty. With a menu that features seasonal ingredients, healthy soups, and innovative dishes, the restaurant provides diners with delicious meals and fantastic views of the Dan­shui River and Mt. Guan­yin. A very popular dining destination, tables can be hard to come by on weekends and holidays.

Fullon Hotels and Resorts has utilized distinctive ideas about hotel siting to expand rapidly across Taiwan. Now the company is on a hiring spree.

Fullon has hotels in a number of tourist hotspots, including Tam­sui, the northeast coast, Ken­ding, and Hua­lien, and has another opening in Ya­may Recreational World in June of this year. It also has business hotels in downtown Tai­pei and Kao­hsiung, and has invested heavily in four-star resorts in several second-tier cities including Tao­yuan, Zhongli (Tao­yuan County), and New Tai­pei’s Shen­keng, San­xia, and Lin­kou Districts. All told, these facilities helped the company increase its operating revenues to NT$2.7 billion in 2011.

When Lih Pao chairman Wu Pao-tien announced in 2005 that his company, already very successful in the construction industry, was branching out into tourism, and proclaimed that he would have a hotel empire within five years, industry observers were dubious. After watching him open hotel after hotel even in the wake of the financial tsunami, even the doubters have begun to take him seriously.

“We had long wanted to diversify our operations,” says Lih Pao president Hugo Chen. He explains that each time a construction company completes a project, it must effectively start over from scratch. The limited availability of land in Taiwan complicates this process. The company had therefore been mulling means of holding onto property long term after development was complete. Hotels offered a solution. Wu anticipated that the government’s 2001 implementation of a two-day weekend would lead to an explosion of domestic travel and recreation, and began strategizing.

In 2002, the company got its chance. A property owner in ­Zhongli hired Lih Pao to build a high rise and wanted it to manage the structure once complete. The two parties came to an agreement that gave Lih Pao the rights to operate a hotel, providing the developer with an entry into the tourism business.

“If it hadn’t been for the ­Zhongli hotel,” says Chen, “we wouldn’t have bought Ya­may.” He notes that before the high-speed rail line was built, Ya­may, which involved the development of 200 hectares in Tai­chung County, was the government’s largest BOT project. But Ever Fortune, the original developer, ran into financial difficulties just one-third of the way into the project. Lih Pao then stepped in, buying billions of NT dollars of Ya­may’s bad debt from the banks and reorganizing the company.

When Lih Pao expanded into hotel operations, it did so with a few advantages­. Construction is the largest fixed cost in getting such a business started. Since Lih Pao was handling the construction itself, it could implement its own controls. It also brought its own unique perspective on siting Fullon projects.

Many people wonder why Fullon chose to build hotels outside Taiwan’s major cities in locations like Shen­keng, Lin­kou, and San­xia. How has it managed to generate eye-popping revenues from such spots?

“The Lin­kou hotel was breaking even within a year of opening,” says Chen. He explains that Lin­kou’s industrial zones generate a good deal of industrial and commercial demand for rooms. And since it sits between the Tao­yuan International Airport and Tai­pei, it offers international travelers inexpensive, convenient accommodations. This, coupled with a maximally efficient use of the site and enough rooms and restaurants to generate economies of scale, allowed it to quickly turn a profit.

The decision to build a Shen­keng hotel was motivated by the site’s location: just a 10-minute drive from Tai­pei’s ­Xinyi District, home to Tai­pei 101. It’s also near Shen­keng’s old downtown and a night market, but room prices are just half of those in ­Xinyi District, making it a popular choice with mainland Chinese tour groups.

Having been in business just a few years at the time, Fullon saw opportunity in the 2008 opening of Taiwan to mainland tourists and doubled down on its investments.

Chen notes that Taiwan has abundant natural and cultural assets. He cites its food culture as an example of the latter, noting that our island offers all of mainland China’s regional cuisines as well as international fare. This contrasts with mainland China, where visitors touring Shang­hai, Nan­jing, Su­zhou and Hang­zhou might spend an entire week eating nothing but Jiang­zhe cuisine. Delicious food is one of our major tourist attractions.

But tourism is a vertically and horizontally integrated industry that requires the integration of numerous resources if it is to be shaped into a new “smokestack-less industry.” In this respect, Taiwan still has a long way to go.

For example, Ken­ding has a beautiful shoreline, offers surfing and sailing in the summer, and is in many respects the definitive Taiwanese tourist destination. But at the same time, Kending’s major streets are lined with illegal hotels and vendors, creating an impression of chaos. Chen suggests that the government should rework the city plan from the ground up. This would not only increase real-estate prices in the area, but also the value-added of its restaurants and hotels.

Speaking to concerns that Taiwan’s tourism industry has become too dependent on mainland tourists, Chen says that indeed it would be best to have visitors from all over the world, but argues that if we are to attract European and American tourists, we need to upgrade our tourism infrastructure now.

Upbeat about the outlook for self-directed travel by mainlanders in Taiwan, Fullon is planning the construction of second hotels in Lin­kou, Fu­long, and Ken­ding. In all, it expects to be operating 16 hotels by 2014.

Right now, the company is busy preparing a Ferris wheel from Fu­ku­oka, Japan. To be sited on a 250-meter slope at Ya­may, the 120-meter-tall Ferris wheel is twice the size of the Mi­ra­mar Ferris wheel in Tai­pei’s ­Neihu District. On a clear day, riders on what is sure to become one of central Taiwan’s top landmarks will be able to see both the coast and Mt. Jade.

Fullon is getting a leg up on the competition by moving into less developed areas of the island, expanding rapidly in anticipation of a bright future for Taiwan’s tourism market.