Fluctuations in the numbers of visitors directly affect the rates of return on tourism
business activities. Therefore, maintaining a firm grasp of the relationship between the
changes in the numbers of Chinese tourists and international travellers visiting Taiwan
is conducive to the formulation of an effective and practical tourism strategy. Although
the topic of international visitors to Taiwan is important, existing research has discussed
the issue of the travel demand between Chinese tourists and international travellers
visiting Taiwan. This paper is the first to examine the spillover effects between the rate
of change in the numbers of Chinese tourist arrivals and the rate of change in the
numbers of international traveller arrivals. Using daily data for Chinese tourists and
international travellers visiting Taiwan over the period from 1 January 2014 to 31
October 2016, together with the Diagonal BEKK model, the paper analyses the covolatility
spillover effects between the rate of change in the numbers of international
travellers and the rate of change in the numbers of Chinese tourists visiting Taiwan. The
empirical results show that there is no dependency relationship between the rate of
change in the numbers of Chinese tourists and the rate of change in the numbers of
international travellers visiting Taiwan. However, there is a significant negative covolatility
spillover effect between the rate of change in the numbers of Chinese tourists
and the rate of change in the numbers of international travellers. The empirical findings
suggest that Taiwan should abandon its development strategy of focusing only on a
single market, namely China, and to be pro-active in encouraging visits by international
travellers to Taiwan for sightseeing purposes, thereby increasing the willingness of
international travellers to visit Taiwan. Moreover, with the reduction in the numbers of
Chinese tour groups visiting Taiwan, and increases in the numbers of individual
travellers, the Taiwan Government should change its previous travel policies of mainly
attracting Chinese tour group travellers and actively promoting in-depth tourism among
international tourists, by developing tourism that focuses on the special characteristics
of different localities. In this way, the government can enhance the quality of Taiwan’s
tourism, and also attract travellers with high spending power