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Coronavirus outbreak hits global tourism

Published : Tuesday, 25 February, 2020 at 12:00 AM  Count : 566
Md Zillur Rahaman
Md Zillur Rahaman

Md Zillur Rahaman

Even as infections of the novel coronavirus seemed to be slowing at one point, the effects of the epidemic on the global tourism industry were accelerating rapidly.
The impact of the pneumonia-like disease caused by the COVID-19 virus is already being felt across Asia, where leisure and business travel contributed $884 billion to gross domestic product in 2017 and about $1 trillion estimated for 2018, the most recent years for data compiled by the World Travel and Tourism Council. For China alone, inbound tourism brought in $127.3 billion in 2019, its tourism bureau disclosed.

But as the diagnoses tick upward again, travel agents, operators and hoteliers are bracing for months, if not a full year, of economic disruption from the outbreak, with long-term effects that may ripple well into 2021. The numbers of trip cancellations not just to China but to the entire continent of Asia
The coronavirus outbreak could cost the global tourism industry about $80 billion in lost revenue, with players warning that the sector is unlikely to recover for at least one year. Millions of Chinese tourists cancelling travel plans, or delaying future holidays over safety fears because of the disease, now called Covid-19, online travel companies like Expedia and Tripadvisor are already forecasting a drop in revenues, which could ripple into everything from hotels to retail outlets abroad.

According to estimates by the Economist Intelligence Unit (EIU), Chinese outbound tourism will not recover to pre-coronavirus levels until the second quarter of 2021 and it will cause a global loss of about $80 billion. EIU benchmarked current data against that from the severe acute respiratory syndrome (Sars) outbreak, which struck the mainland in late 2002. During that time while China lifted its travel ban in July 2003, outbound tourism industry did not recover until early the next year.

The biggest collective damage will happen for the Asean countries, as the tourists are all among the top 20 destinations for Chinese outbound tourists. It is estimated that this year, mainland tourists to the Association of Southeast Asian Nations will drop by about 30 to 40 per cent, leading to a loss in tourism revenue of $7 billion. The impact on the tourism sector in Europe and the US will be milder as Chinese tourists account for just 4 percent of their total visitors.

After travel restrictions were put in place in China, booking trends changed "dramatically in a very short period of time". As on January 26, Chinese outbound flights booked worldwide from January 21 to February 17 fell 13.8 per cent compared to the year before. Bookings for March and April have already been down by more than half, and consumers are delaying travel plans for the summer. The Chinese are traditionally energised and excited after Chinese New Year, but they are not planning that is the biggest risk to the tourism industry. US-based online travel company Expedia Group said the Covid-19 outbreak was already adding pressure to business and could cost the firm around $30 to $40 million this quarter, with impacts potentially extending throughout the year.

Malaysia expects to meet its target of a record 30 million tourists this year by redirecting its marketing efforts to local and other markets as arrivals from coronavirus-hit China fall. The epidemic comes at a bad time, as the country is pushing its  "Visit Malaysia 2020" programme to rev up its stuttering economy, Southeast Asia's third-largest. Tourism accounts for 11.8 per cent of Malaysia's gross domestic product, with 28 million arrivals last year, 11 per cent of them from China, according to available data.

However, local tour operators are facing over 3,000 tour group cancellations in Malaysia and room cancellations have picked up since the Chinese New Year holidays, when the Chinese government issued a ban on its citizens from booking overseas tours, flights and hotels.

Indonesia, the largest country in south-east Asia, claims to have no cases of coronavirus, but according to the Bali's tourism board, there have been around 40,000 cancellations of hotel bookings in recent weeks nonetheless. In the first half of February about 740,000 people visited the island--16.25% fewer than the same period last year. Chinese tourists account for about one in six of the island's visitors, and since Indonesia banned all incoming flights from China on 5 February, their absence has hit hard.

Out of almost 40 million tourists in Thailand last year, some 11 million were Chinese. This year, however, many tourist places are quite empty after China decided to suspend tours abroad on Jan 27 in the light of the worsening coronavirus outbreak. Thailand's Tourism Authority is expecting losses of up to €2.8 billion during the first four months of the year.

Singapore could see a 25% to 30% decline in tourist arrivals and spending this year because of the coronavirus outbreak, as the industry braces for a worse impact than the 2003 SARS pandemic. The city-state is losing about 18,000 to 20,000 tourists a day, and the figures could plummet further if the situation persists for longer.

For the city-state, though, its 2020 tourism projections stand in stark contrast to last year's record arrivals of 19.1 million. Tourism receipts rose to $19.5 billion in 2019 based on preliminary estimates, from $19.35 billion the year before.

Singapore isn't the only nation reeling from the coronavirus. Across the globe, hotels, casinos, airlines and retailers who have come to rely on Chinese tourists have been hit. About 163 million Chinese tourists made overseas trips in 2018, accounting for more than 30% of travel spending worldwide.

Chinese visitors accounted for 150 million overseas trips in 2019, according to official figures, while Chinese tourists spent $130 billion overseas in 2018, up 13 per cent from the previous year, China Tourism Academy found. But since the coronavirus outbreak started in Wuhan, the absence of Chinese tour groups has left hoteliers, restaurateurs, tour operators and retailers counting the cost as one of their highest-spending customer groups has been forced to stay at home. China's ministry of transport said that 73 percent fewer trips were taken by Chinese tourists over the lunar newyear holiday in 2020 compared with 2019.

At least 14 countries have limited or banned flights from mainland China in an unprecedented restriction of travel to and from the world's second-largest economy, with economists warning of a potentially severe impact on global growth.
The exact amount will depend on how long it takes for travel trends to normalise and most of the impact was centred in the Asia-Pacific region, with a bit of weakening also felt in North America and Europe.

The writer is banker











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