The global tourism industry witnessed a marginal growth in 2019 due to factors such as Brexit, slowdown in global economy, unrest in many parts of the world, geo-political situations and others. The industry was hoping for a better performance of the sector in 2020 and came out with strategies to tackle the somewhat unfavorable situations of the year gone by. However, the spread of Coronavirus has made the situation far worse for all industries with travel and tourism taking the maximum hit. With this dreadful outpouring of casualties, airlines, cruise lines, hotels, theme parks and destinations amongst others are bracing for a sharp slump in business as the fast-spreading strain of coronavirus continues its sweep across countries and communities, leading people to wonder if this has already presumed pandemic proportions!
Why the situation is emerging so scary for the tourism industry? This is on account of the fact that China, the genesis of Coronavirus, contributes 12% plus to the global tourism market. With 163 million outbound and 62 million inbound, it is both the largest source market and destination in the world.
And, the spread of virus, which escalated to as many as 40 countries, almost all foreign carriers have stopped their operations to China. Air services to Singapore and Hong Kong are also impacted. According to IATA, carriers in the Asia Pacific are set to incur a revenue loss of $27.8 billion, while global carriers will lose $29.3 billion in 2020 as an impact of the Coronavirus outbreak. The impact shows a potential 13% full-year loss of passenger demand for carriers in the Asia-Pacific region, IATA says.
A visible impact can be seen tourist arrivals and global trade. For India specifically, Indian carriers such as Air India, IndiGo and SpiceJet have already suspended their flights to and from China. The temporary suspension of flights to China and Hong Kong can approximately lead to an Indian carrier missing out on gross revenue of Rs 55-72 lakh per flight,” CARE stated.
With air connectivity coming almost to a halt in China, coupled with the Government’s directive to its citizens to stay inside, hotels are also adversely impacted. Hilton announced the temporarily shutdown of its 150 hotels in China. Similar is the case of other hotels as well in China. Various reports suggest that hotels in top 10 outbound destinations for China may get a hit of 20% to 30% in businesses.
Hilton expects the impact of the Coronavirus to last anywhere from six to 12 months. “Three to six months of escalation and impact from the outbreak, and another three to six on recovery,” Chris Nasseta, CEO, Hilton told investors on Feb 11. He estimated the cost to his company could be from $25 million to $50 million.
Next comes the cruise industry. Almost all cruise liners sailing in Asia have postponed their sailings for the future, with sailings cancelled from China, Hong Kong, Singapore and other Asian ports. The impact could have been lesser, but the incident of the ‘Diamond Princess’ and the ‘World Dream’ created a kind of havoc among travelers and cruise lines were forced to act immediately. During the two-week period when the ‘Diamond Princess’ was isolated in port, it had the largest concentration of people infected with coronavirus outside of mainland China. The Westerdam, operated by Holland America, was denied entry at ports in five different countries after a female passenger was misdiagnosed with the virus. The story is long… with the US State Department urging cruise ship travelers with itineraries to or within Asia to consider canceling their trips. Various cruise lines are bleeding and for some, survival could be at risk.
Major tourism destinations have also southwardly revised their target. Singapore Tourism expected a 20% to 30% downfall in arrivals. According to Singapore Tourism Board, the tourism sector will take a “significant hit”, with visitor arrivals estimated to fall by 25 per cent to 30 per cent this year due to the novel coronavirus outbreak. According to French Finance Minister, “We have less tourists, of course, in France, about 30%, 40% less than expected,” Bruno Le Maire told at the G-20 Finance Ministers and Central Bank Governors’ Meetings in Riyadh, Saudi Arabia. Italy imposed strict quarantine restrictions on 10 towns including the Lombardy and Veneto regions (where Milan and Venice are located, respectively).
Moreover, the exhibition and conference industry is badly impacted. The Coronavirus has caused the cancellation or postponement of more than 24 exhibitions and conferences worldwide, hammering the $2.5 trillion trade show industry. The Mobile World Congress, the world’s largest trade show for the mobile phone industry, was canceled last week. The cancellation of travel trade events is having damaging ripple effects across the hotel, airline, entertainment, marketing, restaurant and other industries. In tourism and hospitality domain, ITB has postponed ITB China and media report suggests that ITB Berlin and ITB India are heading for possible rethink. The Food & Hotel Asia-Hotel Restaurant and Cafe Expo, referred to as FHA-HoReCa, in Singapore has been moved from March to July. So far, exhibition organisers have deferred their dates to future months but if a particular trade show does not take place, there is all possibility that the organisers will refund the money. More on travel trade shows in the immediate days ahead.