Holiday cancelled? How the coronavirus is hurting tourism

With the health scare forcing Chinese visitors to stay at home, tourism across Asia and beyond is feeling the pain.

US Bans Entry To All Foreign Nationals Who Have Been In China Within Last 14 Days
Flights have been suspended and travel banned to and from cities in China as the new coronavirus continues to claim more lives [File: David McNew/AFP]

As China‘s economy surged over the last two decades, Chinese tourists have become increasingly adventurous. They now make up the largest contingent of foreign tourist arrivals in many parts of Asia, and are also travelling in increasing numbers to Europe and North America.

But following the outbreak of a deadly coronavirus that originated in China, many Chinese are cancelling or delaying their travel plans, as authorities impose travel restrictions. And with the numbers of deaths and infections climbing, some tour operators in Asia say about the only thing that is travelling right now is the virus itself.

And that is hurting economies across the region.

“It’s gonna be a tough few months for the tourism industry,” Jeremy Mak, an independent tour guide in Malaysia, tells Al Jazeera.

Mak said he is already seeing cancellations and a decline in bookings as people from around the world put off plans to travel to Asia due to worries about the contagious virus.

Several major airlines in the United States have suspended flights to and from mainland China and Hong Kong. Meanwhile, Hong Kong’s main carrier, Cathay Pacific Airways, has asked its 27,000 employees to take three weeks of unpaid leave after the airline cut about 30 percent of its overall capacity, and 90 percent of its flights to the mainland.

“The industry as a whole is widely affected, but Chinese speaking guides are having a wipeout in terms of work – at least until April, if not longer,” Mak said.

The numbers of Chinese tourists have skyrocketed since the outbreak of the severe acute respiratory syndrome (SARS) in China in 2003, making the economic effects of a slowdown in travel even more damaging to tourism-dependent countries.

Between 2002 and 2004, as a result of SARS, Hong Kong saw a 41 percent reduction in the contribution of tourism to gross domestic product, with a 43 percent decline recorded in Singapore and a 25 percent drop in China, according to a report by the World Economic Forum.

This time, the effects of a slowdown in tourism are most likely to be felt not only across many other Asian countries – which have long been popular holiday destinations for Chinese tourists – but much farther afield.

Thailand, one of the top international destinations for Chinese tourists, stands to lose 109.3 billion Thai baht ($3.51bn) in tourism revenue due to the virus outbreak, RHB Investment Bank economist Billy Toh said in a report shared with Al Jazeera. 

“While the latest virus outbreak has stirred comparisons with the 2003 SARS outbreak, Chinese tourists only accounted for 7.4 percent in 2002 prior to the outbreak. Last year, Chinese tourists accounted for 27.6 percent [11 million visitors] of total visitor arrivals while 28 percent [$17.5bn] of total tourism receipts were from Chinese tourists, overtaking the European, ASEAN and Japanese tourists, which dominated Thailand’s tourism industry back in 2002,” said Toh, who is based in Kuala Lumpur.

But domestic tourism in Thailand is also likely to be affected, he told Al Jazeera, taking into account that Thai residents will also delay travel plans due to the virus outbreak.

“Our base case is for the virus to be contained by the middle of this year,” he said, adding that Thailand could record a 15 percent decline in Chinese tourists for the full year.

Thailand and other Asian countries have already felt the pinch from the dearth of Chinese tourists over the Lunar New Year holidays that began on January 25 and lasted more than a week.

“Global tourism, which relies heavily on Chinese tourists, could experience a negative growth of more than 30 percent,” said Iris Pang, ING Wholesale Banking’s economist for Greater China, in a commentary.

Hong Kong retail sales, which dropped 23.6 percent last November on a yearly basis, could plummet by 30 percent over the coming months, she added.

Indonesia’s tourism minister warned on Thursday that the country stands to lose $4bn in industry-wide earnings if the coronavirus outbreak disrupts travel from China the whole year.

Meanwhile, economists at Oxford Economics estimate that the drop in outbound tourism from China could lead to a 50 percent decline in imported services in the first quarter of 2020, according to a report shared with Al Jazeera.

“Given that Asia-Pacific accounts for almost 80 percent of China’s outbound destination, economies in the region that are reliant on tourism and Chinese tourists – especially Thailand – are expected to see larger downward pressure on economic growth,” said economists Tommy Wu and Louis Kujis of Oxford Economics.

The global aviation industry is also facing a crunch as international airlines suspend flights to and from China, especially in areas where high numbers of coronavirus cases have been reported.

“There will be a negative impact but it’s too early to give a precise figure,” said Chief Executive of the International Air Transport Association Alexandre de Juniac in a Bloomberg interview on Wednesday.

“We can give a lot of measures [to help] to contain the outbreak and to ensure that it is still safe to fly,” he said.

Source: Al Jazeera