World travel industry counts losses

The coronavirus epidemic broken out in China is causing losses not only to the Celestial Empire, but also brings about a global recession in many areas of the economy. First of all, the tourism industry was hit as China is now the world's largest source of outbound tourists.

“Every tenth tourist in the world is from the PRC, and the coronavirus has directly affected the tourism industries of all countries in the world,” said Oleg Cherednichenko, associate professor at the Department of Economic Theory of the Russian Economic University named after G. V. Plekhanov. “As for Russia, the estimated money not brought in our country by Chinese tourists is about $100 mn per month, and this figure does not take into account the damage to related industries.”

The losses of the Russian operators look very modest against the background of the countries that have long ago built their stable business on a steady powerful influx of the Chinese travelers. According to the ASEAN Statistical Yearbook, in 2018, Southeast Asia received over 29 mn tourists, which is 15% more than a year earlier. It was almost twice the size of the European market and almost five times the number of tourists from North America.

The travelers from mainland China make up about one fifth of all tourists visiting Singapore that was the first to impose a ban on the entry of the Chinese into Singapore after the outbreak of the virus. The Singapore Tourism Board reported that 19.1 mn tourists visited the country in 2019, a 3.3 percent increase from 2018. However, the number is forecast to drop about 25-30% this year. According to John Gregory Conceicao, Southeast Asia executive director of the Singapore Tourism Board, “Every day, Singapore loses 20,000 tourists.”

Hariyadi Sukamdani, chairman of the Indonesian hotel and restaurant association Perhimpunan Hotel dan Restoran Indonesia (PHRI), said that since the outbreak, dozens of thousands of foreigners had canceled their trips. “This coronavirus has overwhelmed us, especially the tourist sector in Bali where more than 40,000 room bookings were canceled and 20,000 people annulled their visits,” he said.

Vietnam, the region’s second-largest market for Chinese tourists, said it would refuse entry fees for some tourist attractions after the coronavirus outbreak. The epidemic stroke at a time Vietnam enjoyed a tourism boom: the number of visitors in 2019 grew by 16.2% year-on-year to a record high of 18 million. According to the UN World Tourism Organization, Vietnam ranks the seventh among the world’s 10 fastest-growing tourist destinations. Earlier this month, the Civil Aviation Authority of Vietnam suspended flights to and from China. In Hanoi, over 20 thousand foreign tourists have already canceled hotel reservations. According to the Vietnam National Administration of Tourism (VNAT), a coronavirus epidemic could cost Vietnam $5.9-7.7 bn, or about 25% of the industry’s revenue last year.

In the Philippines, the government and industry officials say the domestic tourism can only really pay back 10-20% of the estimated lost revenue of $435 mn each month.

Having sharply decreased the number of the Chinese guests visiting the Asian destinations, the coronavirus also decreased their number in the European cities - from the streets of Paris to the wineries of Bourgogne, from the German city of Füssen near the fairy tale Castle of Neuschwanstein to the popular luxury shopping centre, Bicester Village in English Oxfordshire. Since Beijing banned overseas group tours (on January 27), the numbers of Chinese tourists coming to all these traditionally popular destinations have fallen markedly.

The effects, especially on businesses catering to the ever-growing Chinese market, have been immediate. Last week, the Italian government considered providing assistance to hard-hit tour operators.

“It’s seen as on par with an earthquake, a situation of emergency,” said Mattia Morandi, a spokesman for the Italian Ministry of Culture and Tourism. As elsewhere in Europe, the Italy's tourism sector has benefited greatly from the China's economic growth over the past two decades. According to the United Nations World Tourism Organization, in 2000, three years before the outbreak of the SARS virus across Asia, Chinese tourists spent $10 bn overseas. In 2018, that figure was $277 bn.

Literally on the eve of the epidemic, on January 21, Dario Franceschini, Italy’s Minister of Culture and Tourism, and his Chinese counterpart, Luo Shugang, launched a yearlong multi-faceted programme aimed at expanding the cultural exchanges and tourism between the two countries. They discussed an intense calendar of initiatives involving the performing arts, film production and numerous exhibitions, including a show of ancient Roman sculptures at the National Museum of China in Beijing and one of terra-cotta warriors at the Reggia di Caserta. It was expected that the direct flights between Italy and China would double over the year, rising from 56 to 108 per week.

But just 10 days after the ministers’ meeting, Italy suspended flights to and from China, and now it is also counting losses and looking gloomily at the immediate prospects of its tourism industry. In some places, the spread of coronavirus has also had a frightening effect on tourists from other countries.

“People don’t want to be on trains or planes or go to conferences,” said Alberto Corti, who is responsible for the tourism sector at Confcommercio, a leading business association in Italy. He described it as a ‘psychosis effect’.

So, last week, the world’s biggest mobile communications trade fair, scheduled to start in Barcelona, Spain, on Feb. 24, was canceled as most participants cancelled their trips. According to Ada Colau, the mayor of Barcelona, the conference was supposed to bring over 100 thousand visitors to the city and revenues of €500 mn. It was also expected that it would create 14 thousand temporary jobs and allow to fill in the hotels in the low season.

According to the American Travel Association, in 2018, China was the third largest source of foreign visitors to the United States. Among the cities, New York was the main destination, followed by Los Angeles. Now, a 28% reduction in the number of Chinese visitors to the USA is expected in 2020, as well as a $5.8 bn reduction in spending.

The forecast is based on a diagram of the tourism industry recovery after the SARS outbreak in 2003 that lasted about four months. It took three years for the number of travelers from China to return to the previous figures. So far, it is difficult to predict how long it will take to restore the previous levels of the global tourism industry and the related industries, however, as most experts emphasize, in the coming years, very many of those who relate to the tourism industry will have to tighten their belts.