Huge dependence on Chinese tourists sees many Asian countries reeling from China’s move to cancel outbound group trips indefinitely, as part of measures to control the spread of the deadly coronavirus.
Among them are Thailand and Japan. The Tourism Council of Thailand has estimated losses of at least $1.6 billion (50 billion baht) as a result of the lockdown, based on an average expenditure of $1,624 (50,000 baht) per Chinese tourist visiting the kingdom. China is Thailand’s number one market, generating nearly 30 percent of all arrivals. In 2019 this totaled to an astounding 11 million Chinese tourists, more than the 10.6 million Thailand received from all neighboring Southeast Asian countries combined.
Over in Japan, whose popularity with Chinese travelers grew at the expense of Thailand following the Phuket fatal boat accident involving Chinese tourists in July 2018, losses of $23 billion (2.48 trillion yen) are anticipated if the Wuhan virus causes a steep decline in visitors for the full year, according to a Nikkei Asian Review report.
Overnight, on Monday, the tap of Chinese tourists was turned off, leaving travel agencies and hotels with the task of ensuring that the health of guests already in-destination and the thousands of staff serving them is sound. Another priority is finding alternative sources of arrivals — at a time when travelers are already starting to mull if it’s best to avoid the region altogether.
Worries of keeping the business afloat have also surfaced, particularly for small and medium-sized enterprises, for whom the Lunar New Year holiday period is a huge income stream that can make or break the financial year’s bottom-line.
“The only measures to take right now is to save costs and make sure you have a healthy cash flow,” said Laurent Kuenzle, CEO of Asian Trails Group, based in Bangkok.
Executives, too, are making a point to stay on top of developments. “We are monitoring the situation closely as the health and safety of all guests and team members is paramount,” said Dillip Rajakarier, CEO of Minor Hotels. “All of our hotels are working closely with local health authorities to ensure that we are vigilant and fully prepared to take additional preventive measures should circumstances indicate.”
The China ban on group travel will clearly have an important negative impact on Southeast Asia’s tourism industry, according to tour operators interviewed, although at this point they couldn’t quantify the extent of the damage.
“It depends on how long it will take until the situation is under control and the virus stops spreading. I also believe that the Chinese FIT [free independent travel] market will be affected, probably to a lesser extent,” Kuenzle said.
China is expected to release the number of domestic and international trips and spending by its citizens over the Lunar New Year holiday on Thursday. “After the festivities, we can see clearer the effects,” said Stephan Roemer, CEO, of Diethelm Travel Group, Thailand.
While China outbound travel damage to the Southeast Asia tourism industry isn’t yet quantifiable, inbound travel to China has been affected to “a massive extent, with virtually no one wanting to travel to anywhere in China for the time being,” said Kuenzle. Asian Trails Group and Diethelm Travel Group are recommending that their clients, who are largely Europeans, Russians and Asians, postpone their bookings to China in February to later in the year.
Said Roemer: “Hotel gyms [there] are closed and there are severe restrictions on transportation. The closures are implemented until February 9 and updates will be given if an extension will be necessary. Under these circumstances, it is recommendable to postpone any trips to China during February until the situation is clear or under control.”
As for inbound into southeast Asia from long-haul markets, at present, there are only “a few” cancellations, according to Asian Trails’ Kuenzle. “Everyone is staying put to see how the situation develops. As such, there is no reason to cancel travel to anywhere in Southeast Asia at this stage. We follow the recommendations of WHO [World Health Organization] and travel advisories of governments, none of which have issued alerts to avoid Southeast Asia. All travel advisories concentrate on advice to travelers to Hubei province and Wuhan [capital of Hubei],” said Kuenzle.
That said, he worries that forward bookings for Southeast Asia from the long-haul markets may slow down if visitors perceive the region as being unsafe and/or unattractive to visit. Singapore has its fifth confirmed case of Wuhan virus as of Tuesday. As of Monday in the rest of ASEAN were two confirmed cases in Vietnam, four in Malaysia, and five in Thailand, according to the World Health Organization. In the rest of Asia, there were four each in Japan, South Korea, Australia and one in Nepal.
But with the virus having gone beyond China and Asia to France, the U.S., Canada, and the latest, Germany, the worst-case scenario is if it becomes an epidemic, which will guarantee a stoppage of travel altogether. Depressingly, the World Health Organization on Monday admitted an error in its initial judgment that the global risk was “moderate.” In a situation report on Sunday, it said the risk was “very high in China, high at the regional level and high at the global level.”
The only silver lining is the organization stopped short of declaring the coronavirus a public health emergency of international concern, reserved for the worst outbreaks that would trigger a more concerted global action.
As of Monday, 2,798 cases were confirmed globally, the majority (2,741) in China, according to the World Health Organization. Another 5,794 were suspected cases within China. Eighty people have died, but none outside China.
Minor’s Rajakarier keeps a positive outlook. “Here in Asia, we have seen our fair share of economic challenges, political difficulties, epidemics, and natural disasters, so we must always be prepared to ‘expect the unexpected’. I firmly believe that as a company we must ensure that we have the capability to react quickly to market changes in order to grow and evolve our business as required. Of course, China represents an important market for Minor Hotels, but we also maintain a strategy of ensuring a wide range of source markets across the globe so that we are not reliant on one particular market or segment.
“In addition, over the last number of years, Minor Hotels has pursued a market diversification strategy to ensure a balanced portfolio of properties across Asia-Pacific, the Indian Ocean, the Middle East, Africa, Europe, and the Americas, which helps to mitigate and challenges that we face in one region or another.”
Likewise, Roemer hopes for the best. “Outbound business from China is very short-term driven. We notice short-term cancellations for February. As fast as the Chinese business can come to a halt, as fast it can open for the masses again. It is definitely very unpredictable,” he said.
“The Coronavirus is not more dangerous than any other flu. Its death toll is not higher. Despite increasing numbers, it does not [yet] spread as a pandemic. According to the German task force, Infectology, the risk of infection is minimal. In Europe, the latest newspaper reports tend to say it is not as dramatic as it was initially reported.”