The double blow of the pneumonia outbreak and the imminent war on Iraq could drastically cut Hong Kong's travel industry revenue, business leaders warned yesterday. They said the combined problems potentially posed a greater threat to business than the 1991 Gulf War or the September 11 terrorist attacks. Hong Kong Tourism Board assistant manager Simon Clennell said many Southeast Asian travellers had cancelled or postponed their trips after reports of the pneumonia outbreak. 'We do see cancellations and we are expecting to see more in a couple of days. We had very few [cancellations] at first, but after the World Health Organisation put up a health alert over the weekend and immediately got global media coverage, we are seeing an increase,'' he said. The situation was particularly bad for travellers from Taiwan and Singapore, he said, as authorities there had warned people not to travel to Hong Kong. The Travel Industry Council's executive director, Joseph Tung Yao-chung, said arrivals from Japan, Thailand, Malaysia and the Philippines had also fallen. Guangdong (HK) Tour Assistant general manager Ting Siu-ming said his company had received several requests to cancel hotel bookings due to the pneumonia scare. But Michael Li Hon-shing, executive director of the Federation of Hong Kong Hotel Owners, feared that in the long run, a war in Iraq might prove to be even more damaging. 'I'm not too worried about the pneumonia. It happens not just here but in other places as well and is confined mainly to medical staff. I think the panic will stop after a while,'' he said. 'The war, on the other hand, may have a bigger and long-lasting effect ... That will mean a sharp drop in business travellers. And because they are the big spenders, top-range hotels will be hit hard.'' Mr Li said that even if the war was over in a few weeks, the aftermath was expected to affect the market for a long time. He also called for more vigorous government action to trace the outbreak's origin. 'It is not going to help if we jump at our own shadows,'' he said. 'The government should contain the disease and do some positive promotion overseas to clarify the situation. Keeping things in the dark will only generate more anxiety.'' He said in this time of uncertainty, the mainland market is even more important to Hong Kong.