Coronavirus: effect on Asian tourism will carry into 2021, experts say
- As diagnoses tick upwards, travel agents and hoteliers brace themselves for months, if not a full year, of disruption from outbreak
- Trip cancellations to all of Asia, not just China, growing each day, operators say
But as diagnoses tick upwards again, travel agents, operators, and hoteliers are bracing for at least months, if not a full year, of economic disruption from the outbreak, with long-term effects that may ripple well into 2021.
“People are put off,” he said. “Sadly, a lot of them are just saying, ‘I don’t know if I want to go anywhere right now.’ Or, in many cases, ‘I’ll just go next year’.”
So far, almost 75 per cent of his travellers have cancelled their February and March departures to Southeast Asian countries, which the US Centres for Disease Control and Prevention still considers to have a lower, level one risk for coronavirus.
“They’re worried about being anywhere close to the outbreak, or of getting stuck with cancelled flights if other hubs become infected,” he says.
A full 100 per cent of the honeymoons his agency had booked to the region have been cancelled and rebooked for alternate destinations including the Maldives, Southern Africa, and Australia.
Hilton CEO Chris Nassetta told investors on February 11 that he expects the impact of the new 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,” he said. He estimated the cost to his company could be from US$25 million to US$50 million.
Why so long, if the medical community is beginning to send optimistic messages about the number of new cases?
When it comes to leisure travel, the biggest question usually revolves around location, location, location. Once that is been decided, weather dictates all.
“Thanks to monsoons and very hot temperatures in most of that region”, which last roughly March through September, “people aren’t looking seriously at rebooking until the fall”, she says.
For families, school schedules can complicate plans.
“We had one family looking at travelling over spring break, and they won’t have that same window of time until next year’s spring break,” she says. “They’re rebooking for 2021.”
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Heald’s clients are among the most likely to help the industry rebound. So far her company has seen fewer cancellations than have her competitors because of the way she targets leisure and high-spending travellers.
An average trip with Remote Lands costs US$1,500 per day for two people, which makes her a purveyor of bucket-list holidays – trips that people are desperately hoping to realise.
“People spend a lot of time and money planning these trips,” she says. “They want to make it happen.” Her workaround so far has been to simply divert airfares through unaffected hubs, replacing routes through Hong Kong or Shanghai with connections in Tokyo, Seoul, or Dubai.
The cost, she says, can range depending on availability of fares and type of tickets booked.
“On a scale from 1 to 10, the disruption to our business has been about a two or three,” Heald says, explaining that travellers’ willingness to postpone, rather than cancel, keeps her balance sheets mostly intact.
Business in China was already low this year because of negative press about trade wars. Heald says only three out of 400 trips she booked last year were China-only.
Ezon agrees: “China was a little soft this year for leisure anyway, and Hong Kong was a mess from July” and the ongoing protests there.
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Hotels understand travellers’ fears, nonsensical as they may seem.
Many have extended gracious policies allowing people to change their plans throughout the Asia-Pacific region at no cost, as long as they rebook before the 2020 festive season.
Like Heald and her fellow travel specialists, many hotels are hoping to best retain their 2020 revenues and mitigate outright cancellations.
That is less of an option for operators such as Guy Rubin, founder of Imperial Tours, whose entire business is based on luxury trips to the Chinese mainland.
“Obviously, we have had cancellations and postponements for January, February, and March,” he says. But even travellers with itineraries for October have been inquiring about cancellations.
Others are in a holding pattern, waiting to see if the current strategy of quarantining people to contain the virus works.
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“If the containment strategy works, then I imagine people will be travelling in China again by summer,” Rubin says. “If it does not work, then I imagine it will take a year for people to regain trust in China.”
Severe acute respiratory system (Sars) is one example the industry is studying for guidance.
It took WHO roughly four months from the moment it announced a global alert about Sars until it said the disease was contained, and then an additional five months for the organisation to wrap up its efforts to tally new cases.
According to aviation analysts at AirInsight, the Sars outbreak cost airlines US$10 billion, and that was at a time when global business was less developed.
If it similarly takes nine months for the Covid-19 outbreak to pivot into “recovery” status, which is consistent with the industry outlooks cited here, aviation will take a bigger hit. And it will take longer still for hotels and destinations to fully return to tourism levels before the disease’s spread.
The flip side is that when they did, she says, there was such pent-up demand that it led to a boom in tourism: Overseas arrivals rose from 13.4 million in 2014 to 31.2 million in 2018.
After many years of reassuring travellers they did not need to worry about radiation exposure, Japan suddenly became the fastest-growing destination in the world.
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Ezon agrees this tide will ebb and flow.
“Once the news cycle moves on, people will forget,” Ezon says. “Just like everything else, it’ll bounce back.”