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Travel Tourism industry hit hard as Chinese tourists stay home

21:45  01 february  2020
21:45  01 february  2020 Source:   cnn.com

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At 6 p.m. on Saturday, Bill Egerton received an alarming email.

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"All tours inbound from China that have been booked with me were all canceled -- I lost 15 tours for February," 77-year-old Egerton, who has been running Koala Blue Tours in Queensland, Australia for the past 25 years, tells CNN Travel.

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"The Chinese is about 10-20% of my business ... I think the federal government doesn't really understand the loss of income and the impact on businesses. The theme parks will suffer, the hotels will suffer...those big groups can be anywhere from 20 to 500 people. China is our biggest market for overseas tourism by far."

On the Gold Coast, which is the leading tourist destination in Australia, Chinese travelers are the largest and most valuable inbound visitor market, spending $1.6 billion in 2019.

In total, Australia welcomed 9.4 million visitors in 2019. Of those, 7.96 million came from China and contributed $21.95 billion (A$32.7 billion) in spending.

Egerton in Australia is far from the only tourism operator who has seen a dramatic drop off in business this month following China's recent ban on group tours and hotel-and-flight packages, which went into effect on Monday.

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Prompted by the Wuhan coronavirus, which has infected at least 9,000 people and killed 200 since it was first identified in central China in December 2019, the ban has had -- and will continue to have -- a dramatic effect on dozens of destinations around the world.

China is the world's largest market for outbound travel, having skyrocketed from 4.5 million travelers in 2000 to 150 million in 2018.

In the 2020s, this number is expected to double again, as passport ownership in China increases from the current 10% of the population to an expected 20%.

The country is also the world's largest spender, accounting for $277 billion or 16% of the world's total $1.7 trillion international tourism spending, according to the UNWTO.

Following the recent ban on group trips and package-bookings, the absence of Chinese travelers will be felt most dramatically across the Asia-Pacific region, which depends heavily on Chinese tourism, while parts of Europe and the Americas are also feeling the pressure.

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A global health emergency

a sign in front of a television: Flights to many Chinese cities have been suspended due to the coronavirus outbreak.© Getty Images Flights to many Chinese cities have been suspended due to the coronavirus outbreak.

On Thursday, The World Health Organization declared the coronavirus a global health emergency, adding to the cacophony of alarm bells ringing around the world. The US State Department elevated its travel advice, warning Americans not to travel to China, as has the UK and Canada.

Airlines like United, American, Delta, British Airways, KLM, Air Canada and Lufthansa have suspended service to and from many Chinese cities while others such as Cathay Pacific have reduced flights.

On Friday, the US announced it's temporarily banning entry to foreign nationals who have visited China in the last 14 days. Singapore's Ministry of Health also announced all new visitors who have traveled to mainland China within the last 14 days will not be allowed entry into Singapore, or to transit through Singapore.

Hong Kong, Macau, Mongolia, North Korea and Russia have partially -- or totally -- closed their borders with China to prevent the spread of the disease.

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As a result of these dramatic travel restrictions, typically busy tourist destinations like Angkor Wat in Cambodia, the Golden Palace in Bangkok or the Imperial Palace in Tokyo have been noticeably emptier than usual.

According to a report by ForwardKeys, a travel analytics company that monitors 17 million booking transactions a day, the impact is particularly notable as we're in the middle of the Chinese New Year period -- typically one of the busiest travel seasons of the year.

The company analyzed outbound travel during the first part of the Chinese New Year holiday period, from January 19 to 26, and found that bookings were up 7.3% in the run-up to the Lunar New Year, compared with 2019 figures.

However, after the travel ban came into effect, the company tracked a 6.8% decrease in bookings.

Asia Pacific, which usually welcomes 75% of Chinese Lunar New Year travelers, has been hit the hardest. Bookings were already down 1.3% before the ban, then they dipped to 15.1% behind a week later.

"Asia Pacific is taking the biggest hit of all because it is the biggest destination for Chinese travelers," Olivier Ponti, vice president of insights at ForwardKeys, tells CNN Travel.

"Europe is doing comparatively better, while North America was already not looking positive before [the travel bans]. After, it has dropped to 22.5%. What that means for the industry is that there is basically no winner in this whole situation."

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Impact around the world

a group of people wearing costumes: Chinese travelers account for about 30% of Thailand's international arrivals.© MLADEN ANTONOV/AFP/Getty Images Chinese travelers account for about 30% of Thailand's international arrivals.

Destinations such as Thailand, Vietnam, South Korea, and Japan -- where Chinese travelers make up a large portion of inbound traffic and tourism spending -- have been hit particularly hard by the travel ban.

China alone contributed 51% of the travel and tourism GDP in the Asia-Pacific region in 2018, according to the World Travel and Tourism Council (WTTC).

In Thailand, where Chinese travelers account for 30% of arrivals, the fallout from the coronavirus has already been substantial.

According to Vichit Prakobgosol, president of the Association of Thai Travel Agents, roughly 1.2 to 1.3 million Chinese travelers have canceled visits to Thailand for February and March.

"The effect can last up until April. It is difficult to estimate at the moment," Prakobgosol adds. "[But] since the orders from China came in late January, I don't see much effect in January."

As a result, many tourism businesses in major tourism destinations such as Bangkok, Phuket, Chiang Mai and Pattaya have felt immediate ramifications, with some shutting down completely.

In Pattaya, at least two dinner cruise companies -- All Star Cruise Pattaya and Oriental Sky -- have announced that they will suspend operations indefinitely starting on February 1.

Mainly catering to Chinese tourists, All Star Cruise typically serves around 300 guests a day, and Oriental Sky around 5,000-6,000.

"We have to suspend our service indefinitely, or until we see that situation has improved. It is our own initiative to prevent the spreading of the disease among our guests or our own employees," Suthasinee Srimala, director of sales and marketing of All Star Cruise Pattaya, tells CNN Travel.

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Srimala says the company will fully refund to customers who are affected by this decision.

According to Yuthasak Supasorn, governor of the Tourism Authority of Thailand, around 80% of flights booked out of China to Thailand have been canceled between February and April.

"This results in an estimated loss of about $3 billion (93.6 billion baht)," Supasorn tells CNN Travel. "It would take at least about four to five months to recover if we're basing it on the SARS outbreak experience. We have reassured travelers that Thailand is not an outbreak area and we have good measures in place."

In Japan, where Chinese travelers account for roughly 27% of inbound visitors, a flurry of cancellations of Chinese group tours have overwhelmed agencies such as Kamome, based in Tokyo.

According to the company, more than 20,000 Chinese package tour customers pulled the plug on all trips to Japan up to February 10.

With Japan receiving approximately 9.6 million visitors from China in 2018, accounting for a third of foreign tourist expenditure in the country, many agencies are keeping a close eye on the ramifications of the coronavirus.

"We are concerned about the decrease in Chinese tourists, but we cannot foresee the outcome as it depends on how long the (Chinese) policy lasts," Japan National Tourist Organization spokeswoman Shiho Himuro told CNN.

Chinese are the top international tourism source market in Japan. They spent $15.6 billion (1.7 trillion yen) in 2019, which accounts for 36.8% of all foreign tourist spending.

a group of people standing in front of a crowd: The Macau Government Tourism Office reported a 75.1% decrease in mainland tourists for the first four days of Lunar New Year compared with 2019.© LAURENT FIEVET/AFP/Getty Images The Macau Government Tourism Office reported a 75.1% decrease in mainland tourists for the first four days of Lunar New Year compared with 2019.

Smaller destinations have also felt the pressure. Macau, a special administrative region of China with a population of roughly 622,000, has also started 2020 on its back foot.

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Mainland Chinese travelers accounted for 70.8% of the 39.4 million visitors in 2019. But in the first four days of Lunar New Year, the Macau Government Tourism Office reported a 75.1% decrease in mainland tourists compared with 2019.

The city canceled its Lunar New Year parade, closed its border with China and Macau's Chief Executive Ho Iat-seng, said on Thursday that the government would not rule out closing casinos.

"Macau has been affected. No one wants to go out because everyone is afraid of the virus," Filipe Ferreira, managing director of Restaurante Litoral in Taipa, tells CNN Travel.

"There are lines to buy masks, supermarkets are crowded with people stocking up on food, but the normal tourist streets are really empty. I still see some tourists in the streets, but it's not as crowded as before."

Meanwhile, island destinations such as the Maldives, Micronesia and the Northern Mariana Islands are also bracing for significant impact.

Northern Mariana Islands, which recently implemented a ban on travel from mainland China, normally receives 700 visitors a day from China -- a relatively high number considering it has a population of roughly 51,000 -- and tourism is the largest industry.

"It is clear that for many countries where they have China as a main source of visitors, this is a very big problem," Wolfgang Georg Arlt, director of the China Outbound Tourism Research Institute (COTRI) tells CNN Travel.

"So certainly, it will be (a catalyst) for some destinations to say, 'Hey, this is dangerous to rely only on the Chinese.' We may see these destinations investing a lot more marketing in alternative markets. If you take a case like Northern Mariana, they increase their efforts to develop other markets like Australia and Japan."

While Europe, the Americas and the UK are less dependent on Chinese travelers, they may still feel the effects.

In France, which sees 2 million visitors from China every year, the Chinese Association of Travel Agents in France (ACAV) has suspended its activities and is expecting "enormous losses," according to a report by French public radio station RFI.

According to ACAV figures, sales are down by at least 33% for the association's agencies so far in the first quarter of the year.

Post-virus rebound

Though it is too early to calculate economic damage, the global impact on the tourism industry will largely depend on how long it takes to contain the virus.

By comparison, the SARS outbreak cost the global economy between $30-$50 billion. It took 16 months for China to return to pre-crisis international arrival levels, a spokesperson from the WTTC tells CNN Travel.

But this time, the Chinese government was better prepared for the outbreak. The country not only acted faster than it did during SARS, but it has also been more transparent with the international community, says Arlt.

"Of course, it's too early to say how long it will last right now. All of this should be taken with a grain of salt. But if it's somewhat similar to SARS, then things could go back to normal around early or mid-April," he adds.

"If we look at what happened in 2003, during SARS, actually most of these trips were just postponed. After the SARS crisis ended, the numbers jumped again. Of course, for a few months, it was really rough for smaller companies but, in the long run, it was okay globally."

a group of people standing next to a body of water: Experts are optimistic that  tourism will rebound quickly.© Getty Images Experts are optimistic that tourism will rebound quickly.

Trip.com Group -- China's largest online travel agency, formerly known as Ctrip -- also shared an optimistic prediction for a quick rebound.

"During the SARs quarter, demand came down but when SARs came under control, we saw double to triple demand," Jane Sun, CEO of Trip.com Group, tells CNN Travel.

"Our belief is that as long as medical personnel can develop prevention methods and we can control this virus, the demand and buying power will be there. We are confident that for the Chinese economy and travel industry, it will come back strong."

Another thing to consider, says Arlt, is that Chinese tourists make up the top 10% of society and traveling is an important status symbol.

"Travel is closely linked with your social status in China," says Arlt. "So if your friends talk about New York City, Sydney or Munich and you can say you have also been there -- this is part of your setup as somebody important in China. That desire to travel will not stop."

States, cities across the US promise to 'wait for you' after the coronavirus pandemic in tourism campaigns .
Many cities and states around the U.S. still want you to visit — just, you know, not during the middle of the coronavirus pandemic. In lieu of much else to do right now, tourism websites are teasing the beauty of their respective locations, but encourage visitors to stay home for now. States across the U.S. are already seeing an impact when it comes to tourism, considering attractions like Grand Canyon National Park and Disney World have shuttered.

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