China virus outbreak rams global tourism, costing billions

Tourism from China was already weakening even before a new virus forced much of the country into a standstill.

With tens of millions of Chinese ordered to stay put and many others opting to avoid travel as the new coronavirus spreads, tourism around the global is taking a heavy hit during one of the biggest travel seasons, the Lunar New Year.

In Thailand, a favorite tropical destination for Lunar New Year travel, officials estimate potential lost revenue at 50 billion baht ($1.6 billion). In Asia and much farther away, hotels, airlines, cruise operators and others who depend on big spending Chinese tourists are ruing their absence.

On Monday, China extended the week-long holiday by an extra three days to Feb. 2 to help prevent the epidemic from spreading further, as authorities announced that 2,744 people had fallen ill and 80 had died from the new virus first found in the central Chinese city of Wuhan. Shanghai pushed the holiday’s end back to Feb. 9.

Travel agencies in China were told to cancel group tourism, and governments around the region were restricting travel from Wuhan, closely monitoring other travelers and helping arrange evacuations of some foreigners stuck in Wuhan.

So far, 17 Chinese cities that are home to more than 50 million people have imposed lockdowns.

In Thailand’s capital, Bangkok, many drugstores ran out of surgical masks and the number of Chinese tourists appeared to be much smaller than usual for the Lunar New Year. The government announced it was handing out masks, and that the airport rail link would be disinfected.

The Tourism Council of Thailand estimated revenues for the holidays would be at least 50 billion baht ($1.6 billion) lower than usual, based on an estimate of Chinese tourists usually spending about 50,000 baht ($1,600) each.

That followed a downturn in arrivals from China in early 2019 after several boating accidents raised questions about the safety standards of tour operators.

Overall, a few months ago the China Outbound Tourism Research Institute predicted 7 million outbound trips for Chinese New Year this year, up from 6.3 million in 2019.

Anti-government protests in Hong Kong have left many from the Chinese mainland wary of visiting that popular destination and more likely to travel farther afield. The same goes for the self-governed island of Taiwan, where heavy voter turnout in elections earlier this month favored candidates who do not favor uniting with Beijing as China’s leaders insist must happen eventually.

Chinese made about 134 million trips in 2019, according to official figures, up 4.5% from a year earlier but a much slower rate of increase than the nearly 15% growth seen in 2018. Hong Kong, Thailand, Japan, Vietnam and South Korea tend to be favorite destinations.

Tourism from China to the U.S. was already on a decline even before the coronavirus hit, hurt by the prolonged trade dispute between Beijing and Washington. In 2018, travel from China to the U.S. fell for the first time in 15 years, according to the National Travel and Tourism Office, which collects data from U.S. Customs forms.

The office has forecast a further decline of 5% in 2019. It was predicting a return to slow but steady growth in 2020 and beyond, and it isn’t clear how the outbreak and latest travel restrictions might change that. China ranks fifth overall in the number of tourists it sends to the U.S., behind Canada, Mexico, the U.K. and Japan.

The impact of the crisis will be difficult to estimate accurately, given the wide range of businesses likely to be affected, apart from the trips cancelled, fewer shop-til-you-drop mall visits, restaurant meals and hotel stays.

“The structural changes to the global economy complicate the economic analysis of this because there are linkages within economies, across sectors, and across international trade and capital flows that need to be factored,” Stephen Innes, chief market strategist for AxiCorp, said in a commentary.

In fact, the already diminished flow of Chinese tourists to the U.S. thanks to the trade war means that market may suffer less of a direct hit, he said.