Corona Virus has taken the world by storm! Everywhere one goes, there is talk of Corona Virus. A piece of free advice on how to deal with Coronavirus here or a precautionary measure there… about the same (even though it may be of no use)! Spread in the month of Dec 2019 from the city of Wuhan in China, Coronavirus has brought many countries to a standstill or a lockdown! As on the date of writing this post, there are 1,16,000 confirmed cases of COVID-19 and 4000+ deaths across 26 countries.
CoronaVirus: Impact on Global Tourism economy
Globally, the tourism economy is worth $5.7 trillion in revenue and accounts for 319 million jobs. Due to the diversity of the Tourism economy, a lot of sectors derive their sustenance from Tourism such as Airlines, Hotels, retail, Food and Beverage, and some parts of the Technology sector. Due to the global outbreak of COVID 19 and its expected long term impact, it is being touted as the biggest obstacle to the Global tourism economy since the 9/11 attack on the USA or SARS virus that occurred in 2003.
Both the events, brought about a global recession which took many months to fade away in its impact. With global cities, metropolitans, and countries getting locked down every week, the impact of COVID-19 is seemingly intense. To make matters worse, there were no / negligible social media when SARS broke out, however, today we know the micro-level detail of every incident of Coronavirus which is not bad at all but spread of such information has an adverse effect on the mood of the global citizens who may otherwise be taking all precautions. There has been a sharp drop in travel across the Pacific not just affecting the Chinese economy but also other Asian economies.
COVID-19: Prominent Conferences Cancelled
Travelers around the world travel for majorly 3 reasons- Leisure, Business and MICE. With the increase in the number of travel advisories, the global tourism economy has witnessed a sharp in dip in Leisure global tourists. Furthermore, a number of prominent MICE events have been canceled: Mobile world congress in Barcelona, Geneva Motor Show, Facebook’s F8 Conference, and ITB Berlin!
Corona Virus Impact on India
Countries across continents are releasing travel advisories against travel to and from China while Italy and Iran are already having higher death rates due to poor health infrastructure or lax on the part of citizens in taking precautions. In India, the virus has started to spread its wings and India faces 50 positive Coronavirus cases (34- Indian nationals and 16 Italian nationals in India). However, there are no deaths in India due to COVID 19 at the time of drafting this post.
Yesterday Holi was celebrated in the quietest way ever in my memory! After celebrating Holi within the family, we set out for a drive around the prominent market areas and everything seemed deserted! The same market areas used to covered in colors of different shades every year and you would roll up your windows to prevent anyone from shooting a water balloon in your direction! But not this time! I never knew we Indians could be so disciplined!
On the other hand, the Indian economy has not been in the most ideal condition of late.
Coronavirus and its adverse effect on China can be an opportunity to Indian medical products and services providers which, if tapped appropriately, can propel Indian economy!
How has China impacted the Tourism economy:
While you and I have been lamenting on the quality of Chinese products, China and its citizens have established their imprint on the global tourism economy!
Did you know that Chinese are the most frequent travelers in the world with 180 million holding passports while on 147 million American nationals have passports? As reports by UNWTO, the Chinese have made 150 million outbound trips in 2018 and spent $277 billion in their travel. Consequently, countries and tourism-related businesses around the world have been customizing their services to fulfill Chinese traveler needs. These efforts include shops employing Mandarin-speaking salespeople, offering 10-year visas and many hotels and duty-free retailers accept China’s Alipay and WeChat payment apps.
Airlines including Air Canada have canceled all flights or reduced the number of flights to and from China. Russia has closed its land border to China and the same goes for Hong Kong.
Due to the COVID-19 and decrease in China-related travels, the global airline industry is also facing huge financial losses and a major chunk of the first traffic decline in more than a decade. The loss could be to the extent of more than USD 29 billion as reported by IATA.
China is the second-largest market (behind USA) for cruise ship passengers with 2.4 million Chinese sailings in 2018 according to Cruise Lines International Association. It was expected to become the world’s largest cruise market by 2030. However, the number of Coronavirus detected aboard the Diamond Princess cruise (700 cases and at least 4 deaths) has halted China’s plans of Cruise transportation domination.
This is based on the presumption that China will not be able to take off its cruise operations anytime sooner than 12 months and whenever it does, the negative brand recall of the cruise Diamond Princess will affect the potential passengers’ mood.
SARS versus Corona Virus:
During the past few weeks, there have multiple instances of comparison between the SARS virus that went viral in 2003 and Coronavirus that has gone viral since December 2019. Here is a table (updated on 10th March 2020) that can help you analyse both the viruses and the dangers they pose.
As you may see, since both the viruses originated in China, the main difference lies in the impact of China on Global Tourism economy at the time of SARS and now. In 2002, China received 38 million International Tourists while in 2019, China received 142 million international tourists. In 2002, China sent 17 million citizens abroad while in 2019, they sent 134 million citizens abroad and a whopping 5.5 billion domestic trips.
Thus, as you can see that since 2002 till date, China has integrated itself into the tourism economy in a strong way and the outbreak of Corona Virus and the subsequent travel restrictions mean that China and the world will be adversely affected and normalcy will happen after a long period of time.
Long term impact of Corona Virus:
As explained in the earlier sections, the tourism economy is a closely-knit economy and thus, the effect of Coronavirus will increase over the coming months and will take a reasonable amount of time to stabilize. The World Tourism and Travel Council analyzed previous major viral epidemics and found that the average recovery time for visitor numbers to a destination was 19 months.
Dip in global oil prices:
There is an expected fall in global oil prices due to lower demand by the world’s importer of oil- China. This means that making a road trip to the Himalayas is a better option than flying. Having said that, it is obvious that certain precautions need to be adhered to before giving in to the adrenaline rush!
Long term positive effect on Bed and Breakfast accommodations:
While a lot of capital intensive hotels are taking a beating around the world and will take a long time to recover from the losses, the Homestay or Bed and Breakfast owners shall take a hit in the short run due to relatively less fixed capital costs. However, as soon as the market opens up and people start traveling soon, which would happen by the mid of 2021 positively, Bed and Breakfast owners will be able to cash in on the wave.
Sources of Inspiration: