China virus outbreak rams global tourism, costing billions

Virus slams tourism hard

Business around the world that have grown increasingly reliant on big-spending tourists from China are taking a heavy hit, with tens of millions of Chinese residents restricted from leaving their country as the coronavirus spreads.

Hotels, airlines, casinos and cruise operators were among the industries suffering the most immediate repercussions, especially with the outbreak occurring during the Lunar New Year, one of the biggest travel season in Asia.

What happens in China means a lot more to the world economy than it did when the SARS outbreak struck nearly two decades ago. In 2003, China accounted for 4.3% of world economic output. Last year, it accounted for 16.3%, according to the International Monetary Fund.

Tourism from China was already down before the virus hit due in part to the Hong Kong protests and the trade dispute between Beijing and Washington.

But about 134 million Chinese travelled abroad in 2019, up 4.5% from a year earlier, according to official figures. Before the outbreak, the China Outbound Tourism Research Institute predicted some 7 million Chinese would travel abroad for the Lunar New Year this year, up from 6.3 million in 2019.

Hong Hong, Thailand, Japan and Vietnam were top destinations, but Chinese tourists are big spenders in cities like London, Milan, Paris and New York.

Economist and tourism industry officials said the biggest threat so far is to China's closest neighbours, with the U.S. and Europe likely to face major repercussions only if the coronavirus outbreak proves long-lived.

In Thailand, a favourite destination for Lunar New Year travel, officials estimate potential lost revenue at 50 billion baht ($1.6 billion). Many drugstores in Bangkok 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.

Spillover is also probable in Vietnam, Singapore and the Philippines, said Tommy Wu and Priyanka Kishore, of Oxford Economics.

Hong Kong is especially vulnerable because its economy and its appeal to tourists have already been weakened by months of sometimes-violent political protest. By November, inbound tourism to Hong Kong was already down 56% from a year earlier.

Visitors from mainland China to the autonomous Chinese gambling capital of Macau were down 80% on Sunday from a year earlier, a threat to a regional government that depends on gaming revenue.

Gaming and lodging operators in Macau reported higher-than expected cancellations over the weekend as the death toll from coronavirus rose and the Chinese government extended travel restrictions, according to Instinet analyst Harry Curtis.

“Cancellations soared across all of the properties we contacted,” Curtis said in a note. “Pessimism rose on how long it could take for business to recover.”

Shares of Wynn Resorts, Las Vegas Sands and MGM Resorts International — which all have operations in Macau — have declined 18.3%, 14.6% and 12.1% since Jan. 17, respectively. But analysts said it was too soon to tell how deeply their finances would be affected. Adding to the uncertainty was the possibility that Macau's government could shut down all casinos.

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