Impact from Coronavirus threat spreading globally

The coronavirus outbreak took an ominous turn over the past few days. While health officials are still not sure about how deadly the virus which began in the Chinese city of Wuhan may be, the repercussions of governments attempting to contain its spread are widespread and could pose a serious threat to travel and travel retail business for some time to come.

Airlines and cruise ships have cancelled service to many locations in China, and stores throughout the industry have been closed in regions that depend on Chinese travelers for much of their business (see ongoing updates at the Moodie Davitt Report).

Alain Maingreaud, president of the TFWA, said this week: “The situation in China is a cause for great concern, both at a business level, but of course most importantly on a personal level for those who have been affected by the coronavirus outbreak.     

     “An issue that affects China, one of the most important markets in our industry, will clearly have an impact across the business. Our colleagues in China and those catering for Chinese travelers around the world are trading in very difficult circumstances and we stand with our industry colleagues.”

“We are constantly monitoring the situation and further statements will follow in due course,” John Rimmer, TFWA Managing Director tells TMI.

The WHO declared the coronavirus outbreak a global public health emergency on  Jan. 30, as the death toll in China was rising with more than 8,100 confirmed cases worldwide. The rare designation frees up the WHO to mobilize financial and political support to contain the outbreak in countries with less-robust health systems.

As of Feb 4, Chinese health authorities have confirmed over 400 fatalities and more than 20,000 cases. As of press time, all but one of the deaths took place in China. This was a man who traveled to Wuhan and returned to the Philippines in January who passed away on Feb. 1. He was the travel companion of a woman who was also diagnosed with the virus.

There are 11 confirmed cases in the United States, and four in Canada.

 

Airlines

     Airlines in Asia, Europe and the Middle East stopped service to mainland China, including Delta Air Lines, American Airlines and United Airlines. At this time, United confirmed it is temporarily suspending flights from its hub cities to three Chinese cities from February 6 until March 28; last Friday, Delta Air Lines announced that it will suspend flights to and from China from February 6 to April 30.

The U.S. Centers for Disease Control and Prevention boosted staffing at 20 U.S. airports that have quarantine facilities. Those airports receive 90% of airline passengers from China.

 

OAG forecasts

     OAG issued a chilling forecast Feb. 3, when it reported that there will be over 25,000 fewer flights operated to/from and within China this week compared to two weeks ago. This is the equivalent of the loss of 4.4 million seats, (the size of the whole of the Indian market is 4.2 million seats, says OAG).

OAG warned that the impact on China’s domestic market – which is 43 times larger than the largest international market—is even more serious. Some 23,000 fewer domestic services are scheduled than last week, equaling a 3.8 million reduction in capacity on Chinese domestic services.

Chinese stock markets  slumped almost 9% on reopening on Monday amid the virus outbreak. The benchmark Shanghai Composite Index opened the day down 8.73%.

In percentage terms, Singapore (-38%) and Thailand (-34%) have seen the largest reductions in capacity with more than one-third of capacity dropped over the last two weeks with Thailand in absolute terms seeing over 100,000 seats lost week on week. (Source: OAG)

In the OAG chart showing Changes to Capacity from China, Top 10 International Markets, flights to the US – the only non-Asian country in the top 10 international markets, was down 16.5% in the week between Jan. 2- and Feb. 3.

 

Cruises

     Cruise Lines International Association announced that CLIA Members have suspended crew movements from mainland China and will deny boarding to any individual, whether guest or crew, who has traveled from or through mainland China within the previous 14 days.

Last week, 7,000 people were briefly detained

aboard a Carnival-owned cruise ship in a port near Rome after a passenger came down with a fever and respiratory symptoms. Officials later confirmed there was no infection.

But today, it was reported that Princess Cruises has canceled an eight-day voyage onboard the Diamond Princess and the ship has been placed in quarantine after a passenger on an earlier cruise was discovered to have the coronavirus.

     Diamond Princess is currently docked off the coast of Japan with more than 3,600 people onboard.
MSC Cruises’ Head of Retail Adrian Pittaway penned some of his thoughts on the impact of the coronavirus on cruise retail on Linkedin:

https://www.linkedin.com/pulse/cornavirus-cruise-retail-adrian-pittaway/

 

Canada

Destination Canada reports that as of Jan. 31, Canada had four cases of coronavirus confirmed, three in Ontario and one in British Columbia.

Destination Canada’s issued the following statement today: “We are actively monitoring the impact of coronavirus and are conscious of the industry’s concern. It is a fast evolving situation and we are working hard to provide our partners up-to-date information as it relates to our industry.
“The visitor economy is vital to Canadians from coast to coast to coast, and directly touches businesses large and small. While it’s still too early to speculate on potential long-term impacts, we are committed to working together to continue inspiring those with glowing hearts to fall in love with Canada.”

 

Caribbean

The Caribbean is working to keep the region virus-free. No cases of the coronavirus have been reported in the Caribbean, reports regional tourism and health officials.

A partnership established five years ago between the Caribbean Public Health Agency (CARPHA) and the private sector-led Caribbean Hotel and Tourism Association (CHTA) as well as the public sector Caribbean Tourism Organization (CTO) is helping to drive a concerted effort by the region’s health and tourism stakeholders to help prevent and mitigate any impact from the spread of the virus.

The three organizations quickly mobilized over a week ago, with CARPHA playing a key role in gathering facts and preparing briefs and tools for the region’s largest industry, tourism, based upon its consultations with global health authorities, including WHO and the U.S. Centers for Disease Control and Prevention, says the groups’ official statement.

While the risk to the Caribbean from the coronavirus is low, health authorities and tourism stake-holders are being vigilant, activating cautionary measures, monitoring and reporting procedures.

There are reports of Dominica and St. Lucia refusing entry to the AidaPerla carrying 3,000 guests, after several passengers reported falling ill.

 

Global economic outlook

The virus is having a wide ranging domino effect. News out of maritime intelligence company Lloyd’s List, warns that fears are emerging of a breakdown in the supply chain as ports increase restrictions on visitors from China, [Australia, for example, is quarantining vessels from China], even as most ports have decided to waive their storage fees for loaded containers covering the period between Jan. 24 and Feb. 9.

As the coronavirus outbreak and responses by governments and firms intensify globally, Oxford Economics revised down its GDP growth forecast for China, cutting its forecast for growth in Q1 by more than 2 ppts. Even with a rebound in Q2, Oxford now forecasts 5.4% growth for 2020, compared with 6% previously.

Oxford also lowered its outlook for the Eurozone, cutting its 2020 GDP growth forecast by 0.2 ppt to 0.8%, following a similar move to its global GDP projection.

An analysis reported today on Travelmole.com cites Oxford Economics forecasting that the coronavirus could cost US tourism US$10 billion. The Tourism Economics projection estimates the US will lose about 1.6 million visits from China worth $10.3 billion, and leading to a 28% fall in visits from China this year, wrote Travelmole. A full recovery could take several years, said the report.

Reports are now estimating that the coronavirus will overtake SARS in economic impact. SARS cost the global economy about US$40 billion, but it is generally reported that the China travel market has grown about eight times as big since then.

LP

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