Affect of Corona Virus on Tourism Industry
Tags: Travel, Tourism, Corona Virus

Empty hotels, cancelled flights, closed tourist sights. The coronavirus is crippling global tourism. The industry is already expecting losses running into billions.The crisis in Europe are still growing: Since the outbreak in Italy, popular tourist destinations are often deserted.

In Venice and Milan, museums, theaters and places of interest remain closed, major events have been cancelled. In France, too, the Louvre remains closed for a third consecutive day because employees have stopped working for fear of infection.

Meanwhile in Germany, following the cancellation of the International Tourism Fair (ITB), people are more concerned over the impact of travel cancellations from the Asia. The German National Tourist Board (GNTB) expects overnight stays from China to fall by between 17 and 25%. As tourists from China make a significant contribution to sales, amounting to around €8 billion ($9 billion) a year, the losses are likely to have a severe impact on tourism in Germany too.

Tourism comes at a Standstill in Malaysia

In Malaysia, local tour operators are facing over 3,000 tour group cancellations. And according to the Malaysian Association of Hotels (MAH), room cancellations have picked up since the Chinese New Year holidays, when the Chinese government issued a ban on its citizens from booking overseas tours, flights and hotels.

Due to the Covid-19 crisis, MAH estimated losses suffered by hotels to reach “hundreds of thousands” of ringgit, especially at destinations which are highly dependent on the China tourist market.

Hotels at Kota Kinabalu (Sabah) and Langkawi (Kedah) in particular, are anticipating a drop in occupancy from 30% to 60% immediately, while other destinations like Melaka, Ipoh (Perak), Port Dickson (Negri Sembilan) and Penang are looking at an immediate impact from 10% to 50%.

Tourism industry seeing bad times in Indonesia

The Indonesian government has said it would provide at least $744 million in subsidies for workers, airlines, hotels, tourists and regional governments in Indonesia’s major tourist destinations to counter the economic slowdown expected as a fallout from the Covid-19 outbreak wreaking havoc in China.

The Chinese were the second-largest group of foreign tourists visiting Indonesia last year, and the loss of their business could cause local establishments to lose a total of $500 million in tourism revenue per month. Regions most vulnerable to such a blow are Chinese travelers’ favorites Bali, North Sulawesi and the Riau Islands.

Impact on Global Economy

Businesses are dealing with lost revenue and disrupted supply chains due to China’s factory shutdowns. Weeks after China imposed travel restrictions on million of its people, Italy placed quarantine measures on its entire population. On 11 March, some key industries in Wuhan were told they can resume, a day after Chinese President Xi Jinping visited the city for the first time since the outbreak began.

On 9 March, oil prices lost as much as a third of their value — the biggest daily rout since the 1991 Gulf War, as Saudi Arabia and Russia signaled they would hike output in a market already awash with crude, after their three-year supply pact collapsed.

Dips Reported in Global Travel Revenue

On 12 March, markets dipped further on US President Donald Trump’s decision to impose sweeping restrictions on travel from Europe. But the announcement on 13 March of $50 billion to fight the crisis cheered markets somewhat.

The outbreak has the potential to cause severe economic and market dislocation. But the scale of the impact will ultimately be determined by how the virus spreads and evolves, which is almost impossible to predict, as well as how governments respond.

Globalization has encouraged companies to build supply chains that cut across national borders, making economies much more interconnected. The major central banks have used up much of the ammunition they would typically deploy to fight economic downturns since the 2008 financial crisis, and global debt levels have never been higher. Rising nationalism may make it harder to coordinate a worldwide response, if that’s required. A resident wears a protective mask while riding a scooter on February 5, 2020, in Wuhan.