How Coronavirus is Affecting Operators in Asia

A look at how coronavirus is impacting in-destination operators in Asia. 

by | Feb 4, 2020

News regarding the coronavirus has flooded worldwide media, leading many China inbound travelers to cancel their travel plans, and their scheduled things to do.

With quarantine in effect in Wuhan, where the virus was first recorded, and fear of contagion spreading, many tour operators in Asia feel the impact.

In the last one week since the threat of the virus and media reporting of it increased we have seen an onslaught of cancellations,” says Laura Blackhall, owner of Hello! Tours, which operates in Hong Kong, Singapore and Tokyo, who says her cancellation rate for tours in Hong Kong was 72%, and 22% for Singapore.

Similarly, Brian Bergey, co-founder of Lost Plate Food Tours who operates primarily in four Chinese cities (Beijing, Shanghai, Xian, and Chengdu), said coronavirus has significantly—and rapidly—impeded business. 80% of Bergey’s guests who booked a tour in February and March have cancelled their trip to China, and many guests in April and May have done the same. 

“Everything happened very quickly. On January 25 China began closing all tourist attractions … things like the Great Wall, Forbidden City, museums, zoos, and more,” says Bergey. “China also ordered all tour companies, both inbound and outbound, to halt operations to limit large gatherings in public. Since we primarily service inbound tourists coming to China, this means we have no one to take on a tour.” 

Both Blackhall and Bergey are being proactive in their guest communication. Blackhall has updated guests with the current number of cases in Hong Kong, and is sending along information from the Centers for Disease Control and Prevention for guidance on preventing illness while traveling. Likewise, Bergey is actively reaching out to travelers if they have not contacted the company themselves. 

Prioritizing flexibility and processing cancellations is a smart tactic, says Blanca Menchaca, CEO of the Singapore-based BeMyGuest. “We can’t emphasize strongly enough the importance for operators to be flexible, and support refunds for all affected travelers, especially the large and popular theme parks, who generally sell open dated, non-refundable tickets,” she says. “As an industry, we need to stand by each other as much as possible. We remain observant of the situation, and we will continue to do so for the coming weeks. We hope the situation will stabilize soon.“

Chee Chong Chan, CEO and co-founder of GlobalTix, based in Singapore, echoes Menchaca’s message of unity among the in-destination industry during this challenging time. “This is a crucial period where the industry should stand united, and rally towards boosting consumers’ confidence in travel,” he says, adding that GlobalTix is working to help mitigate operator impact by extending ticket validity to reduce cancellations and create campaigns to drive domestic travelers. 

“We have to educate and assure travelers that the chances of infection while on a holiday in Asia is low,” says Chan. “Having said that, our industry also has to do our part to ensure this virus is contained through hygiene, quick communication or even take drastic steps sometimes to help to fight this battle.”

Economic Impact

The economic impact of the coronavirus is expected to be significant. “China’s health crisis is testing the entire global economic system, and placing unexpected and additional strain on the fragility of an extended boom,” reports the Wall Street Journal

Reporting by Skift posits, particularly following the protests of 2019 (which are still occurring), Hong Kong tourism may be especially hard hit. As outbound Chinese travelers represent a vital economic opportunity around the world, many other regions may experience business lulls, too. 

Negative media covering the coronavirus exacerbates the problem, says Bergey. 

“I think the biggest problem is that there is a lot of scary news out there, along with a lot of unknowns and missing information,” says Bergey. “It’s important to keep everything in perspective, and while all of the precautions such as quarantines and travel restrictions are necessary, it doesn’t mean the whole country of China (or all of Asia) is sick.”

Positive Outlook

Despite the challenges brought by coronavirus, both Bergey and Blackhall are optimistic about the future. 

“It is completely normal for businesses to go through ups and downs, whether it be from normal seasonal fluctuations in tourism every year or the extraordinary fluctuations caused by natural disasters, political turmoil or economic turbulence,” says Blackhall. “Small businesses like ours have to be capable of weathering these cycles.”

For Hello! Tours, that means running a lean business model with minimal fixed costs so when times are tough, they are never losing money. It also means Blackhall is focused on organically growing her business across Asia, so her company’s success isn’t reliant on one location.

Bergey is also positive about the future despite the current challenges. “We know that at some point everything will get better and tourists will start coming again,” he says.

See more information on the coronavirus and Arival events here. 

 

 

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