What the Coronavirus Means So Far for the Travel Industry

The coronavirus has rapidly become a serious global concern after first being detected in the final days of 2019 in the Chinese city of Wuhan. The travel industry is increasingly bracing for its impact.

Chinese officials reported Friday that there are 830 cases and 26 deaths, and there are confirmed cases in countries including the U.S., Thailand, Japan, South Korea, Taiwan and others. The quarantine has been expanded to 12 cities including the epicenter of Wuhan — an area representing an astonishing 35 million people.

The World Health Organization on Thursday, called for precautions, but fell short of declaring a “a global emergency,” at least for now.

The travel industry may experience an outsize impact and disruption from efforts to contain the spread of the virus. Here's a breakdown of coronavirus' impact so far on key travel sectors: tourism, aviation, hotels, and business travel.

Tourism

When it comes to the tourism sector, the damage of the coronavirus is as much about the seriousness of the virus itself as its inauspicious timing. China’s Lunar New Year begins on Friday, which under normal circumstances would kick off the biggest annual mass movement of people in China, and indeed the world.

An estimated 400 million Chinese travelers totaling three billion trips were expected to travel for the several-weeks-long holiday period to other areas of China and countries across the Asia-Pacific region. It can be the only time of the year that some rural Chinese workers see their families.

This creates a major challenge for the destinations bracing to receive (and now, monitor) all those arriving tourists. In keeping with World Health Organization advice, screening for passengers arriving from China with the use of thermal scanners has been ramped up at airports across the world, the Associated Press reported. In the UK, universities warned Chinese students that they may be quarantined upon return from China if they choose to travel home.

Another challenge is the expected loss of revenue that will occur as a result of many travelers staying home. The quarantine means that millions of people are unable to leave the region, including on flights. As such, a significant drop in the volume of people traveling for the season from that region is to be expected. In other regions, it's likely that people will stay home or cancel trips out of fear or precaution. This could have economic implications similar to the SARS crisis of 2003, wrote Rajiv Biswas, chief economist for IHS Markit’s Asia-Pacific region.

“The 2003 SARS crisis created a severe negative impact on GDP growth for the Chinese economy and also hit the economies of a number of Southeast Asian nations, including Malaysia, Singapore, and Vietnam. However, other economies are also vulnerable, with the SARS epidemic having also had a negative impact on the economies of Canada and Australia. Since the 2003 SARS crisis, China's international tourism has boomed, so the risks of a global SARS-like virus epidemic spreading globally have become even more severe."

He added that in addition to tourism, sectors including retail, restaurants, conferences, sporting, and aviation were at risk. Of particular concern was the effect on this year’s Tokyo Summer Olympics if the epidemic proved to be as persistent as SARS, which in 2003 lasted for months.

On the bright side, observers have said that China's response time to this virus is much improved compared to the SARS crisis. European Tourism Association CEO Tom Jenkins said in a statement today that while the situation is in flux, "we do know that the factors that led to the rapid spread of SARS are not being repeated. The Chinese authorities have been prompt in highlighting the problem, and are supplying daily updates on the situation." He added that precautions are in place across Europe and that while "the virus is of major international concern, it remains a very remote threat — effectively no threat — for any traveler in Europe."

The foreign offices of many nations including the U.S. and the UK have advised citizens not to visit Wuhan. The U.S. State Department issued its highest alert — level four, meaning “do not travel”— in regards to Hubei Province and pointed to the CDC’s guidance on the matter.

— Rosie Spinks, Global Tourism Reporter

Aviation

For air travel, authorities at first were most concerned about flights to and from Wuhan, China, where the virus is thought to have originated. The airport there is now closed, but flights operated for several days after the virus was identified, including nonstops to San Francisco and New York.

Other flights in China remain active, though the country's aviation sector is in flux as regulators wrestle with how best to contain the virus. Air China, like all airlines, is offering free waivers and changes to customers who planned to visit Wuhan in the near future. But even in the airline's other markets, some customers are skittish.

"These are trying times, as you can imagine," Zhihang Chi, Air China's vice president and general manager for North America, told Skift. "Yes, we’re watching it around the clock. There have been changes in our policies and procedures. ... Our goal is to do our part to help stem the spread of the virus and lessen its impact on those who are affected."

With Wuhan on lockdown, airlines must no longer worry about carrying passengers from the source of the outbreak. Since coronavirus has spread quickly and is now no longer only in Wuhan, they must be prepared to contain it wherever they fly.

Past evidence suggests this is nearly impossible. Airlines and public health officials will end up quarantining people who are no threat — they might only have regular influenza, or a similar illness — while letting others go through. But being vigilant is their best defense, unless regulators want to shut down the world's air links, which seems impossible.

In a memo earlier this week, Los Angeles World Airports, operator of Los Angeles International Airport, outlined how the screening process works. First, it said, the Centers for Disease Control notifies the airline it wants to screen a passenger. Then, using a Mandarin interpreter, the CDC spends about five minutes examining the passenger. "If someone is symptomatic at the initial screening," the memo stated, "they are referred to a secondary screening to determine if the likely cause is common illness like the flu, or if tertiary screening is warranted." If it is, the memo stated, the fire department will transport the patient to a local hospital.

Airlines are also trying to be vigilant as they prepare flight crews for possible outbreaks.

In an internal memo this week, United Airlines told flight crews it was stocking all China flights — the carrier flies to Chengdu, Beijing, and Shanghai — with two virus response kits, one for the inbound flight and one for the return. Each kit is stocked with 100 nitrile gloves, one bottle of hand sanitizer, one bottle of hand soap, 20 sanicoms, and 20 face masks. The airline told members of the flight crew they may take face masks to use on layovers for their own safety.

While the kits could be effective in containing virus on board, it's also likely meant to assuage employee fears. The president of the flight attendants union at American Airlines this week urged that carrier to protect members against any chance of exposure. "We will continue to speak out to ensure airlines are erring on the side of caution and putting our members’ health first in these dangerous times,” Lori Bassani, the union president, said in a statement.

American has been issuing hand sanitizer wipes to its China-bound flight attendants, according to the airline. The carrier's medical director also has been giving information to crews about how to protect themselves. An airline spokesman said, "The safety of our customers and team members is our top priority."

As the virus spreads, airlines likely will be under further pressure. In the near term, most of the panic is coming from passengers and crews headed to or from China. As more cases pop up elsewhere — a case was confirmed in Chicago on Friday —  fear may expand. Eventually, passengers and crews even may have concerns about boarding domestic U.S. flights.

Longer term, there may be concern about airline finances, particularly among Asian airlines that do significant business in China. Between April 2002 and April 2003, when the SARS epidemic hit, Asian carriers in affected countries lost about 44 percent of their traffic, according to numbers published at the time by IATA, an industry trade group.

John Jackson, vice president for the Americas for Korean Air Lines, which has an enormous presence in mainland China, said he's watching the situation carefully. So far, he said, the airline temporarily has canceled Wuhan flights, offering refunds to passengers through Feb. 29.

"We’re watching it closely, but it's a little soon to see a big demand issue," he said. "I’m hopeful that the aggressive actions taken in Wuhan will keep it from becoming like SARS."

Among U.S. carriers, United has the most exposure to China, and airline officials said on last week's earnings call that revenue to Shanghai and Beijing had fallen 4 percent over the past 12 months, even before coronavirus. In a phone interview on Friday, a United spokesman said it's too soon to assess the financial affect of the coronavirus.

— Brian Sumers, Senior Aviation Business Editor

Hotels

Hotels are waiving cancellation fees for travelers in affected regions.

Hilton has a waiver in place for guests who want to modify or cancel reservations at any Hilton-branded property in China. Guests traveling from China to Hilton-branded properties globally will also receive a waiver. For now, the waiver will apply to reservations through Feb. 8.

Guests are being encouraged to contact the Hilton Guest Assistance team if they have any questions. So far, Hilton has not seen any increase in questions from employees and guests, said company spokesman Nigel Glennie.

Hilton has four hotels in Wuhan and 5,980 hotels worldwide as of the third quarter of 2019.

"Guest and team member welfare is a focus, and we are keeping a close eye on official updates from the World Health Organization," Glennie said.

Hyatt said it would waive cancellation or change fees for guests who have booked stays though Feb. 10 at any greater China Hyatt hotel through the company’s official channels. That includes Hyatt.com, the World of Hyatt app, WeChat Mini Program, and the global contact center.

Guests from greater China who have booked stays through Feb. 10 at any Hyatt hotel in the Asia-Pacific region including Australia, Cambodia, greater China, Guam, Indonesia, Japan, Malaysia, Maldives, Philippines, Saipan, Singapore, South Korea, Thailand, and Vietnam through official Hyatt channels will also be able to postpone or cancel reservations without paying a fee.

Those who have booked through an online booking site or other third parties will have to contact them.

“In light of the recent cases of novel coronavirus, we are closely monitoring the situation and fully understand the concerns around traveling during this time,” a Hyatt spokesperson said.

InterContinental Hotels Group (IHG) said it would also waive cancellation or change fees at any IHG hotels in mainland China, Hong Kong, Macau, or the Taiwan region until Feb. 3. The waiver applies to bookings made directly with the hotel, through IHG.com, the IHG app, or IHG’s central reservations center.

“The health and well-being of our guests and employees is our top priority,” said IHG spokesperson Jacob Hawkins. “We are monitoring the situation and working very closely with local authorities.”

Marriott International spokesperson Jeff Flaherty said it would waive cancellation fees until Feb. 8 for guests at its China hotels and guests from China who are traveling to other destinations globally.

The company is monitoring the Centers for Disease Control and Prevention and World Health Organization’s statements regarding the cases. A company spokesman said it would follow the guidelines from those agencies and the local health departments.

“The well-being of our guests and associates are of paramount importance,” the spokesperson said. “Our hotels are following the guidelines of local authorities and reinforcing recommended measures on appropriate hygiene standards.”

— Nancy Trejos, Hospitality Editor

Business Travel

Thus far, major corporations have yet to limit travel across Asia in response to the spread of the virus.

"These infectious disease outbreaks at local, regional, and global levels are cyclical in that they happen every once in a while," said Dr. Robert Quigley, senior vice president and regional medical director of the Americas region for International SOS and MedAire. "We saw similar outbreaks with H1N1, SARS, and the like. Now we have this coronavirus, and we don’t know what the severity or the magnitude will be. This is another reminder for travelers to stay vigilant and aware of their surroundings. It is easy to become lackadaisical when it comes to personal care, but it is crucial to always practice universal health precautions when traveling."

If business travelers are experiencing any flu-like symptoms, continued Quigley, they should immediately contact their company and avoid traveling. Having a flexible itinerary will be key as cancellations continue to mount in the effort to contain the virus.

— Andrew Sheivachman, Senior Enterprise Editor