Tourism in the time of nCoV
DEMAND AND SUPPLY - Boo Chanco (The Philippine Star) - February 12, 2020 - 12:00am

Sayang, Jojo Clemente, president of the Philippine Tourism Congress, told me when I asked him about the impact of the Wuhan coronavirus on the local tourism industry.

“Ang masakit,” Jojo explained, “we had good projections for 2020. Really good. I don’t have the exact figure for tourism revenues yet but it is significant.”

The Department of Tourism, now led by an economist, had been crunching the numbers before the coronavirus made everything academic.

“Our Feb. 2020 projected figure for China, Hong Kong and Macau combined is based on the compound annual growth rate of these markets in February 2017, 2018 and 2019. In our initial estimate we used the national average expenditure of 2019, which is $120.60 and average length of stay of nine nights.

“Feb 2020 projected arrivals from China, Hong Kong and Macau is 268,765 tourists x $120.60x 9 nights= $291,717,362 or P14,833,827,842.” That’s just for one month that is peak season with the Chinese New Year celebration.

But, as the New York Times puts it, the coronavirus has disrupted travel plans across Asia. Tour operators, travel insurance brokers and even airline employees interviewed by NYT say they are facing growing numbers of customers who want to avoid the region, even to countries far from the epicenter of the virus in China.

An airline reservation receptionist told NYT “They don’t want to go to Asia. Even though we cannot waive the fee for the Philippines or the other Southeast Asian countries, they still want to cancel.”

A customer service agent for Singapore Airlines also told NYT there is “an uptick in cancellations, despite the fact that the airline has offered to reroute passengers to bypass mainland China and Hong Kong without charge.”

That is such a pity because according to the World Tourist Organization, more than 343 million international tourists traveled to Asia and the Pacific in 2018, an increase of six percent from the prior year.

The tragedy, Al Jazeera pointed out, is the very large dependence of tourism markets to Chinese visitors. Chinese tourists now make up the largest number of foreign tourist arrivals in many parts of Asia, and are also travelling in increasing numbers to Europe and North America.

But with Chinese cities in lockdown and major international airlines stopping flights to and from China, Chinese tourists are staying home. The Chinese government has also instructed Chinese travel agencies to cancel travel packages indefinitely.

As a result, regional economies will suffer this side effect of government actions to contain the coronavirus.

“Global tourism, which relies heavily on Chinese tourists, could experience a negative growth of more than 30 percent,” said Iris Pang, ING Wholesale Banking’s economist for Greater China, in a commentary.

Economists at Oxford Economics estimate that the drop in outbound tourism from China in a report shared with Al Jazeera, pointed out that since “Asia-Pacific accounts for almost 80 percent of China’s outbound destination, economies in the region that are reliant on tourism and Chinese tourists — especially Thailand — are expected to see larger downward pressure on economic growth.”

Japan, now busy putting the final touches for the summer Olympics, is trying to avoid an outbreak there. They are carefully managing the quarantine of some 3,000 cruise ship passengers in Yokohama. About 70 tested positive to coronavirus infection.

I imagine there goes the cruise ship industry at least in Asia for the rest of the year.

The global aviation industry is also facing a crunch as international airlines suspend flights to and from China. Cathay Pacific has placed 27,000 employees on forced leave.

Jojo Clemente, who speaks for the local tourism industry, worries that if this fear to travel goes beyond Q1, “I don’t want to think about it. It may be catastrophic for some stakeholders.”

Last week, the Tourism Congress and the DOT had emergency meetings that eventually led the stakeholders to agree cutting their rates for an all-out drive to get the domestic market to take the slack.

“We are launching a program specifically for the domestic market which will give lower rates for hotels and resorts, as much as 50 percent off on published, which is really good. We are synchronizing it with the airlines so they can also offer low rates for seats. We are looking at a rollout within the week.”

Sensing my skepticism that the industry will really cut rates, Jojo said “we in the industry are agreed that we have to survive right now and we have to work together. Hopefully, it gains traction.”

I think it is also about time that the local tourism stakeholders start pricing themselves competitively with other ASEAN countries. I have many times decided to take family vacations abroad because local prices seem out of line.

But there are a number of new investments in hotels and restaurants in our key tourism destinations. Their owners will have to bite the bullet on prices or face empty rooms and staff layoffs.

The DOT has also strongly urged the local airlines to mark down prices for domestic flights.

The DOT will then intensify its promotional efforts both in international and domestic markets to entice travelers to take advantage of these special deals and rates.

Jojo, who runs inbound tours, said that “we will have to rely on our Western markets. So far, the Western markets are holding. Cancellations have not been as bad as China and Korea. We’re looking at ASEAN traffic pero we’re all in the same boat. Corporate travel is also cancelling or postponing muna.”

Last weekend’s Travel tour Expo had lower traffic than last year but, Jojo said, participants say those who went were buying naman.

So, there we go. Those thinking of Holy Week getaways, should go local this year. It will be safer in terms of health risks, assuming we keep our coronavirus numbers low. It will help the tourism industry survive and keep jobs for so many of our people.

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco

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