Travel Industry Faces Pressure Due to the Coronavirus Outbreak
The COVID-19 a disastrous time for travel-related businesses, as well as all the other service-related industries. Non-essential travel plans have been mostly canceled, all travel platforms are experiencing huge losses due to trip cancelations.
Right after the coronavirus outbreak started, the day before the new year’s eve, Chinese travel platform Ctrip officially launched the “guarantee for canceled orders” initiative including 800,000 hotels nationwide. This initiative will promise to deal with the cancelation of orders for users for free from January 22 to February 8. Right after the initiative was launched, several thousands of hotels registered.
Massive refunds occur on every travel-related platform. According to staff from social-travel platform Mafengwo.com, “The refund process involves detailed communications with multiple parties, hotels, domestic and overseas airlines, service providers, etc. In this value chain, we try our best to help users complete their refund within 48 hours or 72 hours. For service providers overseas, the communication chain is even longer, with different refund policies. It is an intricate network. Consumers only have one ultimate demand, refund as soon as possible. This brings higher requirements on our coordination ability and the responsiveness of partners and suppliers.”
As until January 30, Mafengwo.com has altogether advanced cash payment for users that amount to altogether 500 million yuan. “Currently, our cash flow remains sound,” Mafengwo’s officials said.
Flight bookings have also been uncertain recently. Starting from January 21, the Civil Aviation Administration of China has consistently issued free refund policies. According to a report from Jiemian, as of now, Chinese and foreign airlines have handled over 20 million refunds worth a total of more than 20 billion yuan.
Aviation experts told media that in 2003, during the SARS outbreak period, demand for passenger travel decreased sharply. By the end of June 2003, domestic passenger traffic had fallen by 19%. The annual industry loss amounted to 2.8 billion yuan.
Hotel chains and homestay inns
According to TravelDaily, Zhang Pei, brand CEO of 7 Days Inn Group stated, “At this moment, 7 Days Inn has closed some stores to ensure the safety of employees and guests. At the same time, over 7,000 rooms in 82 hotels were used by medical personnel.” Meanwhile, individual business owners like homestays suffer even more on a personal basis.
A holiday inn owner based in Xiamen wrote on online lifestyle platform Xiao Hongshu, “I’ve decided to dismiss all orders from the Spring Festival to the end of February. For those customers who did not know about the epidemic, I informed them about the current situation in Xiamen is not really optimistic. It’s a tourist city after all.” On these special occasions, answering a nation’s call for drastic public health concerns has surpassed individual business interests.
Hosts of homestay platforms also face financial pressure. According to Airbnb host Qin Yingjia, who owns several residences in Shanghai and Chinese southern city of Haikou, “My main pressure is the housing loan, which I need to rely on my family’s support. There is also daily cleaning and disinfection work. Since the professional cleaning team has not yet resumed operations, I will do these daily tasks myself, which relieves some financial pressure.”
Most affected destinations
For Chinese travelers, many had to cancel their delicately planned trips. Hot international destinations for the spring season include Japan and Thailand, two locations that are likely to suffer the most losses in tourism generated revenue. In fact, the Japan Association of Travel Agents pointed out that many Chinese tour groups have canceled their trips to Japan before the end of March, and it is estimated that the number of Chinese tourists who failed to travel as planned would exceed 400,000 in total.
According to Foreign Policy, the drop in travel from China could result in 50 billion baht ($1.6 billion) of lost tourism revenue, Tourism and Sports Minister Phiphat estimated late last month.
According to an official of Mafengwo.com, “We believe that after the outbreak is over, the domestic tourism market will take the lead in recovery. Outbound tourism may be affected by the prevention and control policies of overseas destinations, and it might just take longer.”
During a lieyunwang.com interview with Gang Chen, co-founder and CEO of Mafengwo.com, he explained that tourism is actually a fairly complex industry. In addition to flight tickets and hotels, it also includes ground transport, guides, translation, and other services in the destinations.
In a recent survey with tour guides in China, the impact of the outbreak on the tour guide industry will last at least 3-6 months, and 35.25% of the tour guides believe that the impact would last more than 6 months. 60% of the guides believe that the outbreak would cost them over 50% of their annual income this year.
Recovery in the springtime
Apart from actual transactions, the outbreak has led to an increase in the digital tourism industry, with new concepts like “cloud traveling”.
In addition to providing real-time travel references for netizens, users of Mafengwo can plan for future travels while staying at home. The app uses different topics to inspire people to continuously provide high quality content from their travels. For example, sections like “Let’s go cloud traveling” or “Must-eat local snacks” appear, where users could post their previous travel content. The combination of transactions and online content, to some extent, alleviates people’s anxiety from their inability to travel at the moment.
“There is no way to start 2020 again, but the tourism industry in 2020 is now waiting for a full ‘restart’.” Will, head of customer support at Airbnb China, said: “We are still looking forward to your next trip.” This is what customer service agents often say when processing refunds of orders, bringing along with it hopes of the coming blossom season. After the outbreak, there is still the tomb-sweeping festival, labor day, the summer holiday and the national day for the tourism industry to recover.