China Virus Outbreak Rams Global Tourism, Costing Billions

Business around the world that have grown increasingly reliant on big-spending tourists from China are taking a heavy hit, with tens of millions of Chinese residents restricted from leaving their country as the coronavirus spreads.

Hotels, airlines, casinos, and cruise operators were among the industries suffering the most immediate repercussions, especially with the outbreak occurring during the Lunar New Year, one of the biggest travel seasons in Asia.

What happens in China means a lot more to the world economy than it did when the SARS outbreak struck nearly two decades ago. In 2003, China accounted for 4.3% of world economic output. Last year, it accounted for 16.3%, according to the International Monetary Fund.

Tourism from China was already down before the virus hit due in part to the Hong Kong protests and the trade dispute between Beijing and Washington.

But about 134 million Chinese traveled abroad in 2019, up 4.5% from a year earlier, according to official figures. Before the outbreak, the China Outbound Tourism Research Institute predicted some 7 million Chinese would travel abroad for the Lunar New Year this year, up from 6.3 million in 2019.

Hong Kong, Thailand, Japan, and Vietnam were top destinations, but Chinese tourists are big spenders in cities like London, Milan, Paris and New York.

Economist and tourism industry officials said the biggest threat so far is to China’s closest neighbors, with the U.S. and Europe likely to face major repercussions only if the coronavirus outbreak proves long-lived.

In Thailand, a favorite destination for Lunar New Year travel, officials estimate potential lost revenue at 50 billion baht ($1.6 billion). Many drugstores in Bangkok ran out of surgical masks and the number of Chinese tourists appeared to be much smaller than usual for the Lunar New Year. The government announced it was handing out masks, and that the airport rail link would be disinfected.

Spillover is also probable in Vietnam, Singapore and the Philippines, said Tommy Wu and Priyanka Kishore, of Oxford Economics.