DRBy Madhav Thadani
The hospitality industry, much like other affiliated businesses (airline and cruises), is generally the first to get impacted by any global catastrophe and the last to recover. We have seen this time and again – be it natural or man-made disasters, trade wars, economic recessions, health emergencies or travel advisories by the political class across the globe who use them as an effective tool in convincing their own public that they have acted responsibly and done their job.
The coronavirus outbreak that showed its first signs in December 2019 was declared an international health emergency by the World Health Organization (WHO) on January 30. Initial indications are that tourist destinations that are traditionally visited by the Chinese travellers are the worst affected, especially as the Chinese New Year holiday traffic cancelled in large numbers. In 2019, China predicted around 166 million outbound travellers, many of whom travelled during the Chinese New Year. This, in 2020 will not be the case, other than a few travellers who already had started their journeys.
Top 10 Destinations for Chinese TravelLers in 2019
Vietnam, Malaysia, Thailand, HongKong, Japan, Philippines, Indonesia, Cambodia, Singapore and Macau
While not making it to this list, smaller countries like The Maldives, Sri Lanka, Fiji, etc. also get a significant percentage contribution of tourist arrivals from China, albeit the actual number is much smaller. Take for example The Maldives, where the Chinese accounted for 16.7 per cent of the tourism market share, making it the top contributor in 2019. As per stats, total tourist arrivals for the period February-April 2019 was 4,94,540 that translated to 30,08,176 bed nights. This is expected to go down by at least 30 per cent in 2020 due to the coronavirus, which in turn will reduce the total bed nights by over 9,00,000. Assuming an average daily rate of $600 means that collectively, the loss of revenue for hotels in The Maldives will be in excess of $540 million for this period alone, and this is then just one country.
However, it’s not just the Chinese outbound traveller we need to be concerned about. Global business travellers are holding off travel to Asia unless absolutely necessary, especially to destinations traditionally visited by the Chinese. Singapore, Mumbai, Dubai, Kuala Lumpur are all impacted, and we hear from hotels that bookings are being deferred or postponed for at least the next couple of weeks.
My advice to hoteliers, and in particular, to the sales teams out there is that they need to think and act rationally. First, let’s get some basic understanding of the situation. The coronavirus outbreak is a unique one-off incident and as such needs to be treated in context. Dropping room rates drastically as a knee jerk reaction is not going to improve the situation, particularly if you are in a business location. One should note what hotels in Hong Kong have done over the past six months in the face of protests. Most hotels had their occupancies go off the cliff but still decided to hold on to their rates. The idea being that people who were coming to Hong Kong needed to be there anyways and it was not because they got a hotel discount.
The second recommendation I would like to make is both to the industry at large as well as to the respective governments. Nations like India, Indonesia and Thailand should be looking sharply at domestic tourism that has time and again increased the resilience of the industry in the wake of global adversities. A case in point, back in 2003, when SARS hit the region, unfortunately coinciding with the Iraq war, most Indians chose to travel domestically rather than overseas. This was a turnaround year for Goa which until then had been a seasonal tourist market. It also fueled domestic tourism in a very big way in the country. Hence, governments can perhaps give tax concessions to encourage local travel and stay. Afterall, the travel & tourism sector employs one in every ten people, and governments can ill afford to let them be bystanders.
Finally, let’s stop all the insensitivity towards the Chinese tourists. Till recently, most tourism and hotel professionals were dying to get a piece of the Chinese pie; however, in the past week, in countries like South Korea, signs have begun popping up on restaurant and hotel windows saying, ‘No Chinese Allowed’ and a casino in the country has stopped accepting Chinese visitors. Similar cases are being seen in Japan too. This is not limited to Asia alone; a French regional newspaper called it the ‘yellow alert’, which is outright racist, considering the xenophobic term ‘yellow peril’ was used for the people of East Asia dating back to the 19th century. In Denmark, the country’s Jyllands-Posten newspaper published an editorial cartoon depicting China’s flag with virus symbols in place of stars on the red background.
We believe that as reputable and respectable hotel brands, turning business away or any phobia against Chinese tourists will tarnish the goodwill in the long run. One must not forget that business is a numbers game and with Chinese travel, the numbers do make a huge impact. They will be back sooner than you think. Hotel brands should instead have set policies and corporate directives to tackle such sensitive situations to ensure that the Chinese tourists do not feel harassed. Operationally, the resort/hotel doctor needs to be equipped with the necessary means to deal with such situations and the management must make it mandatory for the tourists to report to the nearest hospital instead of causing mass hysteria.
We all live in a fragile world and we should not be throwing stones from a glass house.
(The author is Founder Chairman, Hotelivate)
