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Novel coronavirus: Singapore tourism sector to take a hit for at least 6 to 8 months, experts say

Published on: 10-Feb-2020

As fear and anxiety over the novel coronavirus takes hold around the world, Singapore’s tourism sector is likely to take a hit for the next six to eight months at least, experts said.

For starters, Dr Wong King Yin, a lecturer at the Nanyang Business School, noted that about a fifth of the international visitors to Singapore are from China.

“Due to the travel ban to visitors having travelled to China in the past 14 days, we can expect to lose about one-fifth of our visitors in the coming few months,” she said.

On top of that, news reports about international visitors from Malaysia, South Korea, Great Britain and France picking up the infection while in Singapore have spooked potential travellers from around the world. As of Monday (Feb 10), Singapore is also the country with the second-highest number of confirmed cases outside China.

On social media, airlines are inundated with requests from customers demanding refunds for their upcoming flights to Singapore.

According to Business Insider, India’s GoAir has offered refunds for flights to Singapore, while cruise company Royal Carribean has offered credits to guests who want to cancel their bookings for a Quantum of the Seas cruise, which is scheduled to depart from Singapore later this month.

The governments of Qatar and Kuwait have advised their citizens to defer travel plans to Singapore unless absolutely necessary and Kuwaiti citizens in Singapore were also advised to leave the Republic as soon as possible.

More countries could well join in, said Mr Christopher Khoo, the managing director of tourism consultancy MasterConsult Services.

“The countries will read off what the others are doing, and since Singapore is high up on the list of countries (with the most number of confirmed cases), I expect around half a dozen more countries to issue an advisory in the next two weeks,” he said. 

He added that while the ongoing situation is not yet a full-blown crisis, there is “every indication that it will become one”.

“From our experience from dealing with the Asian Financial Crisis, Sars and H1N1 virus, and their attendant impact on the tourism industry, I believe that the industry is in for a very tough six to eight months at a minimum.”

Dr Wong said international travellers will likely keep a close eye on news headlines before deciding whether to take the risk of coming to Singapore, and that they are likely to be easily spooked.

For example, she said, the death of a novel coronavirus patient here might be a “trigger point” that would cause a sharp drop in arrivals.

She added: “If more and more local residents are confirmed to be infected and if we are not able to trace their source of infection, then it would become a great deterrent to visitors to come. I think the greatest concern to visitors is whether they may get infected by someone asymptomatic in the local community.”

It is not just Singapore that will be avoided but travel generally will become a low priority for people around the world, Mr Khoo noted.

“There may be temporary blips or bright spots, if one country does exceptionally well or badly in managing the outbreak, but this will occur within an overall deteriorating background.”

Mr Suan Teck Kin, the head of research for United Overseas Bank, wrote in a report on Friday that the novel coronavirus will have a direct impact not just on hospitality-related companies such as hotels and travel agencies, but also services industries such as food and beverage, retail and transport.

“The key impact will likely come from significantly reduced tourism arrivals especially from mainland China,” he noted.

HOW BAD COULD IT GET?

None of this will be new to Singapore, Mr Suan noted.

During the Sars outbreak in Singapore that lasted from March to July 2003, tourist arrivals nosedived by more than 70 per cent in May 2003 from the previous year, he said.

This was due to a drop of more than 90 per cent in Chinese tourist arrivals in May 2003,  compared with the same month the year before.

The economy shrunk by 0.3 per cent in the second quarter 2003, led by a contraction in hotels and restaurants (-26.8 per cent), transport and storage (-10.8 per cent) and other services (-2.3 per cent).

Given the evolving status of the ongoing novel coronavirus situation, it is hard to determine whether it would be as prolonged and severe as Sars, Mr Suan said, and therefore whether the overall economic impact would be just as bad.

For the time being, he expects this outbreak to shave off between 0.5 and 1 percentage point from Singapore’s economy this year.

WHAT TOURISM COMPANIES CAN DO NOW

But even as they face a tough road ahead, the experts said tourism-related companies should take this as an opportunity to invest in things that they may not have had time for during busy tourism periods.

For example, Mr Khoo said that instead of laying off staff, employers should invest in training them so that hotels and travel agencies will have experienced staff in key positions when the economy recovers at the end of the outbreak.

“The Government could provide subsidies of 95 per cent for relevant courses and make-up pay with few restrictions to help employers,” he said.

He added that as there are many freelancers such as tour guides in the tourism industry, they should also be given assistance by the Government.

He added that this current outbreak also presents a unique opportunity for hotels to renovate their rooms.

“Our hotels have been operating at 80 to 90 per cent capacity in the last two decades, which means we have not had the opportunity to refresh our rooms.”

Dr Wong noted that Budget 2020, which will be announced on Feb 18, is likely to contain measures to help companies through these turbulent times, including short-term cash flow problems and helping them to retain and train their employees by providing some support to cover part of their wage costs.

Even as the industry looks set to struggle in the months ahead, Mr Khoo said there will certainly be light at the end of the tunnel: “What is certain, however, is that tourism will bounce back, and very strongly after this crisis. Countries and regions have all shown that they can overcome crises, as we have seen from (past) crises, earthquakes, terrorist attacks or other catastrophes.”  

Source: Today, 10 February 2020


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