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Coronavirus

Coronavirus hits Thailand hardest in tourism-reliant SE Asia

Hotel and airline stocks sink as China's travel ban kicks in

The Thai government had set an ambitious target of 41.8 million tourist arrivals this year but coronavirus has put paid to those hopes. (Photo by Akira Kodaka)

BANGKOK/JAKARTA -- China's ban on outbound tour groups to stem the spread of coronavirus has hit Southeast Asia's tourism industry which relies heavily on Chinese holidaymakers. 

Thailand has so far been the worst hit by coronavirus outside of China with eight patients and 39 others quarantined preemptively. With nearly 27% of Thailand's tourists arrivals coming from China, the travel ban has been a shock to the industry.

"I only had 1,600 tourists on my boats on Sunday, down from 2,300 passengers I normally have on weekends," said Chaiya Rapuepol, CEO of Patri Tour Group. His company operates cruise ships off the coast of Phuket Island, a beach resort popular with Chinese. "Chinese travel agencies have already canceled 60% of their bookings," he said.

Tourism accounts for over 20% of Thailand's gross domestic product. Although tourist arrivals hit a record 39.8 million in 2019, the figure missed the government's target by about a million. The fallout from coronavirus paints a bleaker picture for 2020. "I don't want much profit. I only hope that I can continue my business and look after my staff," Chaiya said.

On Monday, the government scaled back expectations. "We will try to achieve 40 million," said Yuthasak Supasorn, governor of the Tourism Authority of Thailand said on local television. This was a lower figure than the initial government target of 41.8 million tourists this year

Investors in Thai stocks reacted quickly to the ban. The benchmark SET index fell by 2.9% to 1,524.15, the lowest level in more than three years and the largest single-day drop since October 2016.

Shares in hotel operator Minor International dropped by 9%, while those of state-run airport operator Airports of Thailand and national flag carrier Thai Airways International each fell by 6%.

Yuthasak expects Chinese arrivals to fall by about 70% over the next few months due to the tour group ban. About 800,000 Chinese travel to Thailand monthly on average. Each of them spends about 50,000 baht ($1,630) on average. The economic impact over the next three months from a fall in Chinese tourist spending alone adds up to 84 billion baht ($2.7 billion).

Anusorn Thamjai, assistant professor at Economic Research Centre for Reform at Rangsit University, estimated that coronavirus could hit much harder, putting the figure at between 80 billion and 120 billion baht if the disease was contained by March.

The Tourism Authority of Thailand is scheduled to meet with the private sector to devise countermeasures to cope with the situation. The authority will then meet with cabinet members on Friday to present policy ideas.

Yuthasak hinted at measures to boost arrivals from other parts of Asia, such as Cambodia, Laos, Myanmar and Vietnam. He also spoke about attracting more visitors from Japan, South Korea and India.

Tourists at the Ta Prohm temple complex in Siem Reap province: Cambodia's tourism sector generated $4.35 billion in 2018, equal to about 17% of its GDP.   © Reuters

Away from Thailand, Bali is also bracing for a shock to its tourism industry as China's travel ban kicked in, although Indonesia has not identified any cases of coronavirus yet. The Indonesian Health Ministry said 13 people have been checked for the virus and 11 of them have been cleared. Two others are still under observation, with results expected on Tuesday at the earliest.

"We have received several cancellations [in Bali] due to travel warnings from several countries and flight cancellations from China," said Nadia Tika, spokesperson for Tauzia Hotels, which runs several budget hotel chains across the country.

Rai Suryawijaya, Bali chapter chair of the Indonesia Hotel and Restaurant Association, also confirmed that other hotels have faced cancellations. "Our main concern is missing the target of two million Chinese tourists this year," he said. "[The cancellations are] very impactful because it should be the high season of Chinese tourists visiting in the middle of the Lunar [New Year] holiday."

Two thermal scanners have been placed at Ngurah Rai International Airport to identify patients, according to local media.

Bali welcomed 1.1 million Chinese visitors in the 11 months ended in November, representing 20% of all arrivals in the period, and almost twice the full-year total in 2014. The industry has already been struggling to recover from volcanic eruptions and earthquakes in recent years.

The Cambodian tourism industry is also expecting a hit as Chinese arrivals are its main source of overseas visitors. While health authorities scramble to confront the possibility of an outbreak, tourism officials are working on a plan to mitigate an expected blow.

Cambodia's tourism sector generated $4.35 billion in 2018, an almost 20% jump from 2017 and equal to about 17% of its GDP. According to the most recent figures from the country's Ministry of Tourism, Cambodia welcomed 5.3 million international visitors in the first 10 months of 2019. Of these, 38% were from China.

"Any interruption of Chinese tourist inflows, for example, by a sharp slowdown of the Chinese economy, will significantly impact Cambodia's tourism sector and growth," the World Bank warned in an economic assessment of risks facing the country.

Now, that threat has arrived. Speaking to the Nikkei Asian Review, Ministry of Tourism spokesperson Chouk Choumnor said officials were working with the private sector on "urgent measures," including encouraging domestic tourism by offering affordable packages.

"The Chinese market is the biggest, not only for Cambodia, but the world in general. We will see negative impacts, if there are no urgent measures, or [if] we cannot find effective vaccination for the outbreak, the scope and the scale will increase," he said.

Additional reporting by contributing writer Shaun Turton in Phnom Penh.

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