Since it’s first reported case in Wuhan City, China, the novel coronavirus or the COVID-19 has now spread to multiple parts of the world impacting businesses and economies globally. According to the World Health Organisation, the virus has infected about 90,000 people and has claimed more than 3000 lives. What might have been perceived as China’s problem, has now become a global headache.
The virus has shown the world how something with the potential of causing a pandemic, can disrupt supply chain and conduct of all businesses. The outbreak has once again put a light on how interconnected the global economy has become, particularly after the emergence of economies like Africa, China, and India. Post-1980 when China joined the world trade, nobody expected it would one day take the center stage in the global economy.
Since China has become the epicenter of the virus, many global corporations have closed their operations in the country, banned all essential travel to the country and asked their employees to opt for work from home. But of all the industries, travel and tourism have been the worst hit by the virus. The travel industry is one of the largest industries in the world, with $5.7 trillion in revenue. It is responsible for an estimated 319mn direct and indirect jobs.
The industry has already been taking huge hits due to travel restrictions by companies and individuals have also canceled on their business and pleasure trip, due to the fear of the virus. Some experts are even saying that this could be the worst crisis for the industry since the 9/11 attacks on the World Trade Center, New York. But all this is just the beginning.
Coming summer months, many travel companies were hoping for recovery as leisure travels peaks this season with families going on vacations. Not just international travelers, the domestic travel industry has also been facing similar problems. As the Ministry of Health and Family Affairs recently notified that there have been 28 reported cases of the virus in India, people are canceling up on all their trips planned for the summers.
“We had planned to go to Kerala with kids these vacations. But since the government said there are 3 cases of the virus in the state, and air travel is also not viable at this point, we dropped all our plans for now,” said Ashish who works at a corporate firm in Gurugram.
Travel agents are also falling short on lead to conversion ratio this season. Raghav who works at a travel agency said, “Customers are repeatedly canceling their trips which were booked months earlier. Even our business partners are not willing to travel anywhere until it’s very urgent. Destinations, where cases have been reported, are not even considered by potential travelers.”
“Even destinations which are usually booked during summer months, like Andaman and Goa, are being avoided by travelers citing too much public contact as reasons. Some are fearing that remote places like islands in Andaman are not good options due to lack of medical setup,” he added.
It’s not just individual travelers who are restricting themselves from changing places, even governments of countries are banning citizens of countries where the virus is spreading rapidly, like Italy, South Korea, and China. Recently, the Indian government, in an attempt to contain the further spread of coronavirus cases in the country, canceled all visa/eVisa that had been granted to nationals from Italy, Iran, South Korea, and Japan on or before March 3. The ban is for those who have yet not entered India. The government also notified that this decision would be implemented with immediate effect. The decision comes after two new cases were confirmed in the country with both patients having a travel history to Italy and Dubai.
The government also said that it has revised travel advisory in the wake of the epidemic. The new advisory is being issued in view of the emerging global scenarios regarding COVID-19 (name of the disease caused by coronavirus) and that this advisory would replace all earlier advisories.
Since the World Health Organization has defined the spread of coronavirus COVID-19 as a “Public Health Emergency of International Concern,” the outbreak is inevitably having an enormous impact on the travel industry, ranging from hotel and cruise ship quarantines to airlines halting flights in some regions. Although, WHO is yet to label the outbreak as a “pandemic”, much of the travel that has been lost already, or will be canceled in weeks or months to come, is unlikely to be made up.
The overall impact of the virus depends on how long the outbreak continues. Past health crises, such as the SARS epidemic, indicate people will be willing to start traveling as normal again soon after there is a sense that it is safe to do so. But it is still a prediction, nobody can possibly measure how long the fear of the virus will remain inside people’s memory.
If the decline of revenue in the industry continues for longer, businesses will be forced to take drastic measures such as downsizing, to help the company sustain. So far, there has not been any news of people getting fired in the travel industry due to the virus, but experts fear that it’s not inevitable. If the demand for travel continues to be depressed, the prediction of job losses will be held true especially for lower-paid service jobs such as housekeeping at hotels and waiters and waitresses at restaurants. And as those workers are forced to cut back their own spending, the impact of the slowdown will ripple through the broader economy.
Although many experts believe that the hit to the travel industry is not enough to spark a global recession by itself. But the virus is having a widespread effect on the global economy. There has been a steep plunge in financial markets and the resulting wealth destruction, the disruption of global supply chains for manufacturers and retailers around the globe, the drop in energy prices and production due to reduced consumption All those things could combine with the hit to the travel industry to bring about a global recession.
Sandeep is a journalism and mass communication graduate with a keen interest in politics and business. He is a part of Research & Content team at HrNxt.com.