Southeast Asian tourism likely to be worst hit due to coronavirus, says GlobalData

Following the news that the impact of coronavirus on Southeast Asian (SEA) tourism industry could result in a significant hit;

Animesh Kumar, Director of Automotive and Travel & Tourism Consulting at GlobalData, a leading research and consulting company, offers his view:

“While the impact of Wuhan coronavirus outbreak is being felt by several countries across the globe, it is likely to be severe in case of tourism-dependent countries across Southeast Asia. China outbound tourism is significant contributor to the global tourism industry. According to GlobalData, China accounted for about 12% (159 million) of the global outbound travellers in 2019. Moreover, the Chinese outbound market had the second highest spending in 2019, with an expenditure of US$275bn. The key destinations for China outbound travellers are Hong Kong, Macau, Thailand, Japan, South Korea, Vietnam, Singapore, Malaysia, Cambodia, Taiwan, the US and France.

“The impact is not only on the China outbound tourist market but even the inbound market has been severely impacted as several airlines across the globe have cancelled their flights to China. The size of the inbound tourism market was over US$130bn in 2019. The impact has been severe as the outbreak coincided with peak holiday season.

“Japan and South Korea are already feeling the pinch as they receive a large number of travellers from China. However, certain countries in the region, which have high exposure to the tourism industry, would be the worst-hit. These include countries such as Malaysia, Thailand, Singapore, Cambodia and Vietnam as they draw a large number of tourists from China.  

“Cambodia is heavily dependent on tourism as it is among the top two industries in the country. With decrease in footfall from Chinese tourists and since several tourists from other countries are apprehensive about travelling anywhere close to China, Cambodia is likely to lose billions of dollars in tourism-related revenues.

“Similarly, in Vietnam, tourism is a crucial industry as it contributes 6-7% of the GDP. Due to the impact of coronavirus, Vietnam tourism industry can witness a decline of US$3-7bn.

“The scenario is similar in other key tourist destinations in Southeast Asia as countries like Thailand, Malaysia, Singapore are expected to lose US$3-6bn in tourism-related revenues.

“India has also been impacted as China is a key source/destination for both inbound as well as outbound travellers. India’s tourism in Kerala, a key tourist destination, is encountering challenges since all the confirmed coronavirus cases have been found in Kerala.

“While a large chunk of tourists is indeed likely to postpone their travel plans, some are likely to look for alternate and ‘safer’ destinations. It is important for players in the travel and tourism industry to identify potential travellers (for example, in India) and promote alternate destinations (for example, Middle-East). However, the most important takeaway for the tourism industry from the coronavirus outbreak is to rationalize the portfolio by reducing the reliance on China outbound tourists.”

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