IT comes as no surprise that the coronavirus disease (Covid-19) epidemic has a chilling effect on the global travel and tourism sector, but despite some surprisingly forthright assessments by government authorities who are usually unreasonably optimistic about any sort of bad news, the general public may not appreciate just how bad the situation is.
Southeast Asia has been particularly hard-hit, primarily due to the loss of Chinese visitors.
Last week, Thailand reported it expected tourist arrivals to decline by 5 million this year, erasing 250 billion baht (about $8 billion) in potential revenue. Tourist arrivals from China, usually about 1 million a month, dropped by 90 percent this month. Elsewhere across the region, other countries are reporting their tourism business is down by 30 to 50 percent.
Here in the Philippines, estimates of actual and potential losses vary, but none of them are very encouraging. The National Economic and Development Authority (NEDA) said last week the country could lose P22.7 billion a month from tourism alone if the epidemic persists. The Department of Tourism was a bit more optimistic, predicting that revenue losses for the February-to-April period would be about P42.9 billion, or about P14 billion a month. Airline ticket refunds alone will account for about P3 billion of that in February and March, according to the Air Carriers Association of the Philippines.
Every disease epidemic in the recent past — severe acute respiratory syndrome, Middle East respiratory syndrome, bird flu, swine flu — had a significant damping effect on the tourism industry, but Covid-19 has been far more damaging due to an unfortunate confluence of circumstances. First, the virus outbreak became serious just as the Lunar New Year travel season began. The scale of human movement during China’s biggest holiday is mind-boggling. Without the virus, the Chinese would have taken 3 billion trips in about a month’s time; the combination of the Chinese government’s own restrictions on travel and travel bans imposed by other countries cut that volume by 80 to 90 percent by some estimates.
Second, the epidemic had a negative impact on travel by people from other countries, because it seemed to single out tourists. For weeks, the top stories about the epidemic were those about foreigners trapped in quarantined cities in China, or the several cruise ships in the region that were left stranded due to being quarantined at sea — for good reason, in most cases, as cruise ships have turned out to be fairly effective disease incubators. The impression that travel was particularly risky might not be quite accurate, but it was nevertheless the impression the public was given, and has aggravated the tourism slump.
Third, even at a time when the absence of Chinese tourists and the relatively minor actual impact of Covid-19 on other countries made conditions ideal to boost domestic tourism and events to mitigate the losses from vanishing foreign tourism, unreasonable fear of the infection from governments and the public alike caused events to be canceled and kept people at home. This very likely has caused an additional downturn in sectors that straddle tourism and the rest of the domestic economy, such as retail, restaurants and entertainment.
Economic soothsayers have offered quantified predictions of the epidemic’s impact on the broader economy, forecasts that ought to be taken with a grain of salt, but do at least all consistently point in the same direction. Last week, S&P Global Ratings and Moody’s Investors Service both cut their 2020 GDP growth forecasts for the Philippines to 6.1 percent. NEDA, meanwhile, has forecast that the impact of Covid-19 would cut between 0.3 and 0.7 percent from GDP this year.
There are few, if any, economic sectors that are completely impervious to the effects of a black swan like the Covid-19 epidemic. By the same token, there is no sector that is as completely exposed to virtually every black swan as tourism. And as history shows, tourism is the sector that is typically the least likely to have an effective continuity plan. That is not necessarily a knock against tourism authorities here, but rather the apparent nature of the business, because countries perceived as being a whole lot smarter and better equipped have not performed significantly better.
The only logical response, which no tourism authority or booster wants to hear, is to redirect the effort put toward promoting tourism and integrating it into the broader economy into developing other parts of the economy instead. On a policy level, tourism should be considered an added rather than a core value to the economy, especially in a country like the Philippines, where rich resources and a reasonably stable economic foundation offer options that less evolved and more poorly endowed countries like Cambodia or Laos do not have.