What the coronavirus means for UK tourism

The UK inbound tourism industry is watching nervously as the coronavirus crises unfolds, with parts of China on virtual lockdown and Chinese travel agents being told to suspend selling overseas tours. Helena Beard, managing director for China Travel Outbound, examines the likely impact on the fast growing number of UK businesses who have embraced the Chinese markets and offers some expert advice.

"Whilst we may have been treated to good luck greetings, lion dancing shows and beautiful Chinese New Year decorations over this weekend, for our colleagues in China, things have been very different.

Our Chinese staff closed the Beijing office last Thursday, dispersing throughout Asia to welcome the Year of the Rat with their families. At the same time, millions of people did the same, travelling both domestically and internationally to take advantage of the national holiday running from 24-30 January. Within a matter of hours, the severity of the Coronavirus started to become clear and the city of Wuhan was on lockdown. On Friday, the Chinese authorities announced that all group tours or ‘flight plus accommodation’ packages departing after Monday 27th January should be cancelled by travel agents free of charge. Anyone wishing to cancel their flight may also do so without penalty. No more group tours will be booked until the advice changes.

So how concerned should we be as an industry? Our clients are UK and European hotels, attractions, destinations and travel brands. They depend upon their visitors from China, now the biggest and most valuable source travel market in the world. What impact will this have and what should we be doing in response?

The most obvious place to look for clues about the future is to return to the past, and to SARS, another coronavirus. The SARS virus also originated in China and the outbreak lasted around six months from late 2002 to mid 2003. It resulted in 8,000 cases and 774 people died. There have since been other similar coronaviruses, such as MERS-CoV, which developed in Saudi Arabia in 2012.

SARS had a big effect on outbound tourism from China (and more markedly on inbound tourism to Asia), but there are some very important differences 18 years later.

China has learnt from SARS
The response to the outbreak of the current 2019 – nCoV virus has been incredibly swift and efficient compared to the response to SARS. Back in 2003, a full three months passed after the first case before the SARS virus was reported to the WHO. This new virus was reported to WHO just three weeks after the first reported case. Beijing is being a lot more open about the situation and sharing information globally in an effort to curtail the spread.

The city of Wuhan was swiftly put on lockdown, followed by another 12 cities, researchers have already published their analysis of the virus, and diagnostic tools are in place for testing at all China’s airports. They are also being used at airports around the world. There is a dedicated 1,000 bed hospital being built in Hubei province which, it is said, will be completed within just six days.

This is China
Probably the most comforting aspect about this virus is that it has originated in China. The authoritarian nature of China means that, when Beijing decides something needs to happen, it will happen, quickly, without bureaucracy and with compliance. China’s technology leads the world, and the country’s unparalleled technical and human resources can deliver a speedy and efficient response to a crisis like no other. An instruction from the government will be followed without question. The national holiday has already been extended to 2nd February and schools will remain closed. People will work from home. Life, and business, will go on.

Prepare for a surge in demand

In 2002, 16.6 million Chinese travelled internationally. In 2003, the year of SARS, this figure increased to 20.2m. In 2004, the year after SARS, the figure jumped by 8 million people to 28.9m. The market then continued to grow exponentially, reaching over 150 million last year.

I’ve worked in travel for 25 years and recall countless conversations about how ‘pent up demand’ follows an incident. However, this has never been more true. There is no market more likely to explode with pent up demand than the outbound market from China. This is a nation which believes travel is key to success. For the young, it offers vital education. For the 400 million plus millennials, it delivers status and an investment in their future. For the middle aged, it is a vital life experience, and one which was denied to them in their youth. For President Xi, arguably the biggest influencer in the world, it is a fundamental part of his strategy to establish China as a global superpower. This is why Beijing is supporting route development throughout the globe, opening up the skies and supporting new flights from China’s Tier One, Tier Two and even Tier Three cities. Connectivity is key to success. And remember, if President Xi wants it, it will happen.

On a more practical level, on the instructions of the authorities, the travel agents have cancelled all trips free of charge. Airlines are also allowing free flight changes and cancellations. That money will all be coming back into the pockets of experience-hungry Chinese tourists. They aren’t going to bank it or spend it on home improvements or a new car. They will already be planning for their first opportunity to rebook.

For those interested in the UK and Europe, the next opportunity for many will be the summer. Given the speed of response, and the experience of history, we can predict that, hopefully, this current virus will be contained well before the summer months. The Chinese do their holiday research early but they book late, within around 6-8 weeks of travel, so there is plenty of time before the summer peak.

My best advice to tourism businesses is to use this time to prepare. Find your Mandarin speaking guides, translate your orientation materials, get your WeChat Pay and AliPay implemented, work your trade networks, and prepare your press releases, sales materials and social content, because this will pass and, when it does, that pent up demand is going to hit. Big style."