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Last Updated: Thursday, 15 May, 2003, 11:08 GMT 12:08 UK
Sars strikes down Asia tourism

By Emma Clark
BBC News Online business reporter

The World Travel & Tourism Council begins its annual conference in Portugal on Thursday. Top of the agenda will be the impact of the Sars virus on Asia's embattled tourism industry.

At the elegant Great Eagle Hotel in Hong Kong, occupancy of the 487 rooms has fallen into single digits.

"I don't think anyone has seen anything of this nature before," says general manager Nigel Roberts.

Grand Hyatt Singapore
The Hyatt in Singapore has suffered

His experience is typical. This month, the hotel occupancy rate across Hong Kong is 15%, in contrast to a more usual 82%.

Following the outbreak of Sars and subsequent travel warnings from the World Health Organization (WHO), four Asian destinations have suffered in particular - China, Hong Kong, Vietnam and Singapore.

"The impact of Sars on these countries has been four or five times the impact of September 11 in the States," says Rick Miller, vice-president of research and economics at the World Travel & Tourism Council (WTTC).

The World Travel & Tourism Council has published new data measuring the impact of Sars on four Asian destinations.

Livelihoods have been devastated. Nevin Lim, a tour guide in Hong Kong, has seen his income fall by 90%. Hotel staff, cooks and even taxi drivers have all been affected.

"Sars has not killed many people but it has killed the economy," says Mr Lim, who is relying on his savings and his father's support.

Global slump

Although these countries are suffering more than most, the global tourism industry is far from robust.

The general economic slowdown, the legacy of 11 September and the war in Iraq have all helped to depress demand for travel around the world.

1) France: 76m visitors
2) Spain: 50m visitors
3) US: 46m visitors
4) Italy: 39m visitors
5) China: 33m visitors
Source: World Trade Organization

The expansion in travel services, such as hotels, airlines and tour operators, is stuttering at between 1-1.5%, well below the rate of 3-4% seen a couple of years ago.

Growth of the broader travel and tourism economy, which measures visitor spending around the world as well as capital investment, has slowed to 2.9% this year from about 5% in happier times.

Even the US, which depends mainly on domestic tourism, has seen people going on shorter breaks or downgrading their vacations to camping trips.

1) Dubai, UAE: 30% growth
2) South Africa: 10% growth
Source: World Trade Organization

"We are discretionary spending in many ways and when the economy slows, people take a long, hard look at discretionary spending," says Mr Miller.

Nevertheless, he is predicting the industry will pick up next year and could be booming again by 2005.

'Turning the corner'

In Asia's afflicted countries, workers in tourism are desperately searching for signs of a respite.

"For a week, we have had some positive bookings after weeks of cancellations," says Jennifer Cronin, director of marketing at the Grand Hyatt in Singapore.

Hong Kong at night
People are eating out more

"I believe we are turning the corner, we have even had group bookings for June and July."

The Grand Hyatt, with its 700 staff, has put a freeze on hiring and is no longer replacing people who have resigned.

Similarly, many hotels in the region have cut costs by asking employees, including senior management, to take advance leave and periods of unpaid leave.

"So far there have been very few lay-offs," says Mark Lettenbichler, chairman of the Hong Kong Hotel Association. "[These measures] have kept the hotels alive."

Domestic tourism

In both Singapore and Hong Kong, there have also been government campaigns to stimulate demand among locals.

Mr Lim has been asked to design "high-class" tours, costing HK$400 ($51), for residents that are unable to travel abroad.

Rick Miller
I do believe this is temporary - they will return to previously scheduled growth in 2005
Rick Miller, WTTC

And there are signs of progress.

At the Great Eagle Hotel, Mr Roberts notes that his food and beverage business has only declined by 50%, relative to a 90% fall in bookings for rooms.

"In the last 10 days, there has been an increase in people eating out. We had Mother's Day last weekend and the numbers in our main restaurant were similar to last year."


Once the WHO travel bans are lifted, hoteliers are confident business travel will bounce back, even if the leisure tourists are slower to return.

"We do anticipate some pent-up demand when business people resume travelling," says Mr Lettenbichler, who is also area manager for the Ritz Carlton.

People wearing masks in Hong Kong
The masks are slowly disappearing

The WTTC is similarly optimistic. "I do believe this is temporary," says Mr Miller. "They will return to previously scheduled growth in 2005."

Certainly in Singapore and Hong Kong, the once ubiquitous masks are coming off and life is slowly returning to normal.

"The people are pulling together and there is a very strong team spirit," says Mr Roberts.

Mr Lim, meanwhile, has spent his downtime doing additional research for his heritage tours. He hopes to be better than ever when he finally returns to work.

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