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China virus sends shockwaves through Asia tourist industry

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Tourism throughout Asia will be affected by restrictions in China to prevent the spread of a mystery virus that has killed dozens. AFP

China virus sends shockwaves through Asia tourist industry

A deadly virus that has prompted travel restrictions in China is sending shockwaves through Asia’s tourism industry, which has become increasingly reliant on growing numbers of Chinese visitors.

At least 81 people have died since the new coronavirus strain emerged in China’s Wuhan, and millions are now under an effective quarantine, with all flights in and out of the city grounded and a ban on Chinese tour groups domestically and abroad.

The measures come amid a boom in Chinese foreign travel, with the number of tourists from the country increasing nearly tenfold since 2003, according to a report by research firm Capital Economics.

But businesses in destinations that rely on the huge numbers of Chinese tourists are already feeling the heat, with complaints of “deserted” beaches and shops, and concerns about the future.

The outbreak carries echoes of the severe acute respiratory syndrome (Sars) crisis, which paralysed regional travel and battered local economies from late 2002. Chinese tourist numbers then fell by around a third.

“If they fell by a similar number again, it would knock around 1.5-2.0 percentage points from [gross domestic product] in the most vulnerable countries,” Capital Economics said.

In Japan, the fall in Chinese visitors was already being felt in Asakusa, a popular tourist destination near the Sensoji temple.

“We’ve been seeing less people this year,” said Yoshie Yoneyama, 31, the manager of a shop selling traditional Japanese sweets and a rice-based drink called amazake.

“I think there are less than half the numbers of last year or the year before,” she said.

The number of Chinese holidaying in Japan has exploded from around 450,000 in 2003 to 8.4 million in 2018, accounting for 27 per cent of all inbound tourists as Tokyo works to expand the sector.

But it will now be “very difficult” for Japan to achieve its target of 40 million tourists in 2020, Yuki Takashima, an economist at Nomura Securities, said.

And the effects will be felt beyond hotels, restaurants and tourist sites, because many Chinese tourists visit Japan specifically to shop.

Electronic appliances and beauty products usually top of their lists, Takashima said, so retail outlets will see their bottom lines affected.

The crisis has already sent Japan’s key Nikkei index plunging, with stock in Shiseido – a cosmetics brand popular with Chinese tourists – plunging more than five per cent on Monday.

“We can expect those stocks to continue to fall like dominoes,” said Stephen Innes, chief market strategist at AxiCorp.

But he said Japan would be better placed to weather the storm than another top destination for Chinese tourists – Thailand.

Tourism accounts for 18 per cent of the nation’s GDP, with Chinese holidaymakers making up more than a quarter of total arrivals.

The country’s tourism minister has already warned a crisis on the scale of Sars could cost an estimated $1.6 billion, and the effects are already clear in Phuket.

“For two days, the streets, the shops and the beaches have been deserted,” said Claude de Crissey, who owns a 40-room hotel and a restaurant on the island.

“Phuket has focused almost exclusively on Chinese tourism . . . if the situation continues, we will all be impacted,” he said.

Australia too, already reeling from the effects of the bushfire crisis, is likely to feel the impact.

Chinese visitor numbers doubled in the six years to June last year, with mainlanders now accounting for 15 percent of Australia’s inbound tourists.

Mario Hardy, CEO of the Pacific Asia Travel Association said it was hard to gauge how long the crisis would last.

“I would suspect the impact would be between three to six months, but it will depend on how the situation evolves in the coming few weeks,” he said.

In Japan, leather goods store owner Hayato Chiba said local businesses in the Ameyoko shopping district of Tokyo’s Ueno were hoping for a swift resolution.

“An increasing number of shops in Ameyoko count on foreign customers, so it’s getting a bit tough,” said Chiba, 65, who represents around 400 local businesses.

“Something really serious is happening. We’re worried about how long it will last.”

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