Visitors take photographs near the brink of the Horseshoe Falls in Niagara Falls, Ont., on Feb. 3, 2020. Chinese tourism spending in Canada will plunge by one-third this year, according to estimates from the Conference Board of Canada.Tara Walton/The Globe and Mail
The global travel industry is being hit hard by mounting fears over the novel coronavirus, as events across Asia and Europe are cancelled, businesses postpone meetings and tourists reassess summer plans in response to a virus nearing pandemic status.
The outbreak has spread to about 50 countries, resulting in a growing number of cases and deaths, including in tourist hot spots such as Italy and Japan.
The virus could cost the global business-travel industry as much as US$46.6-billion a month, according to research by the Global Business Travel Association.
COVID-19 will likely have a material impact on the Canadian economy, partly because of an expected sharp drop in visits by Chinese tourists.
Chinese tourism spending will plunge by one-third this year, resulting in a $550-million hit to the economy during the first half of 2020, the Conference Board of Canada said Thursday in an estimate. British Columbia will suffer the largest dollar impact, while Prince Edward Island will experience the largest percentage hit, the Conference Board said.
“While it is difficult at this stage to assess the magnitude of the outbreak, there is little doubt that Canada’s economy will be impacted,” the report said.
Airline stocks were punished on equity markets this week. Some airlines have already embarked on cost-cutting initiatives, including unpaid leave for staff, to cope with not only a hit from tourists, but from major companies – such as Nestlé SA and L’Oréal SA – that have suspended business travel.
Facebook Inc. on Thursday cancelled an annual developers conference in San Jose, Calif., over coronavirus concerns. Moreover, major sporting events – from professional cycling races in Italy to the Summer Olympics in Tokyo – find themselves at risk of cancellation.
B.C. tour operators have started to see some cancellations, although concrete figures are difficult to tally at this time, said Walt Judas, chief executive officer of the Tourism Industry Association of BC. Vancouver-based Discover Canada Tours and Entrée Destinations have each had one cancellation, with the latter coming from Singaporean doctors who had to stay home to help with the coronavirus response.
The bigger concern, Mr. Judas said, is that bookings drop off as summer plans get made.
“We haven’t yet hit peak [travel] season, but we’re encroaching on it,” Mr. Judas said. “The longer [the outbreak] continues, the more concerned our operators will be.”
Chinese tourism to Canada has skyrocketed over the past couple decades. In 2019, Canada welcomed more than 750,000 Chinese travellers, up 1,100 per cent from 1999, Statistics Canada data show. China is now Canada’s third-largest source of tourists, behind the U.S. and Britain.
Moreover, Chinese tourists spend big. In 2019, they spent $1.8-billion in Canada, the Conference Board said. A separate Statscan survey found that Chinese tourists spend more in Canada than visitors from any other country, excluding the United States. The southwestern corner of B.C. – including Vancouver and Whistler – accounts for a sizable portion of that spending.
The SARS (severe acute respiratory syndrome) outbreak of 2003 provides a clue of what could be in store. That year, Chinese travel to Canada fell by 22 per cent. But Canada also faces the prospect of weaker travel from other affected countries.
“Even just a month ago, [the outbreak] was largely contained within China, but now we see epidemics breaking out” elsewhere, said Robyn Gibbard, senior economist at the Conference Board. “It's pretty clear at this point, the impact is not going to be contained to just Chinese people.”
Thursday’s report also noted COVID-19’s impact will extend to trade, with potentially weaker Chinese demand for lobster from PEI and Nova Scotia.
In a research note last week, National Bank senior economist Krishen Rangasamy said Canada’s tourism sector accounts for less than 3 per cent of gross domestic product. As such, the bigger threat is “from weakening commodity prices and declining investment amid a deteriorating global economic outlook.”
Mr. Gibbard said a $550-million hit to GDP was “not world-ending,” but that “in the sectors that cater to these tourists, that can be a pretty big impact.”
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Matt Lundy