U.S. Travel Industry Set for Multibillion-Dollar Hit From Coronavirus - The Wall Street Journal

U.S. Travel Industry Set for Multibillion-Dollar Hit From Coronavirus - The Wall Street Journal

New York City is relatively well positioned to withstand the drop in tourism from China, because it draws visitors from around the world, tourism officials said.

Photo: Spencer Platt/Getty Images

By

Keiko Morris and

Keiko Morris
The Wall Street Journal
• Biography
• @keikomorris
• Keiko.Morris@wsj.com

Austen Hufford

Austen Hufford
The Wall Street Journal
• Biography
• @austenhufford
• austen.hufford@wsj.com

Feb. 12, 2020 5:30 am ET

While the number of coronavirus cases in the U.S. remains small, the reverberations of a worsening outbreak across the Pacific are being felt in the American tourism industry.

Airlines have canceled flights between the world’s two biggest economies into April, and the U.S. has banned noncitizens who traveled recently to China from entry.

That effective freeze on visitors from China is a blow to hotels, retailers and other businesses that have come to rely on their spending.

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Residents of mainland China made 2.7 million entries into the U.S. in the first 11 months of 2019, according to the National Travel and Tourism Office, the third-highest tally among overseas countries after the U.K. and Japan. Chinese tourists contributed $35 billion to the U.S. economy in 2018, according to the U.S. Travel Association’s latest estimate.

Chinese New Year is normally big business for the Corning Museum of Glass in upstate New York.

The museum, on the road between New York City and Niagara Falls, has made a special effort to attract Chinese tourists since the early 2000s, said executive director Karol Wight. Its glass-blowing demonstrations are conducted in two languages: English and Mandarin.

“We usually see a spike in visitation around Chinese New Year, and it was soft for us this year,” Ms. Wight said.

Many in the industry say they expect the impact to be far worse than the hit from the outbreak in China of SARS, or severe acute respiratory syndrome, in 2003. Some 1.5 million Chinese residents received visas to travel to the U.S. in 2018, according to the National Travel and Tourism Office, compared with 217,000 in 2003.

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The industry could lose $5.8 billion in airfare and domestic spending this year, estimates Tourism Economics, an economic consulting firm. “There is so much more at stake than there was 17 years ago,” said Adam Sacks, the firm’s president.

Alexander John Hay, manager of GoldenBusTours LLC, said orders for the trips across the U.S. he organizes for Chinese and Indian visitors are a fraction of what they were last year. Many trips have also been canceled, he said.

Charles Man, owner of New York City-based Sino American tours, has also had some customers cancel or postpone trips. He has been encouraging them to travel to places outside of China.

The Corning Museum of Glass in Corning, N.Y., which conducts glass-blowing demonstrations in English and Mandarin, had fewer visitors around Chinese New Year this year.

Photo: Victor J. Blue/Bloomberg News

“There are a lot of other destinations,” Mr. Man said. “They can take a cruise to the Caribbean, because in the Caribbean there is no coronavirus.”

Cruise operators have canceled Chinese cruises.

More than 130 passengers aboard the Diamond Princess cruise ship have caught the virus, causing about 3,700 passengers and crew to be quarantined for two weeks aboard the vessel, which is docked in a Japanese port.

Royal Caribbean Cruises Ltd. said last week that before the outbreak, it expected 6% of its capacity this year to be from cruise ships leaving China. The company has canceled eight China sailings and modified several itineraries that were going through the region. The cruise operator told investors it hasn’t seen a big impact on bookings elsewhere.

Travel economists said the outbreak could cost the hotel industry some 4.6 million overnight stays this year. That would be about a 0.3% hit to demand, said Jan Freitag, senior vice president at STR Inc., a hotel-data provider. He said that would be a bigger blow than it appears because many hotels are expected to see declining occupancy rates this year. The increase of hotel-room supply in addition to the prospect of a slower-growing U.S. economy are factors expected to weigh on the hotel industry’s growth, analysts have said.

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U.S. hotel and casino operators that have properties in China face a double whammy. Wynn Resorts Ltd. said last week that the closure of its casino in the semiautonomous city of Macau would cost it $2.6 million a day, largely to pay employee salaries.

New York City, which draws throngs of visitors from around the world, is better positioned to withstand the drop from China, tourism officials said. Visitors from China made up just 1.7% of the nearly 70 million visitors to the city last year, said Christopher Heywood, executive vice president of NYC & Co., the city’s official tourism organization. He said demand for hotel rooms was up 6% annually in January despite fewer visitors from China.

The Ravel Hotel in New York City’s Long Island City neighborhood typically draws about a third of its guests from Asia at this time of year, said owner Ravi Patel. He estimates his share of guests from Asia is down to about 5%. But he said the mild winter has drawn more visitors from within the U.S., helping cover that gap.

Were the outbreak and travel halt to continue into the peak summer season, however, hospitality workers said, the damage would be severe.

“There’s a silver lining there that this didn’t happen at the worst possible time,” said Mr. Sacks of Tourism Economics.

Write to Keiko Morris at Keiko.Morris@wsj.com and Austen Hufford at austen.hufford@wsj.com

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