In China and Italy, residents are being told not to travel at all. In the United States, health officials are urging people to avoid situations like travel, where they will likely be exposed to crowds. As a result, many have canceled travel plans, sending the industry reeling. Some experts even say that the effects of the coronavirus may have already triggered a recession.
Online travel agencies, airlines, and cruise lines all saw double-digit US sales declines in the week ended March 2, compared to a year earlier, according to new data from Earnest Research, a company that monitors consumer credit and debit card spending. Hotels, a category that includes chains like Marriott and Holiday Inn as well as home-sharing apps like Airbnb, saw a small decline in the week of February 25 to March 2 (weekly data is Tuesday through Monday). Still, hotel sales aren’t as bad as those in other travel segments, but the losses will likely get worse as more recent data becomes available that reflects new government and company precautions.
Airlines have been hit particularly hard, having reduced their flight schedules and offered waivers for rescheduling and cancellation fees. Despite offering incredibly cheap flights, few are taking advantage of the bargains. The International Air Transport Association estimates that the industry could lose up to $113 billion in revenue in 2020 due to the coronavirus.
Meanwhile, the cruise industry is uniquely threatened by the coronavirus outbreak. On Sunday, the State Department advised Americans, especially older ones or those with underlying health conditions, not to take cruises because they present an increased risk of coronavirus infection. Tight quarters and poor ventilation, which can spread virus particles to other rooms, make cruise passengers more susceptible to infection than they would be in other environments.
The State Department alert came after a number of different vacation cruises around the world have turned into extended nightmares, as coronavirus cases aboard ships forced passengers to quarantine themselves in their rooms to avoid further infection.
Most recently, the 3,500-person Grand Princess cruise had to wait off the coast of California as government officials debated what to do with the 21 people on board who had tested positive for coronavirus. The ship finally docked yesterday in Oakland, California, where getting all the passengers off of the ship and assessed by medical professionals is expected to take as long as three days. The nightmare still won’t be over as these passengers will have to wait in quarantine zones for at least 14 days before being released.
Direct losses from the cancellation of major tech conferences to airlines, hotels, and food and transportation purveyors have already surpassed $1 billion. Business conferences like the now-canceled South by Southwest and Mobile World Congress result in more than a trillion dollars in direct revenue a year, according to Oxford Economics.
Meanwhile, a number of high-profile companies are suggesting that their employees limit travel or work from home, and numerous public events have been canceled as organizers seek to abide by public health recommendations and stem the spread of Covid-19, the disease caused by the new coronavirus.
Fears about the coronavirus have caused the economy as a whole to suffer as industries expect supply chain problems thanks to work stoppages in places like China as well as decreased demand for certain products and services, like travel. The Dow Jones Industrial Average and the S&P 500 index, measures of the performance of some of the most important companies in the country, dropped nearly 8 percent on Monday, marking the worst day since 2008 — the start of the Great Recession.
As the virus spreads, the economic situation is likely going to get worse before it gets better.