COVID-19 Impacts on Travel and Hotels

Part
01
of three
Part
01

COVID-19 Impacts on Travel and Hotels - Japan

Canceled bookings, suspended services, and unconventional plans are some impacts in the travel and hotel industry in Japan as a result of the COVID-19 outbreak. Despite these, the travel industry is expected to rebound quickly after the pandemic.

Canceled bookings

  • Due to the "tightening border controls and social distancing efforts amid the coronavirus pandemic limiting nonessential travel," hotels in Japan faced a sharp fall in bookings.
  • One example of this is Homeikan, "an operator of traditional Japanese-style inns in the Hongo district of Tokyo." Homeikan lost about 30% of its March bookings as nearly all group reservations have been canceled.
  • The Corona Hotel in Osaka has also experienced canceled bookings. The hotel usually has 80-90% occupancy at this time of the year as several schools would normally book for their end-of-year school trips. But these bookings have been canceled due to the COVID-19 outbreak and now the hotel hovers at 30-40%.
  • Also, in Kyoto, the loss of foreign visitors is " threatening the very survival of traditional Japanese ryokans, or family-run inns." According to Momoka Matsui, "a fourth-generation landlady of a ryokan near the famed Nishiki market," all the large groups that made their reservations a year in advance "had canceled or delayed trips due to the virus."
  • In Shizuoka, where Mt. Fuji is, "about 90,000 people, mostly Chinese, have canceled hotel and ryokan inn bookings for the first three months of this year." According to the local tourism association, "Chinese account for as much as 70% of foreign tourists."

Suspended services

  • Several cruise ship operators "have suspended services since infections were found among passengers and crew aboard the Diamond Princess, which was quarantined in Yokohama."
  • As the number of countries that implemented travel restrictions increased, "cruise service cancellations have also increased." To date, more than 400 cruise ship visits have been canceled at Japan's ports due to the COVID-19 outbreak. These cancellations "could result in the loss of more than ¥10 billion ($90 million) to local economies."
  • Since airlines and governments have suspended unnecessary travel, Japan Airlines Co Ltd (JAL) said that "it would cut 1,468 domestic flights between March 20 and March 28 stemming from lower demand because sporting and cultural events had been suspended in Japan." As a result of this, the stock prices of Japan’s ANA Holdings Inc and JAL "closed 7.6% and 13% lower respectively."

Unconventional plans

  • To cope with the sharp fall in bookings, hotels in Japan "have been offering unconventional plans to attract tourists." Homeikan hotel thought of an unconventional plan that became an instant sensation. It gave an offer that's designed "to make the guest feel like great authors of times past."
  • This Homeikan deal, "priced at about ¥8,000 per night," allows guests to do their work or just be alone while "hotel staff, behaving like publishing house editors, come and check on how they are doing." With this deal, guests are not allowed "to leave the inn unless an emergency occurs." This became successful as "bookings for March sold out within hours, so the operator is considering offering the plan again in April."
  • Also, the operator of the Tokyo Daichi Hotel Yonezawa in Yamagata Prefecture "dedicated two floors for use by high school students unable to study at home during school closures — at no charge." Around 160 students came to the hotel to study since March 5. Aside from this, "the operator will also enable residents to use the hotel’s restaurant after hours as a coworking space."

On 'revenge spending'

  • A research survey conducted by Kantar China Insights shows that 45% of respondents who have had to cancel travel plans due to the pandemic said that travel is an activity that they are itching to do. Respondents ranked travel "as number 2 on their list of activities to immediately resume after the epidemic passed."
  • With this, the travel industry is expected to rebound quickly. This is also "reflected in the after-effects of past outbreaks that came back even more favorably for the travel and hospitality industry."



Part
02
of three
Part
02

COVID-19 Impacts on Travel and Hotels - China

COVID-19 has caused significant changes to the travel and hotel industry in China. The Chinese Spring Festival has historically been the most popular tourism event in China. The Festival and the peak of COVID-19 occurred within days of each other, and the impact was unprecedented. Throughout China, COVID-19 has also caused a dramatic decline in Revenue per Available Room at leading hotel chains, and new cancellation policies have been created to address the number of travelers unable to proceed with their hotel reservations. Finally, travel bans to and from China have devastated the hotel and travel industry and caused tension between China and other countries.

The Chinese Spring Festival

Revenue per Available Room (RevPAR)

New Hotel Cancellation Policies

  • Faced with cancellations from travelers and the need to close hotels to prevent the spread of COVID-19, the hotel industry in China was forced to create new cancellation policies. At least seven of the top hotels in China implemented these new policies.
  • Marriott Hotels waived cancellation fees through mid-March, with plans to reassess this end date. The company released a statement indicating that the corporation was closely following the Centers for Disease Control and Prevention and World Health Organization guidelines.
  • Wyndham Hotels & Resorts also waived change and cancellation fees for all guests. In a public statement, the company reassured guests that they delivered supplies to their hotels in China designed to protect the safety of workers, visitors to hotels, and general members of the community. Wyndham also extended gold, platinum, and diamond member benefits through 2021.

Travel Bans to/from China

Research Strategy

In order to complete this research, we reviewed numerous travel, hotel, and tourism reports to determine the most significant impacts of COVID-19. The data points cited in this report are current through mid-March of 2020. It should be noted that changes in this industry are rapidly evolving, and continued monitoring of the impact of this pandemic is advisable.
Part
03
of three
Part
03

COVID-19 Impacts on Travel and Hotels - Singapore

Examples of impacts/changes in the travel and hotel industry in Singapore as a result of the COVID-19 pandemic include a ban on travelers from countries such as China, Singaporean hotels being forced to implement contingency plans, an increase in hotel room cancellations, and hotels being faced with additional cleaning and disinfecting expenses. The details are below. KKK

A Ban on Travelers From Certain Countries

Singapore Hotels Implementing Contingency Plans

  • According to Hospitality Net, a second impact on the hotel industry in Singapore as a result of the COVID-19 pandemic is that hotels have been forced to implement contingency plans. This is because growth in the industry is expected to slow-down as a result of the travel restrictions and lockdowns resulting from the COVID-19 disease fears.
  • In a survey that was carried out by Horwath HTL Singapore in partnership with the Singapore Hotel Association to determine the early impact of the COVID-19 pandemic on the industry, 90% of the respondents had implemented contingency plans related to revenue and cost. This is because 62% of those surveyed believe that the impact of the COVID-19 virus will be felt for over six months.
  • Over 83% of the respondents also expect the total revenue performance for the first quarter of 2020 to be down by at least 50%, while 62% expect the total revenue performance for the financial year 2020 to be down by at least 50%.

Hotel Room Cancellations

  • According to Pharmaceutical Technology, another impact or change in the hotel industry in Singapore as a result of the COVID-19 pandemic is that hotel room cancellations are anticipated. This is because travel restrictions and lockdowns meant to prevent the spread of COVID-19 have resulted in the decline of air traffic in busy hubs such as Changi, "one of the world’s most interconnected hubs."
  • As per The Strait Times, hotel occupancy has suffered due to COVID-19 as cancellations have risen. For example, the occupancy rate of Oasia hotel has fallen sharply and 20% of its business has been wiped out due to cancellations. This is according to the CEO of Far East Hospitality Management, Mr. Arthur Kiong, which manages the hotel.
  • According to the general manager of the Royal Plaza on Scotts hotel, Mr. Patrick Fiat, the hotel has had over 1,000 cancellations since the COVID-19 outbreak began. The cancellations have affected workers and Singapore’s hospitality industry has come up with cost-cutting measures, such as asking some employees to use their leave to stay at home or to do a four-day work week.

Additional Hotel Expenses

  • A change in the hotel industry in Singapore as a result of the COVID-19 pandemic are the additional expenses that hotels need to add to budgets such as temperature screening, cleaning, and disinfecting rooms costs. According to The Strait Times, it costs a hotel around $2,000 to clean and disinfect a room that had a confirmed COVID-19 case.
  • An example of a hotel that was affected by additional room cleaning and disinfecting expenses is Oasia. The 13th confirmed case in the country stayed at Oasia Hotel Downtown. The guest was a 73-year-old female Chinese national from Wuhan and the hotel was required to disinfect the room.
  • The Singaporean government announced that it would help hotels by funding cleaning costs. The Singapore Tourism Board has agreed to “pay up to 50% for third-party professional cleaning services at hotels, capped at $20,000 for those with confirmed cases and $10,000 for those with suspected cases, backdated to January 20, 2020.”

Increase in Staycations

  • Since COVID-19 cases around the world have spiked, Singaporeans are wary of traveling overseas. Local hotels are working to attract people to go on staycations instead. Some hotels have seen an increase in the number of Singaporean guests taking staycations.
  • For example, according to the chief operating officer of Resorts Singapore and Millennium Hotel, Kieran Twomey, his hotels have seen an increase in total staycations in 2020 compared to 2019. The hotels are offering staycation packages and discounts for customers eager to avoid overseas holidays due to COVID-19.
  • According to the CEO of Far East Hospitality Arthur Kiong, the number of room nights for the staycation sector in the first two months of 2020 grew by 25%, compared to the same period in 2019.
  • YOTEL Singapore Orchard Road is also focusing on the local market and has launched a new two-night staycation package for families. The hotel states that it has seen an increase in bookings in response to sales and promotions.
Sources
Sources

From Part 02
From Part 03
Quotes
  • "The Singaporean government has imposed restrictions to control community spread by disallowing passengers from Mainland China. "
Quotes
  • "62% of respondents believe the impact will be felt for more than 6 months and 55% felt it's 'much worse' than any previous health scares."
Quotes
  • "According to Mr Kiong, the number of room nights for the staycation segment in January and February this year has grown by 25 per cent, compared to the same period in 2019. "