The Tourism Industry Under The Epidemic Situation: Air Services Are Grounded, Hotels Help Themselves, Cash Is King, Waiting For Rebounding.

The new crown pneumonia epidemic in early 2020 hit all walks of life, and the third industry is undoubtedly the hardest hit area. All tourism is built on the basis of travel, because the epidemic continues to be anxious, pressing the pause button.

On the one hand, international airlines have suspended flights to China for a large area, and the cancellation rate of domestic airlines is over 50%. Official data show that as of February 10th, the total volume of passenger transport during the civil aviation Spring Festival was 37 million 78 thousand passengers, 36.4% less than that of the same period last spring.

On the other hand, the hotel industry cliff declines, STR preliminary data analysis shows that mainland China's hotel occupancy rate dropped by 75% in from January 14 to 26, 2020, in January 26th, the occupancy rate dropped to 17%, averaging 8 rooms in 10 rooms are idle.

"Many airlines rely on the end of March as a node to resume flight and recovery depends on the development of the epidemic. Hotel occupancy is certainly very low. " This has also affected the tourist market of several outbound destinations, such as Thailand, Korea, Japan and so on. "The two quarter is the traditional off-season, so we should not have too much hope," said Lian Pei, director of the research department of UBS, in an interview with the twenty-first Century economic report. Therefore, we should not hold too much hope. From the perspective of tourism, we should look at this summer. The peak season in July and August may be a good time to recover.

Whether it's a ship or a hotel, the mode of self-help has been opened. "People-oriented" and "cash are king" are the key words to "survive" and "get over".

Industry self insurance

Under the epidemic, the market value of China Southern Airlines evaporated 13% in a week, and the three major airline stocks fell. The cancellation of flights has become a "self preservation" move.

According to Ctrip statistics, only 1 -2 days in January 25th, the number of international flights has exceeded 7500 classes, and will continue to grow in the next few days. From the end of January to now, the daily flight rate of domestic flights has dropped continuously, and the cancellation rate has increased from 50% to over 70%. The cancellation rate of individual small airlines is even as high as 100%.

"Domestic airlines have basically cancelled more than half of their flights and are adjusting every day. The number of cancellations also depends on current demand. In the past few days, due to the cancellation of Spring Festival travel, it is relatively small, but we can judge that the cancellation amount in the latter half of the week will probably continue to rise in the direction of six or seven. Lian Pei said, "in 03 years, the valuation of the listed company has fallen worse. At the beginning of the epidemic, many air travel related stock price valuations had fallen to SARS, so some investors have been buying since last week, but this does not mean that they have seen any improvement in their data, just because the valuation is cheaper, and now they buy and wait. From the investment point of view, aviation stocks may still be in the doldrums for the next two or three months.

"In order to prevent and control epidemic situation, the State adopts the method of reducing personnel flow and reducing personnel contacts, and the demand for air transportation is suppressed by people. The serious reduction of demand forced airlines to reduce their transport capacity, and the sharp reduction of flights was necessary and necessary. Qi Qi, a civil aviation expert, told the twenty-first Century economic report, "whether the listed shipping companies are affected by short-term effects, and we should pay close attention to the control of the epidemic situation. But in general, the impact on state-owned airlines is short or medium term. Under the tremendous pressure of performance and profit pressure, the possibility of capital injection is not ruled out.

The "self insurance" of the hotel industry is more reflected in the hotel groups have issued free cancellation of reservations, waiver franchisee management fees, a variety of financial support programs and epidemic prevention and control measures.

In February 2nd, Ji Qi, founder of Hualong Group, called on the franchisees to "overcome difficulties and persist in business" in an internal mail. "First, the occupants need us. Two, there is no special case. We are a 365 day industry. This is our industry characteristics. The current difficulties are not going to be closed. We can talk to landlords about rent free and rent reduction, at least we can talk about paying rent temporarily.

In addition, the major hotels group also had some "just needs" during the epidemic period. According to Ji Qi, 03 years of SARS period, "a hotel reception medical group personnel, the rental rate of more than 70%, is the only profitable hotel in 3 stores."

According to InterContinental Hotel group, its three hotels, including Wuhan InterContinental Hotel, Wuhan Baohe and so on, have received medical teams from Wuhan. The InterContinental Hotel in Wuhan has recalled 190 employees, implemented the epidemic prevention work and completed the cleaning and disinfection of the whole hotel.

Marriott said to the twenty-first Century economic report that in order to receive the aid medical teams such as Shanghai and the army, the Marriott in Wuhan was able to liaison with other suppliers to purchase and deliver goods on the new year's day to alleviate the shortage of hotel materials. Marriott's support for the procurement system and the support of the sister hotel have solved the urgent need for supplies such as hotel disinfectants and respirators.

Waiting for "rebound"

Considering the impact of the epidemic on the economy, all industries can not help taking the data of 03 years of SARS as a reference.

In the February 11th epidemic report released by Bain, according to statistics, the impact of SARS on GDP is short term. In the second quarter of the 03 most affected years, the growth rate of GDP dropped from 11.1% to 9.1%, but it quickly rebounded to 10% in the three or four quarter, and finally formed a negative impact of 1% or so, and did not affect the next year.

In the third industries of the hardest hit areas, the growth rate of the transportation industry dropped by 5.4%, the accommodation and catering industry and the financial industry dropped to 3.6%, the second industries also had a larger impact, the industrial and construction industries fell by 2% and 1.7% respectively, and agriculture was relatively stable, with a decrease of 1% or so.

Though hard hit, the recovery rate is very fast. Including transportation, accommodation, catering, industry and other industries, immediately after the outbreak of SARS to a relatively reasonable level, including financial services, education, cultural and entertainment industries wait until the fourth quarter or even the next year will be fully restored.

Qi Qi thinks, "the new crown epidemic situation and SARS are not the same. In the past 17 years, the supply of Chinese civil aviation has increased enormously. The basic demand for civil aviation transportation during the two epidemic period is very different. However, the cost of transportation for two times due to insufficient demand is very different. Three, we should carry out the national mission and protect the basic civil aviation guarantee during the epidemic period regardless of income. Non three major airlines should shrink, reduce flights, rent out aircraft, plan maintenance, reduce supply, seize cash flow, and survive the winter. At the same time, it is suggested that the industry management departments should act decisively in the implementation of the policy flexibility so as to maintain the core resource allocation of the epidemic situation and avoid the excessive loss of market resources in the field of civil aviation after the outbreak.

A number of agencies initially predicted that the new crown pneumonia epidemic will cause losses of about 3000 to 500 billion yuan, which is higher than the loss of about 100 billion yuan during the SARS period.

In his report, Bain also gave the strategy of "people-oriented" and "cash as king". Ensuring employees' safety and health, controlling cash flow and cost is the key for enterprises to tide over difficulties.

Ji Qi disclosed in the above email that "the manpower cost of the front line staff in normal circumstances is about 6000 yuan per month, and 100 thousand employees are 6 hundred million per month", but "it will not deal with the crisis through layoffs and salary cuts." The most important thing is to manage cash flow properly. Managing the cash flow is extremely important when the turnover decreases and the expenses, especially the wages of employees, are paid. Large capital expenditure is labor and rent is two.