There is turbulence ahead as the Wuhan Coronavirus hammers the region's travel sector. Photo: AFP

As panic continues to mount over the Wuhan Coronavirus outbreak, North Korea has locked down its borders until further notice while the South Korean and Japanese travel sectors watch the fallout increase as China suspends group tours and domestic tourists cancel bookings.

It is a hard pill to swallow for travel sectors that had anticipated a bonanza of incoming Chinese tourists over the Lunar New Year – China’s biggest national holiday. And with massive uncertainties hanging over the duration, spread and mortality of the virus, the cost-counting by regional airlines, and by hotels, restaurants and shops that are patronized by Chinese has barely begun.

North Korea halts inbound

North Korea, an isolated country with an economy that is dwarfed by its regional neighbors, and with a medical system that is under-resourced, has sealed its borders. According to South Korean news reports on Wednesday, Pyongyang – which has not  reported any cases of the virus – has also declared a national emergency.

Alhough multiple avenues for foreign exchange earnings, from coal exports to textile processing, have been impacted by international sanctions, tourism per se is not sanctioned. That makes tourists, who almost all enter the country from China, a vital source of scarce forex for Pyongyang.

The halt to tourism will take place until further notice, the representative of a Beijing-based company that specializes in tours into the state told Asia Times.

“It is closed, we have not been able to send tourists in since last week – January 22,” Marcus McFarland of Koryo Tours,  a Beijing- based travel company that specializes in tours into North Korea, told Asia Times by telephone. It is not known when the borders will open, McFarland added, noting that to make any guesses would be “wild speculation.”

However, there are some pointers, based on past experience.

“In the past they closed the borders during SARS for around two months, but for Ebola they closed it for four or five months,” McFarland said. “So, it is pretty difficult to speculate about.”

And however cash-strapped Pyongyang is, it is likely to prioritize public safety over foreign currency earnings.

“Our understanding is that there has been an increasing stream of tourism going into North Korea from China this year and the revenue gained is around $300 million per year, so if there is a reduction in inflow, there will be a corresponding decrease in revenues,” Go Myong-hyun, a North Korea watcher at Seoul’s Asan Institute told Asia Times. “But the regime puts political and social stability over economic growth.”

South Korea double-whammy

Meanwhile, south of the Demilitarized Zone, the travel and tourism industry is already suffering fallout from Coronavirus.

Low-cost carrier Seoul Air announced Tuesday that it was suspending all flights to China, according to The Korea Herald newspaper.  The news follows the suspension of all Korean flights to Wuhan, as ordered by the Transport Ministry last week. And all the the country’s airlines, including flag carriers Korean Air and Asiana, said they are offering full refunds for passengers cancelling flights to China.

Local airlines – hard hit last year by falling passenger numbers on Japan routes due to a heated historical/diplomatic/trade dispute that led to a Korean consumer boycott on travel to the neighboring country – are now facing a double whammy. As a result, according to Yonhap news agency, airlines are likely to suffer ongoing sales declines in the first and second quarters. Even so, airlines outperformed the main KOSPI index on Wednesday as investors hunted bargains, Yonhap noted.

Two leading Korean travel agencies said they are suffering thousands of cancellations, the Korea Herald reported. Locals are also avoiding hotels where Chinese guests are staying, reports say.

Although only four cases of the virus have been confirmed in South Korea, with 28 potential cases being monitored, the story is dominating local news media and online discussions. Four government charter flights are expected to fly to Wuhan this week to evacuate Koreans in the city. After returning home, they will be held under quarantine watch.

A petition has even been submitted to the presidential website calling for the ban on entry for all Chinese; it had received over half a million signatures by Tuesday.

Banks are advising all teller staff to wear masks, though airlines are leaving it to the discretion of flight attendants as to whether they wear masks.  In a subway carriage in Seoul on Wednesday morning, Asia Times noted that approximately half of the passengers were masked.

A convenience store owner in central Seoul, wearing a mask while working the till, told Asia Times she was concerned by the large numbers of Chinese tourists visiting the nearby shopping precinct of Myong Dong.

“Why do Chinese people eat all these odd animals?” she asked – before adding, “But a lot of Korean men eat them, too.”

Japan counts cost to GDP

Meanwhile, with Chinese making up one third of all incoming tourists in Japan, the country’s inbound tourism sector is expecting to take a hard hit from Beijing’s cancellation Sunday of all outbound group tours as it battles to contain the virus.

According to the Nikkei Asian Review, if Japan suffers a drop in tourism on a par with the outbreak of SARS in 2002 and 2003, it will cause 776 billion yen ($7.1 billion) worth of damage to GDP this year. If the Wuhan Coronavirus causes a similarly steep decline in visitors for a full year, that drag would increase to 2.48 trillion yen, lopping 0.45% off Japanese GDP.

Cruises with a total of 5,660 passengers due this week have been suspended, the Nikkei noted, and a single Japanese travel company told CNN that over 20,000 incoming tourists have been impacted through February 10.

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