China’s coronavirus outbreak is hitting the nation’s service industry hard — according to economists, it’s costing more than 1 trillion yuan (US$144 billion) in losses to the restaurant, tourism and movie industries in seven days of the Lunar New Year holiday, Caixin Global reported.
The coronavirus, which has already killed more than 200 people and infected more people than the SARS outbreak in 2003, has brought large parts of the country to a standstill. Chinese people are being forced to stay home, cancel travel and avoid gatherings, hammering the service industries, the report said.
Restaurants and retailers recorded sales of more than 1 trillion yuan in the seven days of the 2019 Lunar New Year’s holiday. Just half of that total is expected for the 2020 holiday, estimated Ren Zeping, chief economist and director of the Evergrande Think Tank.
A manager at a restaurant in Guangzhou told Caixin that it usually averages 500,000 yuan in daily sales during the holiday, but this year it has lost millions of yuan, the report said.
Haidilao International Holding, China’s largest hotpot chain, said Tuesday that it would close all of its locations on the mainland until Friday. As of the end of June, Haidilao operated 550 restaurants in 116 cities in mainland China. Jiumaojiu Group, another Hong Kong-listed restaurant operator, said it would close its more than 300 restaurants till Feb. 9.
As many small and medium restaurant operators suffer from lost revenue, an industry group in Guangzhou Thursday called for landlords to waive and reduce rents to businesses “to tide over the difficult time together.”
But these measures may not be enough to ease the financial pressures on restaurant operators. Rents usually account for 10%-15% of restaurants’ revenue, while labor costs could amount to as much as 20%-30%.
The tourism and movie industries are taking an even harder hit after travel agencies were told to suspend all tour groups, major tourism spots were closed and all eight movies scheduled to debut were withdrawn, the report said.
Chinese film studios often release major films over the holiday, and “New Year films” are major revenue generators, with 5.9 billion yuan of sales over last year’s Lunar New Year.