Coronavirus devastating travel, leisure industries

Amid coronavirus fears, booths for travel agencies stand empty at Incheon International Airport, Friday. / Yonhap

By Baek Byung-yeul

The travel and leisure industries are reeling from the COVID-19 coronavirus outbreak, with an increasing number of travel agencies closing due to entry bans on travelers from Korea and sagging travel demand, data showed Sunday.

According to the data on records of licenses filed with local governments, 56 travel agencies have reported closing their businesses between January 20 ― when the first positive test of the novel coronavirus was identified here ― and March 13.

The data show just how serious the impact of the coronavirus outbreak is, with more than one travel agency a day going out of business.

Surviving agencies have gone into emergency mode in their management, but analysts predict the industry will inevitably continue to suffer major losses.

They also presume that the industry will enter into the initial stage of long-term recovery later this year at the earliest, because of “deferred demand” ― when people are prohibited from travelling for a long time due to external factors, such as the present crisis.

Hana Tour, the country's largest travel agency, has implemented a three-day work week for two months starting this month. The No. 2 company Mode Tour is offering paid leave for employees for up to two months, with a maximum 70 percent payment. Yellow Balloon Tour, the No. 3 agency, has also implemented a paid leave program for two months from March.

The hotel industry is also taking the brunt of the coronavirus outbreak, with hotels near bustling tourist areas such as Myeong-dong and Dongdaemun in central Seoul having temporarily shut down.

According to online travel platform Trip.com, around 100 hotels here have asked the agency to suspend sales of their rooms from last month to this month. The hotels are mostly rated three stars or more, whose guests are mostly foreign tourists.

To support the virus-hit industry, the Ministry of Employment and Labor designated the travel, tourist accommodation, tourist transport and performance businesses as qualifying to receive special financial support to implement paid leave, March 9.

“Due to the outbreak of the coronavirus, the reservation rate of travel agencies in February dropped by 80 percent year-on-year and the figure will be about 95 percent soon,” said Hana Financial Investment analyst Lee Ki-hoon.

“Given the premise that there has always been deferred demand in travelling after a crisis event like coronavirus is valid, the industry will rapidly recover as early as the second half of this year, or 2021.”