A deadly viral outbreak in China has led to a wave of travel and commerce restrictions between the two largest economies, disruptions that could knock billions from the US tourism industry this year.
Airlines and hotels have increasingly braced for a blow to business in recent days as Americans ramped up efforts to contain the coronavirus, which has killed more than 1,100 globally and spread to at least two dozen countries. The Trump administration announced a travel ban with China in early February, and major airlines have suspended flights to and from that country until April.
China has emerged as the largest source of American travel-related exports, spending about $34 billion on travel and transportation services last year. But the coronavirus could result in a 28% drop in Chinese visits to the US in 2020, according to estimates from Tourism Economics, a branch of Oxford Economics.
The coronavirus is expected to have a more significant impact on travel than SARS, or severe acute respiratory syndrome, in the early 2000s. Visits from China to the US have increased nearly 13-fold since 2002 to an estimated 2.8 million last year, the consulting and data company estimated.
From tourism to international supply chains, China has become far more intertwined with the world market since then. With stores and factories idled across the second-largest economy, the coronavirus outbreak is stalling activity more broadly.
“China is a far more important driver of the global economy than it was in 2003 during SARS and further disruption to production and travel will continue to create meaningful global ripples,” said Richard Falkenrath, the chief security officer at Bridgewater Associates.
A recent Morning Consult survey found that 44% of respondents said they were less likely to travel abroad over the next six months because of the coronavirus. Travelers were also reluctant to take trips within the country, with 17% saying they were less likely to do so following the outbreak.
“If enough consumers push back their plans until later in the year, corporate earnings may reflect atypical seasonality,” said John Leer, an economist at Morning Consult.