Will SARS Be Next Crisis For Travel Industry?

NEW YORK— The deadly respiratory illness known as SARS may have started in China, but its impact is rippling around the world. And while the United States’ population has remained virtually untouched by the illness itself to date, fears regarding its reach/impact continue to mount and are showing up in changes in travel habits. Some in the industry are waiting to see if SARS is the next chapter that will prolong the travel industry’s ongoing woes. So far, most major lodging companies have not expressed significant concerns regarding SARS impacting their business. However, most comments on the situation were marked by uncertainty, as the true impact of the illness is yet to be seen. In a statement made during the announcement of Starwood Hotels & Resorts Worldwide’s first quarter results, Barry Sternlicht, CEO, said: “I remain optimistic for the back half of this year, assuming the SARS crisis dissipates.” Similarly, in Hilton Hotel’s first-quarter announcement, the company noted, “As a company with hotels primarily in the United States, it has seen relatively little effect on its total business as a result of the SARS situation. However, it has seen a further weakening of the Japanese business in Hawaii and in the international group market.” Indeed, the growing fear of SARS has been manifested in a change in travel habits as it relates to those areas of the world that have been most affected, such as mainland China, Hong Kong, Singapore and Toronto, Canada. According to a Time magazine report, North American airline bookings to Hong Kong have plunged more than 85% recently; in the first two weeks of April, visitor arrivals to Singapore dropped 61%; from February to March, hotel business in Asia plummeted 25%; and retail sales are reportedly down 50% in Hong Kong. Just last week, the World Health Organization (WTO) warned against unnecessary travel to Toronto, where 21 lives have been claimed by SARS. Canada is the only other country outside Asia to suffer deaths from the illness. Nearly 300 people have died from SARS in China and Southeast Asia. Reports have surfaced of empty hotels in Toronto, and empty streets in Beijing, underscoring the affect the sickness is having on travel to those areas. But many in the industry are hopeful that the WTO’s precautions have helped contain SARS, and that the travel industry will not suffer yet another setback.