Home > > State-owned bank bails out OTA; airlines to see first traffic drop in a decade | Daily Brief

State-owned bank bails out OTA; airlines to see first traffic drop in a decade | Daily Brief

02/21/2020| 11:21:10 PM| ChinaTravelNews

The Industrial and Commercial Bank of China will provide a USD 86.7 million loan to online travel giant Trip.com Group; RevPAR of Hyatt hotels declined 90% last month in China.

Key developments:

* National bank offers loans to OTA, airlines
* Airlines to see first traffic drop in 11 years 
* Hyatt's China business drops 90%
* Tourists in Japan cautious but upbeat 

Worldwide updates: 

State-owned bank bails out travel firms

>> The Industrial and Commercial Bank of China (ICBC), a major Chinese state-controlled bank, will provide an RMB 610 million (USD 86.7 million) loan to online travel platform Trip.com Group, and an aggregate RMB 1.1 billion (USD 156 million) loan to two Shanghai-based airlines, Spring Airlines and Junyao Airlines, according to a notice from the Shanghai Municipal Financial Regulatory Bureau.  

Travel businesses including airlines, hotels and online services have shouldered great financial burden due to the massive cancellations caused by the covid-19 coronavirus outbreak.

But Trip.com Group may need more cash than ICBC has to offer: earlier this month, the OTA giant is seeking to raise a USD 1.2 billion loan, according to a Bloomberg report.

First global air traffic drop since 2009 

>> The airline industry expects the first annual decline in global passenger demand in 11 years, after tallying up the initial impact of the thousands of flights canceled because of the coronavirus outbreak in China.

The estimate shaves about 4.7 percentage points off of a passenger-traffic forecast issued just two months ago, with almost all of the impact in the Asia Pacific region, according to the International Air Transport Association. The projection may be conservative as it assumes the losses will be limited to markets linked to China.

Hong Kong airport to close concourse 

>> Hong Kong International Airport is preparing to consolidate all flights into the main terminal building, as passenger flights into and out of the city drop by two-thirds.

A number of countries have restricted or outright banned entry for people who have recently been to mainland China – and in some cases also Hong Kong – including the United States, Singapore, Australia and the Philippines.

British Airways extends route cancellations 

>> British Airways has further extended its flight cancellations to Chinese cities Beijing and Shanghai, following “the Foreign Office’s continued advice against all but essential travel to mainland China”. The airline has confirmed that the routes have now been cancelled up until April 17.

Qantas and Jetstar cut Asia flights

>> Qantas and its low-cost brand Jetstar will reduce flights to Asia for at least three months, as travel demand slows. 

The move comes after Hong Kong’s Cathay Pacific cut back its schedules by 40% up to the end of March and asked all 27,000 staff to take three weeks of unpaid leave.

Hyatt's China business drops 90%

>> RevPAR of Hyatt properties declined 90% last month in China and was down 32% in Asia Pacific excluding China. The hotel group estimated that every 1% decline in China RevPAR equals USD 1-2 million hit to EBITDA. 

Hyatt has been operating in China for more than five decades and has so far closed 26 properties in the country in response to the virus, with many others running at extremely low occupancy. 

Accor expects $5.4 million revenue loss

>> Accor expects to take a USD 5.4 million revenue hit as a result of the outbreak. The Grater China area, which includes Hong Kong and Macao, generates only about 3% of Accor’s total revenue, with the number of rooms slightly above 10%. 

Tourists in Japan cautious but upbeat 

>> Foreign tourists in Japan remain mostly confident as the country deals with one of the worst outbreaks of the coronavirus outside China. 

According to data released by the Japan Tourism Agency, the estimated number of foreign tourists to Japan only dropped 1.1% in January, with visitors from China hitting a record high for the reporting month at 924,800, up 22.6%. But the February figure is expected to nosedive following the Chinese government's ban on group travel and some individual trips overseas from Jan 27 to curb the spread of virus.

Norwegian Cruise cancels Asia voyages

>> Norwegian Cruise Line has canceled its voyages in Asia through the third quarter in 2020 and expects to take an earnings hit for the full year because of the coronavirus. Any guest or crew who have traveled to China, Hong Kong or Macao in the past 30 days are not allowed to board its vessels.

TAGS: Trip.com Group | ICBC | Accor | coronavirus | Daily Brief
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