Travel Aggregator COVID-19 Special Edition (20 May 2020)

20 MAY 2020

COVID-19 Special Edition: Opinion Piece

COVID-19 TRAVEL SAFE ZONES

FOREWORD

Welcome to a sp Travel Aggregat

WebBeds’ newsletter dedicated The travel and hospitality industries are currently

COVID-19 global pandemic. In this issue, we will s Pacific and consider how our region will emerge

With the help of WebBeds’ team of analysts, we lo

borders will reopen and travel will resume, includ

you with the information you need to make posit

We understand that this is a difficult time for ever

partner and stands by your side. Together, we wil stronger than ever.

Enjoy the read and stay safe.

Daryl Lee CEO of WebBeds Asia Pacific

To catch up on any past editions of Travel Aggregator, simpl

Disclaimer: The information contained herein (the “Information”) is provided as is. While reasonable care has been taken to ensu “WebBeds”) are not responsible for any errors, inaccuracies or omissions in the Information. WebBeds may correct or update the will be accurate, reliable, current or without errors. To the maximum extent permitted by applicable law, WebBeds disclaim all r decision made or action taken in reliance on the Information or for any consequential, special or other damages, even if advised 2

FOREWORD

WEBBEDS ASIA PACIFIC

pecial edition of tor –

d to the travel trade in Asia Pacific. experiencing unprecedented disruption, caused by the

shed some light on the near-term future of travel in Asia

DARYL LEE CEO Daryl.Lee@webbeds.com SUN KOK SHENG CCO Koksheng.Sun@webbeds.com CYNDI NG COO Cyndi.Ng@webbeds.com BERNARD CHIONH CFO Bernard.Chionh@webbeds.com CHERYL CHEANG Vice President, Marketing Cheryl.Cheang@webbeds.com

from this crisis.

EILEEN TOK Vice President, Commercial Technology Eileen.Tok@webbeds.com

ook at the factors influencing how, where and when

KRISTY LEE Lead Research Analyst Kristy.Lee@webbeds.com

ding easy-to-read charts and graphs. The aim is to provide

tive business decisions.

rybody. Please rest assured that WebBeds is your proud

ll get through this challenging period and bounce back

JINTANA PORNTANAPAT General Manager, Thailand and Indo-China Jintana.Porntanapat@webbeds.com VINCENT LEUNG Managing Director, Hong Kong, Philippines & Japan Vincent.Leung@webbeds.com JOY HUANG Managing Director, China Joy.Huang@webbeds.com LINDA KIM General Manager, South Korea Linda.Kim@webbeds.com ASHUTOSH DOGRA General Manager, India Ashutosh.Dogra@webbeds.com JOHN STUCCI President, Pacific John.Stucci@webbeds.com JOY ZHOU General Manager, Singapore and Malaysia Joy.Zhou@webbeds.com

ly head to attractions.fitruums.com/landing/aggregator @WebBedsAPAC

ure that the Information has been obtained from reliable sources, WebBeds FZ-LLC and its representatives (collectively e Information without prior notice. WebBeds make no representations, warranties or guarantees that the Information is or representations and warranties, whether express or implied. In no event shall WebBeds be liable to you or anyone else for any d of the possibility of such damages.

3

INTRODUCTION

COVID-19 Travel Safe Zones With COVID-19 now coming under control

Japan, while Thailand is in talks with Vietnam

in parts of APAC, some countries are now

on creating safe travel corridors. Australia

tentatively

lockdown

and New Zealand have also reached a formal

restrictions, restart their economies and return

agreement to establish a trans-Tasman travel

to normalcy – most notably China, South

“bubble”, although no specific timeline has yet

Korea, Australia and New Zealand.

been revealed.

In late April, China and South Korea agreed on

Many countries are planning to focus on

a ‘fast-track’ process that simplifies the entry

domestic travel to jump-start their economies,

procedures for some business travellers. This

while also enabling essential cross-border

was the first formal bilateral program to ease

business travel. Currently, most countries

border controls and a sign that some countries

and territories have border controls in place,

are looking to relax travel restrictions and ease

such as a total ban on foreign arrivals or strict

the economic strain. China is also in talks

quarantine rules for inbound visitors.

planning

to

ease

with other countries, such as Singapore and

4

INTRODUCTION

5

W H I C H A R E T H E L I K E LY L O C AT I O N S T O O P E N U P T H E I R B O R D E R S ?

Which are the likely locations to open up their borders selectively?

6

We looked at the top trading partners for

been controlled domestically. These markets

selected

and

would open up selectively, possibly in phases,

summarised them in Chart 1. These strong trade

as highlighted in the matrix. For instance,

links or dependencies would mean business

Singapore’s top trading partners in APAC are

travel is likely to be prioritised after the virus has

China (12%), Hong Kong (12%), Malaysia (11%),

APAC

countries/territories

W H I C H A R E T H E L I K E LY L O C AT I O N S T O O P E N U P T H E I R B O R D E R S ?

Indonesia (8%) and Japan (5%). We expect

The

coronavirus

pandemic

has

had

a

that Singapore’s first travel corridors would be

devastating impact on travel and countries/

established with China, Hong Kong, Malaysia

territories that are heavily dependent on

and Japan in Phase 1. Indonesia would likely

international tourism, intensifying the pressure

follow in Phase 2, as infection rates have not

to open up their borders. According to CNN,

yet been controlled there.

Thailand is considering easing its borders to some foreign tourists, but confined to certain locations such as islands. This could be the future of tourism until a vaccine becomes available.

Chart 1: APAC's top trading partners (%) (by exports) SINGAPORE

INDONESIA

MALAYSIA

8

11

SINGAPORE

PHILIPPINES

THAILAND

VIETNAM

CHINA

JAPAN

12

5

INDIA

SOUTH KOREA

AUSTRALIA

HONG KONG

12

INDONESIA

7

15

11

MALAYSIA

14

6

14

7

7

PHILIPPINES

6

4

13

14

14

12

10

16

8

THAILAND

5

VIETNAM

5 2

CHINA

3

JAPAN

3

INDIA

3

4 2

SOUTH KOREA

2

3

7

4

4

12

7

2

5

8

27

5

3

35

16

5

56

3

3

2

5

5

20

AUSTRALIA HONG KONG

6

8

5 4 8

7

3

Figures indicate export partner share in % Phase 1

First to open borders to each other

Phase 2

Only open at a later stage

Phase 3

Last to open borders to each other

12% 12%

SINGAPORE’S TOP TRADING PARTNERS

Others - 44% China - 12%

11%

Hong Kong - 12% Malaysia - 11% Indonesia - 8%

44% 8%

US - 8% Japan - 5%

Source: WITS and WebBeds

8% 5%

7

W H I C H A R E T H E L I K E LY L O C AT I O N S T O O P E N U P T H E I R B O R D E R S ?

We also looked at other parameters that could support our view on travel safe zones.

We measured the ability of selected APAC countries to finance the stimulus programs they have rolled out, versus their dependency on trade and tourism in Charts 2, 3 and 4.

Chart 2 shows selected countries/territories’ dependency on trade versus their dependency on tourism. Those with high dependency on either parameter will have a higher propensity to open their borders. Countries/territories in quadrant 3 (i.e. Thailand, Malaysia, Hong Kong and Vietnam) are most likely to open their borders. The size of bubbles also indicates government stimulus as a percentage of their GDP. Larger bubbles may also mean a higher need to restart their economies to fund the stimulus programs (although the ability to finance stimulus programs varies depending on each country’s reserves and existing debt).

8

W H I C H A R E T H E L I K E LY L O C AT I O N S T O O P E N U P T H E I R B O R D E R S ?

High

Dependency on tourism

1

3

Chart 2 Dependency on trade Low

High

2

4

Dependency on trade

Dependency on tourism

Measured by Openness index

Measured by Contribution of

or trade to GDP ratio

tourism to GDP

Low Size of bubbles indicate stimulus as a % of GDP

Australia - 17%

India - 1%

Malaysia - 18%

Singapore - 11%

Thailand - 22%

China - 2%

Indonesia - 3%

New Zealand - 9%

South Korea - 1%

Vietnam - 3%

Hong Kong - 18%

Japan - 20%

Philippines - 3%

Source: WebBeds, compiled with data from various sources

9

W H I C H A R E T H E L I K E LY L O C AT I O N S T O O P E N U P T H E I R B O R D E R S ?

In Charts 3 and 4, we further examine these APAC countries/territories’ ability to finance their stimulus programs, as measured by total outstanding government debt and stimulus as a percentage of their reserves. Australia and Japan are in weaker positions given their high government debts and low reserves, but they are also less reliant on trade and tourism compared to other APAC countries.

10

W H I C H A R E T H E L I K E LY L O C AT I O N S T O O P E N U P T H E I R B O R D E R S ?

Weak Ability to finance stimulus

1

3

Chart 3 Dependency on trade Low

High

Weak Ability to finance stimulus

2

4

1

3

Strong

Chart 4 Dependency on tourism Low

High

2

4

Strong

Dependency on trade

Dependency on tourism

Ability to finance stimulus

Measured by Openness index

Measured by Contribution of

Measured by Govt debt +

or trade to GDP ratio

tourism to GDP

stimulus as a % of reserves

Size of bubbles indicate stimulus as a % of GDP

Australia - 17%

India - 1%

Malaysia - 18%

Singapore - 11%

Thailand - 22%

China - 2%

Indonesia - 3%

New Zealand - 9%

South Korea - 1%

Vietnam - 3%

Hong Kong - 18%

Japan - 20%

Philippines - 3%

Taiwan - 6%

Source: WebBeds, compiled with data from various sources

11

W H AT A R E T H E R E Q U I R E M E N T S F O R A C O V I D - 1 9 T R AV E L S A F E Z O N E ?

What are the requirements for a COVID-19 travel safe zone?

The aim of a COVID-19 travel safe zone is to resume flows of goods and services to maintain global supply chains and allow essential business travel. COVID-19 travel safe zones would mean the need for quarantinefree flows of people (or minimal quarantine like the China-South Korea travel corridor) with specific measures in place. This is likely to be done in a concerted and reciprocal manner.

This can only occur between countries/ territories that have shown strong records for containing the virus, based on reliable statistics. Daily infection rates and confidence in the government’s handling of the pandemic will be widely scrutinised before they can be considered in the COVID-19 travel safe zone.

12

W H AT A R E T H E R E Q U I R E M E N T S F O R A C O V I D - 1 9 T R AV E L S A F E Z O N E ?

The country/territory must have already eased lockdown restrictions and have some degree of normality (e.g. China and South Korea).

Arguably, China and South Korea are both at risk of second wave of infections, but the governments have responded accordingly, such as locking down a new city in China and shutting bars and nightclubs in Seoul.

Countries/territories who want to be part of this travel safe zone should also be expected to

adhere

to

common

contact

tracing

procedures. They would also need to have the

same

common

cross-border

health

declarations and checks to resume crossborder travel and/or agree on a set of protocol to allow this to happen.

We have observed the rise of disinfection tunnels, thermal scanners at airports, rapid COVID-19 tests by Emirates (although this only tests for presence of antibodies and not an active infection), Etihad’s self-service kiosks that claims to detect COVID-19 symptoms, etc.

While these may form the new pre-boarding flight requirement, the key to reopening borders would depend on rapid COVID-19 tests that can detect an active infection within minutes. Of course, the availability of vaccines would also facilitate this, but that would come at a later stage.

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BE READY TO MARKET

Chart 5: Potential COVID-19 travel safe zone Phase 1

Australia

Japan

South Korea

China

Malaysia

Thailand

Hong Kong

Singapore

Vietnam

Be ready to market

14

The COVID-19 travel safe zone could be

Australia (Chart 5). However, travel corridors

organised in different phases and, in our

would

view, countries/territories in Phase 1 would

as indicated by the red arrows in Chart 5.

include China, South Korea, Japan, Thailand,

Stakeholders in the travel industry, such as

Hong Kong, Vietnam, Malaysia, Singapore and

hoteliers and travel agents, should focus on

be

selective

for

trading

partners

BE READY TO MARKET

Credit: WebBeds

these markets and be ready to act in these

may close whenever there is a resurgence of

regions and target the right audience. Before

cases in a country/territory. Travel safe zones

a vaccine is developed, we would have to

are also likely to remain regional and it will be

contend with regular lockdowns on and off,

a long time before we will see any long-haul

while travel corridors will also be volatile and

travel.

15

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