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.
13
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
EXPLORE
DREAM
DISCOVER
FUEL YOUR INNER WANDERLUST WITH THESE #STAYHOME READS READ NOW >