China’s booming domestic and international tourism industry stands to lose billions of US dollars in tourism and related service industries revenues this year as a result of the recent SARS epidemic.

In recent years, China’s three “golden week” holidays have each generated on average, over 30 billion yuan ($3.6 billion US) in tourism revenues. This year, the Chinese Labor Day holiday was shortened and bisected by two working days, to discourage Chinese residents from travel, and to control the potential spread of the SARS epidemic to non-affected areas. Many of the country’s major tourist attractions, parks, public events, shopping venues and restaurants were and remain closed as of this report. Now, after the “holiday” public areas around the country have begun to re-open and industry appears to have taken its first weak steps toward recovery. Most State-run service venues and attractions in Beijing, however, remain closed until further notice.

In 2001, China received over 80 million inbound travelers in 2002 (including approximately 64 million compatriots from Hong Kong, Macau and Taiwan). Outbound travelers reached 12 million (also including compatriots). Both of these figures are expected to be significantly impacted this year, as a result of the World Health Organization’s (WHO) travel advisory for SARS affected areas. Travel to China has dropped to a slow trickle, with several airlines that offer service to China canceling regularly scheduled flights due to insufficient bookings.

Travel from China has also decreased, as a number of countries have limited tourist arrivals from SARS-affected areas. Combined with the currently stagnant and slow-to-recover domestic travel industry, many domestic and international travel agencies and tour operators in China are facing the possibility of financial ruin. Several of Beijing’s five-star hotels have reported improving but still exasperatingly low occupancy rates (as low as 1.6% during the May holiday), during a season that traditionally boasts 70-80% occupancy rates. On a positive note, as hotels, restaurants and other attractions remain closed and while the public continues to avoid such popularly frequented locations, many venues are seizing the opportunity to undertake much-needed renovation projects. For some locations that have been waiting for a slow period to perform renovations and employee training, administrators optimistically view the SARS epidemic effects as a means of actually improving China’s service industry.

While the figures are not yet in on just how severely SARS has impacted China during one of its most profitable travel seasons, it is clear that China will continue to suffer significant losses in its efforts to contain the SARS epidemic. U.S. industry providing travel services to and from China will no doubt, also be impacted, which does not bode well as U.S. industry struggles to recover from the recent impacts of war on travel. China, up until the SARS epidemic became public, was one of the few regions that did not experience a decline in tourism during the recent war in Iraq. The World Travel Organization has also recently launched an international survey to assess the effect of SARS on industry.