Despite the best efforts by health workers around the world, the coronavirus continues to spread in terms of cases, fatalities and nations where it has made an appearance. As of this writing, the worldwide case count is approaching 80,000, with China being ground zero and home to the vast majority of cases.
However, the disease is picking up steam. Cases in Korea are nearing the 1,000 mark, with Italian cases of the novel virus skyrocketing nearly overnight from less than 50 to more than 200. An increasing number of fatalities in Iran have reignited concerns that the disease’s global spread is essentially past the point of containment.
The World Health Organization is not yet describing the situation as a pandemic, but Director-General Tedros Adhanom Ghebreyesus told reporters this morning (Feb. 25) that it is distinctly possible it could become one.
“For the moment, we are not witnessing the uncontained global spread of this virus, and we are not witnessing large-scale severe disease or deaths,” he said. “Does this virus have pandemic potential? Absolutely, it has. Are we there yet? From our assessment, not yet.”
While that diagnosis of the situation has been somewhat controversial, it is becoming increasingly incontrovertible that the continuing increase in cases and deaths — now over 2,000 worldwide — means that consumers and governments are starting to act like a pandemic is on.
The effects are rippling through the world, particularly when it comes to the world of travel and events.
Airlines were the first players in the space to feel the bite of consumers’ ground enthusiasm, particularly as the normally travel-intensive Chinese Lunar New Year season fizzled under the emerging virus strain. According to the International Air Transport Association (IATA), the trade body for the global airline industry, that trend has intensified, and is expected to continue to do so in the near term. The IATA estimates that falling passenger demand, particularly from China, will cost the airline industry $29.3 billion in lost revenue this year, meaning that global air travel revenue will decline for the first time in more than a decade in 2020.
As air travel has taken a hit, it is perhaps unsurprising that the destinations to which those flights connect people are feeling the associated pinch.
The cruise industry, according to NBC reports, has been hit particularly hard by the global travel showdown, especially amid cases of quarantined vessels like Carnival’s Diamond Princess, which saw some 600 passengers detained on the ship after testing positive for the coronavirus. Some described their 10-day quarantine like being held “hostage,” and anxiety around exposure and the possible consequences thereof has put an extreme damper on enthusiasm among potential cruisers.
“Business is soft, people are scared to travel,” Frank Del Rio, CEO of Norwegian Cruise Line, told investors before predicting that the trend would continue “until we see the leveling off of new cases.”
Collectively, Norwegian, Carnival and Royal Caribbean have canceled nearly 40 cruises, and rerouted an additional 40. Shares have gone down across all “three major cruise lines from 10 [percent] to 16 percent since January,” NBC reported, and all three have said that the softness will likely have notable consequences on their full-year earnings.
The good news, according to experts, is that this is not the industry’s first go-around with this type of issue. Cruise quarters are relatively close for health outbreaks, and avoiding them is a persistent issue.
“If you look at prior outbreaks, what you see is kind of [a] short-lived duration impact on booking trends in the cruise space, followed by a return to normalcy over the subsequent months,” Sharon Zackfia, equity analyst with William Blair, told NBC. “The cruise industry is really resilient, and I don’t expect we’ll be talking about this in 2022.”
2022? Yikes. That’s two years from now. Resilience may be in the eye of the beholder.
There’s also the Italian economy, which has seen COVID-19 come up hard and fast as a threat to its already fragile condition over the last few days, as cases have dramatically — and, in some areas, inexplicably — spiked. Milan Fashion Week capped off with an unusual site: Giorgio Armani presented his annual runway show, but to a totally empty theater.
“The show will happen, but in front of an empty teatro. It will be live-streamed on Armani.com, on Instagram: @giorgioarmani, and Facebook: @giorgioarmani. Due to the status of the coronavirus in Italy, Mr. Armani has decided that he wants to safeguard the well-being of all his invited guests by not having them attend crowded spaces,” the Italian designer noted in a statement across media channels.
Not every designer played it quite so conservatively. Dolce & Gabbana and Hugo Boss both showed collections to full houses. However, as case reports in Northern Italy topped 100, the National Chamber of Italian Fashion cancelled its closing awards event scheduled for Sunday night, as well as its market day for emerging designers the following day.
Meanwhile, in Venice, the annual Carnival celebration — a major annual tourist event in the southern city — was cut short by two days in an attempt to curb the spread of the coronavirus, which began appearing further south in Italy as of last weekend.
“I was surprised by this explosion of cases,” said Prime Minister Giuseppe Conte. “We will do everything we can to contain the contagion.”
Yet, whether they will be able to contain the economic carnage that will come along with it is another story. The disease’s unexpected explosion within its national borders, and the attendant hit from the concurrent cancellations at Milan Fashion Week and Venice’s Carnival, came as hits to an economy that was, by most expert opinions, just keeping its head above water before the outbreak broke out. The containment measures Italy is now undertaking may stop the spread of the virus, but likely at the cost of pushing the nation into a recession.
While Italy has had a concentration of events cancelled in the last week or so, worldwide events like trade shows are taking a hit as well, as concern about slowing the spread of the coronavirus — and hopefully cutting it off before it reaches epidemic levels — becomes paramount among corporate leaders worldwide. For example, the Mobile World Congress (MWC), the industry’s biggest annual trade show in Barcelona, Spain, was called off last week due to the virus.
Thus far, MWC is but one on a list of 24 trade show events cancelled due to COVID-19, a trend that experts are increasingly worried will take a massive bite out of the $2.5 trillion a year global industry.
“We will not know the economic impact until later this year, but it is substantial,” said Cathy Breden, CEO of the Center for Exhibition Industry Research.
The ripple effects are growing as the virus spreads, while the case counts still seemingly double by the day, and as more consumers stay home — as opposed to traveling or otherwise venturing out. The ripples are also coming more quickly, and spreading further into the segments of the global economic ecosystem.