One moment, I am speaking to Tien Thuy Tien, managing director of Asian Trails Vietnam, who’s at the Lak Tented Camp in the Central Highlands and she’s waxing lyrical about the scenic beauty and the elephant by the lake, and how locals like her were out travelling, and the next, Vietnam goes into lockdown.
One moment, I am speaking to friends in Melbourne who were planning trips within their own state of Victoria because inter-state borders were not yet opened, and the next, they are confined to home with full restrictions back in place.
One moment, I am speaking to friends in Hong Kong who are out hiking the trails and discovering all the islands in the territory and the next, they have to stay home and all bars, restaurants, gyms are closed. Half a lifestyle becomes no lifestyle.
What a week.
The three poster children of Covid-19 in Asia Pacific, indeed the world, have stumbled. I know we are all keeping our fingers crossed that Japan, South Korea, Taiwan, Thailand and China do not go the same way and indeed, these are cautionary tales for countries like Malaysia and Singapore which are just beginning to open up.
In Singapore, we are beginning to have half a life and are looking forward to living fuller lives in the next few months but with what’s happening, I am sure there will be even more caution with easing up.
What a week too in the travel industry.
The bad news continues to pile up as companies report their financials. It’s a bloodbath. Almost all airlines saw more than 90% drop in passenger revenues in June. On July 28, IATA released its report, saying global passenger traffic (revenue passenger kilometers or RPKs) will not return to pre-COVID-19 levels until 2024, a year later than previously projected.
June international traffic shrank by 96.8% compared to June 2019, only slightly improved over a 98.3% decline in May, year-over-year. Capacity fell 93.2% and load factor contracted 44.7 percentage points to 38.9%.
Asia-Pacific airlines’ June traffic plummeted 97.1% compared to the year-ago period, little improved from the 98.1% decline in May. Capacity fell 93.4% and load factor shrank 45.8 percentage points to 35.6%.
Singapore Airlines saw a 99.5% drop in passenger carriage, leading to a $1b net loss in the first quarter. The only strong showing came from cargo. Thank goodness some things can still move around.
Airlines are at the bleeding edge of travel and unless they recover, we won’t.
In online travel, we take solace in the news that amid the pandemonium, Traveloka was able to raise US$250 million to stay alive.
In a statement, Ferry Unardi, co-founder and CEO, said it “was seeing an encouraging recovery across its key markets” due to a resurgence in travel and activity bookings by local holiday-makers. “Our business in Vietnam has returned to 100% pre-COVID-19 level and Thailand has surpassed 50% pre-COVID-level,” he said.
Fingers crossed. We want Traveloka to do well, to pave the way for the rest of us.
Then there’s the news that Trip.com is considering going private. This report carried by Nasdaq says, “Trip.com, best known as Ctrip, is inviting brave funds to buy out China’s tourism dip. The country’s biggest online travel outfit is considering going private, Reuters reported. It has a clean balance sheet and no controlling shareholder, and premiums for delisting Chinese companies in New York have nearly halved to 22% from last year, according to Refinitiv data. It’s a tempting target as domestic travel revives, but funding a deal will be tricky.”
It added, “New York’s loss could be private equity’s gain. The pandemic paralysed tourism spending. Ctrip is expected to lose $359 million this year, according to an average of analyst forecasts polled by Refinitiv, and its shares have fallen 17% since January. Online travel agents have fallen out of favour with public market investors, too. They once looked like asset-light cash machines, but the outbreak has demonstrated that a surprising amount of working capital is involved in keeping them afloat.”
Certainly one development to watch as Covid-19 forces companies to take measures they wouldn’t ordinarily think of. As they say, extraordinary times, extraordinary measures.
Said one analyst contacted by WiT for his observations on the news, “By doing a take private deal, management is obviously signalling to the market that its shares are undervalued. They also have not indicated where and when the company would re-list, if at all. However, those banks and funds financing the take private deal would certainly want a path to liquidity, so I’m sure it is in the cards.”
Clearly, this mother of all storms is by no means over. Some of us are in the eye right now, some are just about to get into the eye, some are at the edge of the other side of the eye. Whatever the case, keep your eye on the horizon.
This was the best piece of advice I got from a captain when I was feeling seasick on his boat. “Keep your eye on the horizon, dear.” Worth remembering and repeating, each time a new wave strikes.