By Lu Haoting (China Daily)
Updated: 2008-05-27 07:07

The 8-magnitude earthquake that devastated Sichuan province on May 12 would seriously hamper tourism in affected regions in the short term, industry insiders have said.

China National Tourism Administration (CNTA) has ordered all travel agencies to cancel trips destined for, or passing through, quake-affected areas, and the local tourism industry's major players are already feeling the pinch. The administration also requested tourists refrain from visiting these areas in the near future.

Shanghai Spring International Travel Service spokesman Zhang Lei said: "We haven't yet calculated the economic losses caused by the quake, but I'm sure they will be huge."

Sichuan-bound excursions are among the most popular of the firm's travel packages, generating about 10 percent of its total domestic travel revenue.

"Given the difficulties of restoring the damaged infrastructure, it would be difficult to resume trips to Sichuan in the short term, even if the CNTA were to allow us to organize them," Zhang said, adding that many tourists would be reluctant to visit affected areas for some time because of the "psychological shadow" cast by the disaster.

When the quake struck on May 12, 298 tourists were on Shanghai Spring International trips in the province, including 281 visitors from Shanghai and 17 from Shanxi province. They had all been safely returned home by May 21.

Many customers bound for other regions in China cancelled their trips with the company after the quake. Zhang said part of the reason was that the natural disaster cast a "psychological shadow" over the entire nation.

"Everybody is busy trying to help the victims, and so sightseeing and relaxation seems inappropriate at the moment," Zhang said.

Second blow

The quake is the second disaster to negatively impact the country's tourism industry this year, after the worst blizzards to hit China in half a century wreaked havoc on the southern part of the country in February.

Prolonged cold weather put the chill on travelers' enthusiasm during Spring Festival. The country's tourism industry earned 39 billion yuan during the Golden Week this year, 6.2 percent less than in 2007, CNTA figures show. Many popular tourist sites reported fewer visitors during the period, as weather and traffic concerns led many people to cancel travel plans.

"2008 will probably be a tough year for the country's tourism industry," Zhang said, adding that the cancellation of the Labor Day Golden Week holiday also negatively impacted long-distance travel.

China previously had three Golden Weeks a year - one during Lunar New Year, one starting from Labor Day on May 1 and one starting from National Day on Oct 1 - and these were the country's peak travel times. However, the government shaved several days off the Labor Day Golden Week starting from 2008, substituting it with three new public holidays on the dates of traditional festivals.

"Frequent natural disasters would dampen enthusiasm for travel, so we have upgraded travel companies' risk ratings," said Tang Jianwei, analyst with Guojin Securities, which has downgraded travel industry shares from "buy" to "hold".

Local impact

Analysts said Sichuan's local tourism industry's agents would suffer greater losses than national tourism companies, such as Shanghai Spring International.

Tourism plays a fundamental role in the province's economic development, accounting for more than 8 percent of its gross domestic product.

Last year, the province's tourism revenue was 121.7 billion yuan, the seventh highest among the provinces. Sichuan received 185.7 million domestic travelers in 2007, accounting for 11.5 percent of the country's domestic travelers.

Popular destinations included Jiuzhaigou Valley, giant panda sanctuaries and Emeishan Mountain.

Shares of Emeishan Tourism Co, Sichuan's only listed tourism firm, suspended trading for two days after the earthquake. The company generated 465.93 million yuan in revenue last year, a 24.68 percent year-on-year increase. But the earthquake would "significantly" impact its 2008 performance, analysts said.

Emeishan Mountain's peak seasons are usually in the second and third quarters. Last year, second-quarter revenue alone accounted for more than 60 percent of the company's total sales.

"At best, if Emeishan Tourism Co's business was to return to normal levels in three months, the firm would still suffer a 20 percent year-on-year drop in the number of 2008 customers," a Ping An Securities report said. Ping An Securities has downgraded Emeishan Tourism Co to "neutral" from "buy".

Looking ahead

But despite the recent setbacks, analysts and industry insiders remain confident in the Chinese travel industry's long-term prospects.

"The negative impact of natural disasters is temporary," Guojin Securities' Tang said. "Over the long term, China's travel industry would still undergo fast growth driven by rising incomes. We would not change our long-term ratings of the industry."