From wedding dresses to mortgage rates and an already sluggish luxury real estate market, tourism and even education programs, the effects of the coronavirus are fast starting to have an impact on businesses across the US.
Economic casualties are mounting from the virus-like flu, which has afflicted more than 64,000 people across the globe, including 15 confirmed US cases in seven states, and which has left 1,383 people dead.
That means the economic impacts being felt by US businesses that rely on Chinese tourists are expected to linger for months, unless the coronavirus – now named COVID-19, is brought under control, economists and supply chain experts tell the Washington Post.
Chinese factories had been scheduled to reopen Feb. 10, after a Lunar New Year holiday was extended due to coronavirus concerns.
But with many workers in China unable or not willing to come back to work in a sprawling quarantine region, the resumption of routine operations in many workplaces has been delayed, the Post reports.
WEDDING INDUSTRY
Some in the wedding dress business who depend on Chinese suppliers say they were feeling the disease’s impact.
‘Everything that we get [that comes] from China affects us dramatically,’ Angela Jourdan who runs the Enchanted Bridal Boutique in Bakersfield, California, told KTVU.
Most of the wedding dress in her boutique are made from Chinese fabrics, including, silk, chiffon, and satin, the news outlet reports, and the coronavirus outbreak is delaying shipments for those materials and gowns.
Enchanted bridal boutique in Bakersfield, California, which has taken a hit because most of its dresses are made in China
Brides are now having to delay their weddings because the dress production time is setting them back until 2021
‘You have no air travel, you have no employees to work on the gowns, you have no production,’ she said.
Dresses are delayed as many as six weeks, which Jourdan said can set weddings back months.
‘Your wedding could be delayed until 2021, you could lose deposits, and so on and so forth’ she told KTVU.
Apple is forecast to ship five to 10 percent less in stock like AirPods and iPhones this quarter because their production has also slowed
TECH
Another big delay may come for electronics, as tech companies have dealt with a shortage of Chinese-made parts that may affect the delivery of popular electronics.
Analysts say the virus could lead to Apple shipping five to 10 per cent fewer iPhones this quarter and could affect its plans to ramp up production of its popular AirPods, reports the Economist.
Fewer free-spending Chinese tourists are also contributing to the impacts on US businesses.
Bookings from China to the Americas, with the US being the dominant destination for Chinese nationals, dropped 64.1 per cent between Jan. 20 and Feb. 9, according to ForwardKeys, a travel analytics firm that tracks scheduled flights.
Looking forward, bookings are behind 63.2 per cent for March and April, according to data ForwardKeys provided DailyMail.com.
AUTO
Automakers are also experiencing delays due to factory shutdowns brought on by Corona concerns.
Tesla acknowledged on Thursday in its annual filing that the outbreak may have a material adverse impact on its business.
Tesla acknowledged on Thursday in its annual filing that the outbreak may have a material adverse impact on its business. Its Shanghai Gigafactory is shown
In the Risk Factors section of the 2019 10-K filing, Tesla included — for the first time ever — a mention of “health epidemics.”
Its Shanghai factor, shuttered since a Lunar New Year holiday was extended, reopened this month with the blessing of local officials.
But the electric vehicle maker now says that it is unknown whether and how global supply chains, particularly for automotive parts, may be affected if such an epidemic persists for an extended period of time.
‘We may incur expenses or delays relating to such events outside of our control, which could have a material adverse impact on our business, operating results and financicial condition.’
A delay also may affect Tesla founder Elon Musk’s compensation, which comes from options and hinges on meeting performance targets.
Musk had been on track to becoming the richest man in the world by April, if the company continues to grow at its current rate.
A delay in the reopening of Tesla’s Shanghai plant also may founder Elon Musk’s compensation, which comes from options and hinges on meeting performance targets. Musk is pictured at the World Artificial Intelligence Conference in August
LUXURY REAL ESTATE AND MORTGAGE RATES
The decline in Chinese visitors already had had an impact on the US housing market.
Mortgage interest rates have dipped, and an already sluggish luxury real estate market has depended in recent years on an injection of Chinese buyers, Realtor.com reports.
‘China has been the most important source of foreign demand for real estate,’ says Lawrence Yun, chief economist at the National Association of Realtors.
‘Wealthy Chinese buyers often purchase luxury properties, such as high-rise condos, in California and New York.
‘The upper-end market can expect to be softer as a result.’
TOURISM
The impacts of fewer tourists from China has been most felt through out the tourism industry in the US, resulting in hotel room cancellations nationwide.
The manager of the Best Western Queens Court in Flushing told the New York Times that cancellations and no-shows had begun before travel restrictions took effect, reducing business 25 percent in the last two weeks of January.
The Wyndham Garden Newark Airport in Newark, New Jersey, which also counts heavily on Chinese tourists, is likely to lose $250000 to $300000 worth of business in the next 90 days, general manager Dwayne Cronce told the Times.
He said he was already facing a loss of well over $100,000 from cancellations and no-shows.
‘Like everything else, it will work itself out,’ he said. ‘But the initial impact? Very difficult.’
Tourism experts think theme parks like Disneyland and Universal Studios will take a hard hit
With a drop of tourism starting to hit major cities that draw significant Chinese tourists, the impacts are expected to continue taking their toll, especially on hospitality and entertainment industries.
‘This is absolutely a big blow to Los Angeles tourism,’ Sean Maharaj, a managing director at global management consultancy AArete, tells the Los Angeles Business Journal.
In 2018, the most recent year for which data is available, Chinese nationals comprised the second largest group of international visitors to Los Angeles, according to the Los Angeles Tourism and Convention Board.
Chinese travelers spent nearly $1.5 billion in the city that year, the organization said.
‘If this continues, I think that you are looking at a significant impact on the likes of Disneyland, Universal Studios and other theme parks,’ Maharaj said.
‘The live show environment and the restaurant businesses are also likely going to be affected.’
Spokespersons for Disney and Universal theme parks did not immediately respond when DailyMail.com reached out.
CHINATOWNS DESERTED
New York’s Chinatowns — in Manhattan, Queens, and Brooklyn — have seen business drop from 50 to 70 percent in the last two weeks, all partly due to the decrease in tourism, reports Eater.
The owners of restaurants like historic Nom Wah Tea Parlor in Manhattan describe their environs as a ‘ghost town,’ telling Grub Street that business had reached a five-year slowdown last Monday.
Chinatown in New York is being hit hard by the virus with many tourists presuming it’s not safe to eat there despite there not being any known infection
Steve Ip, owner of Yin Ji Chang Fen, tells the Times that he had been expecting crowds of international students visiting New York-based family during the Lunar New Year: They haven’t materialized, and business at Yin Ji Chang Fen is down by half.
Restaurants in Boston’s Chinatown are suffering, too, Eater reports.
Businesses like New Golden Gate Seafood Restaurant are normally bustling this time of year, but have been practically empty, Boston radio station WBUR reports.
Business leaders in Houston’s Chinatown are seeing the same situation.
The owner of Houston’s Shabu house, Debbie Chen, tells Houston TV station KPRC2 news that she’s worried about being able to pay her staff.
COLLEGES LOSING FOREIGN STUDENTS
Education also has been impacted by the drop in tourists from China.
Sean Jasso, a professor of economics at Pepperdine University told the Los Angeles Business Journal that many short-term intensive programs at local universities catering to Chinese students have begun to see postponements and cancellations.
‘The revenues from those will obviously be lost,’ he added.
A full 42 per cent of California’s international students come from China, according to a 2019 study by the Institute of International Education and the State Department.
They contributed billions to California’s economy last year, according to the report.
Pepperdine’s Jasso said future travel restrictions by the US government could impact Chinese enrollment for the 2020-2021 school year across Los Angeles County — although this would depend on a sustained spread of the virus.
‘If a quarter of your student body comes from China, like it does in my program, that could be a big problem,’ Jasso said.
College professors say their student bodies will change drastically when, in some cases, Chinese students make up a quarter of the intake. Pictured, Harvard.