SARS strikes blow to Hong Kong travel

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[hong kong] Hong Kong's travel and tourism industry, already suffering from a recession and fallout from the war in Iraq, has been hit with yet another crippling blow. The SARS virus has hit the Chinese territory and rippled around the world, resulting in travel warnings throughout Asia.

In the most affected market, international-aviation hub Hong Kong, travel from Asian cities such as Beijing, Shanghai, Taipei and Singapore is down sharply.

"Tourism and air travel will be the primary industries affected," said T.J. Bond, a Merrill Lynch economist in Hong Kong, who expects Hong Kong's economy to contract in the second quarter.

Hong Kong-based Cathay Pacific Airways and Singapore Airlines have both cut about 60 flights in the region. Long-haul markets have also dropped, but that trend began before the SARS epidemic spread, because of the war.

Severe acute respiratory syndrome "is probably the worst thing that could happen to Hong Kong in the current economic climate," said Charles Edwards, managing director of Publicis Groupe's Fallon, Hong Kong, which handles United Airlines. "I think the actual threat will pass within the next month, but it will take two to three months until people shake off [Hong Kong's] stigma. I don't think there will be a long-term effect, though."

Hotels are suffering, too. "We've seen a slowdown in bookings. The first 15 days of March were quite strong for most hotels [in Hong Kong], but business went down eight percentage points overall in March, based on normal trading," said Julia Record, director-corporate PR, Shangri-la Hotels & Resorts, Hong Kong.

In the meantime, many events in Hong Kong have been postponed, ranging from trade fairs and conferences to a Rolling Stones concert.

The travel industry's recovery, Ms. Record added, "is hard to predict. It all depends on when SARS will be contained and what happens in Iraq."

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