Mar 6, 2020 - Economy

The coronavirus is causing widespread U.S. price cuts

Illustration of suitcase with discount stickers on it

Illustration: Aïda Amer/Axios

Having already hit supply chains and led to the widespread cancellation of large gatherings and events, the COVID-19 outbreak is now causing a repricing on tourism and travel globally, as airlines, hotels and travel operators see major declines in bookings and revenue.

Why it matters: China's record low readings in February for both manufacturing and services could serve as a warning of what's to come for parts of Asia, Europe, and even the U.S.

  • However, China is also where the best news about the virus can now be found.

Driving the news: Southwest, United, and JetBlue have all warned that the virus will have a serious impact on profits as tourists cut back travel and companies cancel events.

  • The price of tickets is plunging as airlines attempt to offload tickets, with Bloomberg reporting that flights from New York to Miami were being sold for as low as $51.

State of play: "This is not a drill," the World Health Organization said Thursday. "This is a time for pulling out all the stops,"

  • "Countries have been planning for scenarios like this for decades. Now is the time to act on those plans."

Scientists are still trying to determine how the virus is spreading and the best ways to combat it, Maria Van Kerkhove, head of WHO’s emerging diseases and zoonoses unit, said.

  • “It’s still early days, it’s still a few weeks into this outbreak."
  • “We’re learning something new every day about this virus.”

Between the lines: The worst-hit industry may be hotels, which are marking down prices and facing what may be the worst year since the financial crisis, WSJ reports.

  • Marriott's shares have fallen by about twice as much as the S&P 500's since Feb. 19, with major hoteliers Hilton and Hyatt also badly lagging the index.

On the bright side: The number of new cases confirmed in China has consistently declined in recent days to zero outside of the Hubei province, and the country's lowest levels since the start of the outbreak. Stocks have climbed all the way back from their lows in a matter of weeks.

  • The trajectory of U.S. equities appears to be following China, which sold off immediately upon opening after the Lunar New Year holiday and erased all of 2019's gains while U.S. indexes continued to touch record highs.
  • The blue-chip China CSI 300 Index rose to a two-year high Thursday, as the country's massive stimulus efforts have helped provide a V-shaped recovery.

Yes, but: There is increasing doubt about the accuracy of China's reporting.

Meanwhile in Europe:

Reproduced from STR; Chart: Axios Visuals

Hotel bookings in Italy and Milan have fallen off a cliff as travelers cancel trips en masse, data from STR showed.

The details: The country has canceled major events, including Milan's fashion week and its carnival celebration. The festival was also canceled in Athens, leading to substantial hotel declines there as well.

Also: Travel analytics company ForwardKeys found that flight bookings to Italy fell by nearly 139% in the final week of February, compared with a year ago, the Washington Post reported. The company said that means the number of cancellations exceeded the number of new bookings.

  • “We have some people who are choosing to cancel going to Italy right now,” Jennifer Wilson-Buttigieg, co-owner of Valerie Wilson Travel, told the Post. “What we’re trying to message in reaction to canceling is, ‘Let’s defer, let’s postpone.’”

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