The coronavirus outbreak has substantially altered forecasts for Asia-Pacific duty-free sales this year, according to research firm GlobalData.
Takings were originally forecast to reach US$43.4 billion by the end of the year. New calculations show the outbreak will likely cost the industry $8.3 billion off that figure.
Globaldata now expects Asia-Pacific duty-free sales to reach $35.2 billion, 19.1 percent lower than the original forecast. Positive outlooks for China and South Korea especially have been dashed by the epidemic, with regions expecting to profit from burgeoning Chinese tourism now forlorn.
“Other Asia-Pacific countries such as Japan, Singapore, Hong Kong, and Thailand with a considerable increase in the number of new cases over the past few days are estimated to worsen the impact,” said GlobalData Retail analyst Suresh Sunkara.
“The forecasts may change further during the course of time if the virus spread is prolonged to the second half of this year or if it spreads to other key duty-free markets in the region including India, Malaysia, and Australia, which are currently not significantly affected by the spread.”
Many key airports in the region have closed with travel between countries broadly impacted by the viral threat. Major duty-free operators such as Shilla, Lotte, Shinsegae and China Duty-Free Group are now left re-evaluating their strategies and identifying other consumer groups and markets to help offset a weakening in revenue.
“The Tokyo Olympics should … aid the recovery in Asia-Pacific duty-free sales over the summer,” said Sunkara, “on the provision that the crisis has calmed down and travel restrictions have been relaxed. If not, the market growth will take an even more serious hit this year.”