Flu virus starts to take toll on businesses

Travel industry seen facing biggest risk

by Hiroko Nakata and Takahiro Fukada

The spreading H1N1 swine flu virus is having an ill effect on a wide range of businesses from tourism to retailing, particularly in the western regions where the outbreak was first detected, industry sources said Friday.

Economists bemoaned the timing of the outbreak, fearing its impact on an already weakened economy.

The outbreak “could pour cold water on the Japanese economy at a time when it just started to bottom out and was about to recover,” said Toshihiro Nagahama, chief economist at Dai-ichi Life Research Institute Inc.

The share prices of sports event organizers, amusement park and theater operators, airline and railway companies, tourist agencies and retailers, among others, are already sliding, he noted.

On the other hand, pharmaceutical firms and mask makers have benefited, he said.

Nagahama likened the situation to the SARS (severe acute respiratory syndrome) scare in 2003. The chilling effect of a strong yen and relatively cold summer forced the government to retract an optimistic declaration that the sluggish economy had bottomed out and better days lay ahead.

“This time, too, I am worried that the same will occur because of the strong yen and the influenza,” Nagahama said.

Many group tours and conferences have been canceled. Normally the season for school trips, many high school and junior high school students will instead be forced to stay put this year.

The Japanese Society of Anesthesiologists said it has decided to postpone its conference originally set for Friday to Sunday at a hotel in Kobe.

According to the hotel and the society, about 80 percent of the country’s anesthesiologists, or about 12,000 people, were to participate in the three-day conference.

The impact on the hotel business in western Japan is huge, said Hiroshi Dan, the secretary general of the Japan Ryokan Association’s Kinki branch.

Dan said Friday that 195 “ryokan,” or Japanese-style hotels, in the region lost 362,200 customers through cancellations from May 17 to May 19, amounting to a loss of ¥4.3 billion.

Cancellations of school trips cost Kyoto and Nara 150,000 and 30,000 visitors, respectively, during this high season for excursions to the historic cities.

“It hurts a lot because it’s one of the peak times for school trips, especially to Kyoto and Nara,” Dan said.

“Not only our region but the industry as a whole would be damaged” if schools in the Kansai region are forbidden from going on excursions elsewhere, he said.

Struck as well by a falloff in foreign tourism, the association’s Kinki branch on Friday asked the government for emergency funds, he said.

As the virus spreads from west to east, travel agency JTB Corp. reported that the rate of package tour cancellations from the Kanto region to Kansai rose to an above-average 4 percent between May 16 and May 18.

“If the situation continues, it will have an impact on our earnings,” said JTB spokesman Yasoji Kato.

“It is not clear how long the epidemic will continue, but I hope things will stabilize as soon as possible,” he said.

Some tottering companies have even collapsed.

Osaka-based toy retailer Iseya and its affiliate began bankruptcy proceedings at the Osaka District Court, private credit research agency Teikoku Databank said Thursday.

With about ¥290 million in outstanding debts, it is the first bankruptcy case linked to the influenza in Japan.

Teikoku blamed the collapse on sluggish sales at Kansai and Itami international airports — both in the Osaka area — and at Narita International Airport near Tokyo, as travelers decline.

However, economists such as Koichi Haji, chief economist at NLI Research Institute, downplayed the impact on the economy thus far.

“Unless the outbreak is truly widespread, it will not have a large impact on the economy,” Haji said, suggesting the latest H1N1 swine flu is basically similar to the seasonal flu and that the fatality threat posed cannot be compared with that of SARS.

On the other hand, he warned that if the outbreak lasts through the fall, as more people get infected, the sick time they take will weigh on businesses.