Coronavirus: What happens in Vegas if no one stays in Vegas?

Las Vegas Airport. Companies are beginning to restrict non-essential travel for employees. Photo / 123RF

Companies that rely on people travelling around the globe for business and pleasure are struggling to predict exactly how the coronavirus will ultimately affect them.

This week, thousands of people will travel to Las Vegas for business conferences. The annual South by Southwest festival in Austin, Texas, is scheduled for this month.

After that comes spring break, summer vacation, the Olympics in Japan.

When the coronavirus first broke out in China in January, the disruption to the hospitality industry — and the broader travel sector — seemed confined to people going to and from the country. But as the outbreak has spread to Europe and the United States, the impact has widened and companies that rely on world travelers for business and pleasure are struggling to predict exactly how it will ultimately affect them.

Hyatt Hotels, for instance, withdrew its financial guidance for the year on Monday because of "quickly changing circumstances and uncertain consumer demand for travel," said Mark S. Hoplamazian, Hyatt's president and chief executive.

As more corporations impose restrictions on nonessential business travel and the public stays put, conferences, hotels and others are grappling with how to contend with escalating coronavirus fears.

Analysts say most companies in the lodging, gambling or leisure industries, including cruise ship lines and amusement parks, know they will take a near-term hit to revenues, but have little idea of what will happen in the summer or beyond.

Nervous investors are bracing for the worst, driving down stocks of cruise ship lines by a third. The stocks of hotel chains like Hyatt, Marriott International and InterContinental Hotels Group have tumbled more than 16 per cent this year, compared with declines of 5 per cent in the broader market.

"It would not surprise me to see other companies rescind or revoke guidance that they provided in the fourth-quarter earnings season," said Bill Crow, a hotel analyst at Raymond James Financial. "The focus largely at that point was on China and what would happen to hotels in China. Now this has become a big domestic issue and we're seeing cancellation after cancellation of major conferences."

Japan is hosting the Summer Olympics, scheduled to begin in July. Photo / AP

Crow noted that conferences and other group events are a big business, making up about a third of the revenues for hotel chains, with another third coming via vacationers.

Many conference organisers seem determined to go forward, but are enacting a variety of screenings and rules.

SaaStr, a business-software conference set for next week in San Jose, California, said it would bar any residents of the most affected countries — China, South Korea, Italy and Iran — as well as anyone who has visited those places in the past 60 days. All attendees will need to show a U.S. driver's license or a passport to enter. Citizens of China, South Korea, Italy and Iran will also be subject to additional screening, organisers said, including passport checks to ensure they haven't recently visited their home countries.

Organisers plan to check all attendees' temperatures via "passive scanning." They also banned handshakes and mandated that attendees wash their hands before each session. "This may create some lines," the organisers said. "Our apologies."

Attendees of the Healthcare Information and Management Systems Society conference in Orlando, Florida, next week are being told to tap elbows rather than shake hands. Attendees can also get medical-grade face masks at information booths.

Facebook, Twitter and Intel have said their employees will not attend South by Southwest, but organisers insisted on Tuesday that next week's festival will go on.

Travel restrictions resulted in some cancellations by would-be attendees from China, Italy, Korea and Japan for an international construction trade show set to start next week in Las Vegas, but organisers say registration numbers are still up from when the show last occurred three years ago. As part of their efforts to keep the more than 130,000 people expected to attend healthy, conference organisers say they will be distributing buttons or stickers that say "no handshakes."

Other conferences, facing cancellations or nervous attendees, are pulling the plug.

The Walt Disney Company said last month that the closing of parks like Disney Shanghai would cost it roughly US$175 million in profits this year. Photo / Yuyang Liu, The New York Times

Mobile World Congress, a major trade show that draws tens of thousands of people from technology, telecommunications and advertising companies each year, canceled its event in Barcelona, Spain, last month, after companies pulled out based on health and safety concerns. Google and Facebook each canceled major developer conferences scheduled for May in California. The software company Zendesk called off its Relate conference that was to begin Tuesday in Miami.

Zendesk said it would donate food and unused carpet to nonprofit organizations and work with a local artist in Miami to "take some of the cardboard signage and repurpose it into a piece of art."

The Walt Disney Co. said early last month that it would lose roughly US$175 million ($278 million) in profits this year because of the closure of its parks in China. Its parks in Japan have since closed. And Disney has not said how attendance at Disneyland Paris, which has two separate parks with combined annual attendance of 15 million, has been affected as France has started to ban public gatherings in some areas around Paris in an effort to contain the spread of the virus. The parks are part of a business unit inside Disney that makes up 38 per cent of its total revenues and 46 per cent of its profits.

One city that is anxiously watching the spread of the virus is Las Vegas. Last year, more than 6.6 million, or 15.5 per cent, of the 42.5 million visitors to Las Vegas were there for conferences, according to data from the Las Vegas Convention and Visitors Authority.

Stocks of the gambling companies Wynn Resorts and Las Vegas Sands are already each down more than 20 per cent this year, largely owing to the closure of their enormous casino operations in Macao for two weeks.

Las Vegas lost its first big conference late Monday when Adobe Systems canceled its annual event that was going to bring 20,000 visitors to hear headline speakers like actress and entrepreneur Gwyneth Paltrow, New England Patriots quarterback Tom Brady and comedian Chelsea Handler, along with chief executives and top officials from numerous companies. Adobe said it planned to host portions of the event online.

"Vegas is the biggest unknown right now," said Steven Wieczynski, a gambling and leisure analyst at the financial services firm Stifel Financial. "If the coronavirus continues to linger and stays in the news, more conventions and group trips will get canceled. That's what Vegas is known for right now."

Written by: Julie Creswell
Photographs by: Yuyang Liu
© 2020 THE NEW YORK TIMES