Coronavirus outbreak causes Disney, McDonald's to shutter locations

Jonathan Garber

Businesses in China are bracing for the fallout from the coronavirus outbreak.

Retailers, hotels, restaurants and entertainment operators across the country are being forced to shutter locations and give refunds or exchanges to customers whose plans are impacted by the outbreak. As the virus sweeps across the mainland, businesses in the country are taking action ahead of the Lunar New Year, during which the Chinese were expected to take 3 billion trips. The holiday begins on Saturday and ends on Feb. 4.

McDonald’s announced the shuttering of restaurants in five cities in Hubei province, which is where Wuhan is located.

Others, like hotel operators Hyatt and InterContinental Hotels, have offered customers the opportunity to cancel or change their reservations.

And Walt Disney Co. said on Friday that it was temporarily closing its Shanghai theme park “in order to ensure the health and safety” of its guests.

The disruption is expected to have a negative impact on the local economy.

“The rapid spread of the virus means there is no longer any doubt that it will disrupt the economy this quarter,” wrote Julian Evans-Pritchard, a Singapore-based senior China economist at Capital Economics.  “The SARS epidemic offers some clues as to the potential scale of the drag,” he added. “Retail sales continued to expand, but growth halved in the space of a few months.”

However, he says that the “rise of online retail and food delivery services should soften the blow to consumption from people opting to stay home.”

But other businesses will have a more difficult time making up for lost business.

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The coronavirius, which originated in Wuhan, China, has caused the Chinese government to quarantine 40 million people as they try and stop its spread. So far, the virus has sickened 830 people and killed 26 in the country, China’s National Health Commission said Friday. Cases of the virus have also been discovered in the U.S., Japan, Korea, Singapore, Thailand, and Nepal.

Meanwhile, Chinese companies have been slower to react to the outbreak. Starbucks competitor Luckin Coffee has not yet announced the closure of any stores, neither has Yum China, which manages restaurants in the country including Pizza Hut, KFC and Taco Bell.

Casino operators in neighboring Macau, often compared to Las Vegas, are also at risk of losing business. Wynn Resorts, Las Vegas Sands and MGM Resorts are all at risk of having to close key locations in the gaming capital of Asia.

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