Flu scare stokes fear of profit loss

For businesses, particularly in the services sector, fear over the escalating spread of Influenza A (H1N1) means fear of profit loss.

And the government's latest move of raising the alert level to "red" only keeps businesses nerve-racked amid lingering uncertainty.

"We haven't experienced a steep drop in patrons, but the flu scare has definitely dampened consumer traffic here, while all the flu reports by the media are driving many people to avoid public areas," an employee of Beer Oak, a bar in Seoul's Hyehwa-dong area, said in a telephone interview on condition of anonymity.

Latest government service industry data underscore the impact of the flu outbreak on local businesses. According to the Ministry of Strategy and Finance, the service industry bounced back to growth in the third quarter, recording a year-on-year expansion of 2.1 per cent. But it highlighted that the flu scare had dealt a blow on the travel industry, private academies, amusement parks, pubs, and certain transportation sectors.

The report found that travel and tourism businesses suffered a 24.9 per cent drop in sales in the third quarter compared to a year ago, while the railway and bus transportation sectors posted a loss of 5.5 per cent and 3.5 per cent respectively.

Kim Youn-joon, a spokesman of Asiana Airlines, told The Korea Herald that the biggest blow dealt by the H1N1 had so far been in May and June during the early bout of the flu scare.

"Sales were down 20 to 30 per cent during these two months, but things improved in July and August, which was when it was hotter and the flu scare died down," Kim said in a telephone interview.

The official said that travel patrons since then have not dropped compared to last year, allowing Asiana to maintain similar performance levels as 2008.

Kim, however, noted that group travel and long overseas flights may fall due to the latest flu scare.

Pubs and restaurants have also been hurt, with the bars posting a 7 per cent drop in sales and restaurants recording a 2.7 per cent loss, according to the ministry data.

All the uncertainty and anxiety has driven even specialty coffee chains like Starbucks to take quick and preemptive measures.

"All the employees here are checking their body temperature every day and being ever more sanitary and cautious," Park Chan-hee, the spokeswoman for Starbucks Coffee Korea, said. She added that the flu has not yet hurt the coffee chain's sales performance, but noted that she noticed more take-out customers than sit-in ones.

The government report also showed that amusement parks experienced a 7.6 per cent decline between July and September, while video game arcades and sports stadiums underwent a 5.7 per cent decline. It also found that the private academy industry, or hagwon industry, saw a 7 per cent contraction due to parents keeping their children away from public areas.

Jung Joon-ho, a spokesman of Lotte World, the indoor amusement park in Seoul's Jamshil area, said group visits plunged by 50 per cent in September and October, the peak months for school field trips.

"School trips have plunged, and this would be because the schools officially announced that public events should be avoided. But otherwise, the number of individual visitors has not declined," Jung said. He added the drop in school visits has brought down its revenue by 15 to 20 per cent overall.

The government report, however, showed that hospitals and clinics enjoyed a 10.3 per cent rise in earnings in the third quarter, while medical supply distributors recorded a 4.3 per cent gain.

As of last week, an average 8,857 people were confirmed as having contracted the new flu every day, up from 4,420 recorded the week before. A total of 42 people have died in the country from the flu since mid-August.