The secret to surviving will be to manage cash flow during the height of the crisis.
In some ways, the coronavirus outbreak feels like déjà vu for Larry Hundt.
In 2003, he watched the Toronto region get hit by another deadly respiratory virus — severe acute respiratory syndrome (SARS).
His family-owned business, Great Canadian Holidays and Great Canadian Trailways, is located in Kitchener, Ontario, between Toronto and Stratford.
“The SARS in 2003 ended up hitting the coach industry here in Canada extremely hard,” Hundt said.
Coronavirus, which causes a disease called COVID-19, isn’t as virulent as SARS, but it has proven more devastating, killing more than 5,000 people. SARS-related deaths totaled nearly 900, including 44 in the Toronto area, according to news reports.
Both viruses appeared first in China. However, with COVID-19 there is a diagnostic test, which wasn’t available during the SARS outbreak.
Watching business evaporate
Hundt, like operators across Canada and the U.S., has watched future business evaporate with the closing of Toronto events and theater, and government recommendations to avoid all travel outside Canada in a season when travel into the warmer U.S. is a large part of his business.
Last week, Canada Blooms was canceled right before the nine-day Toronto garden and flower show in Toronto was supposed to open. Mirvish Theatre also announced it was closing down all shows in Toronto through mid-April, which Hundt learned as two of his coaches were en route to a performance.
“A lot of us are going to see our fleets come to a screeching halt here very soon,” said Hundt. “Hopefully, this thing doesn’t last too much into the spring or warmer weather.”
Canada, like the U.S., is responding to the public health threat by shuttering schools and public buildings as part of a social distancing strategy to reduce spreading the virus. The country’s hockey and basketball leagues have canceled their seasons, and the baseball is being delayed by at least two weeks.
Even Canadian Prime Minister Justin Trudeau is in self-isolation for two weeks after his wife, Sophie Grégoire Trudeau, tested positive for the virus. Officials are asking Canadian citizens to curtail international travel, even across the border to the U.S.
Hundt, a United Motorcoach Association board member, has been working with the association’s leadership to come up with tips and suggestions for members to limit damage to the businesses. They have also asked members to share their ideas and concerns through a survey that went out to members last week.
“This thing got very ugly very fast,” said Hundt, who began worrying about the impact of the virus during the UMA Motorcoach EXPO in January, when COVID-19 was first reported in China.
The SARS virus was even more devastating to Canadian operators, sending a number of the weaker ones into bankruptcy. It didn’t help that the economy was still rebounding from the 9/11 attacks 18 months earlier.
The secret to surviving will be to manage cash flow during the height of the crisis. Hundt recommends operators contact banks and lenders to negotiate reducing payments to interest only or temporarily suspending them until business picks up again.
“Your bank needs to know that you’re doing everything in your power to reduce your costs. These are tough times and we have to make tough decisions,” he said.
That will mean reducing expenses immediately, beginning with laying off employees if there isn’t any work for them, and stretching payables as much as possible.
“There’s a fear that if we lay a driver off, he or she is going to go drive a truck and we’ll never see them again. But if you don’t have any work, how do you employ a driver? The same comes down to your office staff and your garage,” Hundt said.
Fewer international travelers
During SARS, Toronto-area motorcoach businesses saw a significant drop in business from clients from Europe and Asia, who stayed away in the months following the outbreak. Fortunately, there was a boost in domestic travel from Canadians and Americans, who were reluctant to travel overseas.
With the stringent measures being taken by the US and Canadian governments, Hundt is optimistic that North America might again soon be appealing as a safe destination for travelers, both internationally and domestically.
“Maybe international travel will come to the U.S. and Canada because they seem to be cleaner destinations,” Hundt said.
In the coming days and weeks, UMA leadership will continue to offer more tips and ideas for addressing the COVID-19 Crisis, added Larry Killingsworth, UMA interim president and CEO.
“It appears to be the end of the world, but we’re going to get past this,” Killingsworth said. “Our industry is a critical component of our North American transportation infrastructure, even more so than in Europe which has a strong railroad system.”
He is encouraging all members to take part in “Leading your company through the COVID-19 Crisis,” an online town hall meeting this Thursday, March 19, at 2 p.m. ET. The virtual event will be a way to become better informed about the latest developments, how best to respond and what this means to your business.
In the meantime, find resources and updates that can help you on the UMA website at https://tinyurl.com/UMAresources