ANALYSIS: Dose of PR needed to soften effect of SARS on business

SARS is now largely contained, but businesses are still taking major hits. And their recovery will involve much more than just quashing the hype.

SARS is now largely contained, but businesses are still taking major hits. And their recovery will involve much more than just quashing the hype.

In just two months, the SARS story has evolved from panicky reports of the spread of a mysterious disease to critical examinations of how public-health entities - ranging from the Chinese government to the World Health Organization - have handled the outbreak.

In recent weeks, another story has slowly begun to take shape: how SARS is affecting the world's businesses. So far, experts are refraining from making detailed predictions about the long-term damage that will be done. One thing all agree on, however, is that damage will be far-reaching and wide-ranging.

"It's impacted everyone's business," says Alan VanderMolen, president of Edelman Asia Pacific. "All industries have been hit. The airlines in particular, as well as travel and tourism - absolutely hammered."

Flights have been cancelled and hotels sit empty. Trade shows, conferences, and new-business meetings have been rescheduled. Companies from McDonald's to Estee Lauder are reporting slower sales. Even the IPO of a distributor of cell-phone parts was postponed.

The fact that this is happening in Asian countries that represent some of the global economy's greatest growth engines makes this all the more vexing. So PR is playing a vital role in attempts to lessen SARS' blow to businesses, especially as companies' recoveries rely on accurate portrayals of the disease in a time when it's been sensationalized.

Yet the role of communications throughout the outbreak, say PR execs, has been a multifaceted one, going beyond quashing the hype. They are lobbying the Chinese government to step up business recovery efforts, as well as helping companies educate their employees. But none of these tasks have been made any easier by the misinformation clouding the media and public's understanding of the issue.

Overblown reactions

Early on in the outbreak, American Airlines found itself at the story's center when three passengers aboard a flight from Tokyo to San Jose, CA exhibited symptoms. The airport ordered that all passengers remain on the aircraft, which was moved to a remote location in a kind of de facto quarantine. A media frenzy developed around it and, as company spokesman John Hotard puts it, "We became the SARS poster child for the day. It was entirely overblown."

The irony is that American doesn't consider itself a major part of the SARS story. The extent of its operations in places close to where the virus broke out is flights from Tokyo. As a result, the airline doesn't expect the fallout that other airlines have experienced. "Overall, we do not expect it to impact our business," Hotard says.

But these expectations have not prevented American from putting into place an entire communications infrastructure that includes a hotline for employees with medical concerns, and setting up weekly conference calls.

"American was quick to set up various forms of communications, both internally and externally, even though we do not consider ourselves a major player," Hotard explains.

But the incident puts into perspective just how unpredictable the effects of SARS can be.

Cathay Pacific, the Hong Kong-based airline, is reportedly losing $3 million a day because of the SARS crisis. Its plight is part and parcel of the outbreak's effect on the air-travel industry, as was Singapore Airlines cutting back to 29% of its capacity.

What's left for Cathay is to try and convey the relative unlikelihood that passengers will be infected on one of its planes - a message that has become crucial to weathering the SARS storm.

"[The] air cabin is a low-risk environment for the transmission of SARS," explains May Lam, corporate communications manager for the company, adding that "of the 150 to 200 million global passenger movements since the outbreak of SARS in early March, there have been three probable cases of in-flight transmission."

The facts may be on the airline's side, but it's doubtful this message has been heeded: As of last week, almost 40% of flights into Hong Kong were cancelled.

The airlines' problems are echoed in other elements of the tourism industry.

The Hong Kong Hotels Association, an Edelman client, had an average occupancy rate of 84% last spring. This year, that number is down to 9%.

VanderMolen says that Edelman has opened up two PR fronts: one against the Chinese government, and one against the misinformation that has come from the at-times-overheated coverage of SARS.

"We're trying to be a voice of reason for Hong Kong overall to help the international business world in particular, but also international travelers to put SARS in context," he says.

This means getting across the facts that relatively small percentages of populations have been infected, as well as that the outbreaks have been concentrated geographically in a handful of places.

Edelman is also pushing the Chinese government to help financially damaged businesses. "In terms of the business-rescue side, [the government] could be better in providing relief and stimulating the economy," says VanderMolen.

Internal comms come first

But with rattled workforces concerned about their personal safety and that of their families, the first move for PR agencies has been on the internal communications side.

"At this point," says Ogilvy PR senior counselor James McGregor, "it's how do you educate your own employees to stay safe, and then how do you help your clients educate their employees, and then those circles get wider and wider as you look toward customers."

But, he adds, in the business world, "things have come to a standstill temporarily."

Despite the economic havoc SARS has wrought, there are bright spots. For instance, the virus has been contained in Hong Kong, Vietnam, Singapore, and Toronto (see sidebar), and has spared other large population centers. There is also the sense among experts that the spread of the disease will peak by the end of May. However, there's been more bad news heaped on top: Last week, the World Health Organization announced that the SARS virus can live outside the body for longer than was believed.

"It won't go away soon," says VanderMolen. "Who knows if it will ever go completely away? We must learn how to live with it and how to integrate it into our daily business, and learn what that means for our personal hygiene, and what it means for the hygiene of our businesses."

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Repairing SARS damage in Toronto

Toronto's tourism industry is deploying a global publicity campaign to win back its reputation as a safe city.

The largest city in Canada - the only country outside Asia with SARS deaths, at 23 - has blamed SARS fears for scaring billions of dollars away from the country's economy.

So with health officials saying SARS is contained in the city, the Toronto Tourism Industry Community Coalition - formed by industry, business, and labor leaders when the SARS outbreak hit - is launching an $118 million recovery initiative, funded by the Ontario government. Says Rod Seiling, coalition spokesperson and Greater Toronto Hotel Association president, "For Toronto, this was worse than the impact of September 11."

Several events and meetings have been cancelled, and the number of visitors has fallen. The American Association for Cancer Research nixed its five-day meeting in April, which would have brought 12,000 delegates to the city and pumped as much as $20 million into the economy. "The recovery will be a multi-stage, multi-faceted program spanning two years and involving a fair amount of PR," Seiling says.

The coalition has hired the Toronto office of Edelman to develop a "marketing recovery campaign," says Freda Colbourne, Edelman corporate and public affairs VP. According to Seiling, communications efforts will include the staging of a "seminal event in Toronto," likely this June, with the aim of garnering international news coverage to showcase the city as "a safe and fun destination." Already, Air Canada is offering "super cheap" fares to Toronto, the Toronto Blue Jays sold $1 tickets to the April 29 game against the Texas Rangers, and Mirvish Productions, Canada's largest theater producer, is offering discount entertainment packages.

But repairing Toronto's reputation will take time, says Ralph Hui, president of the Toronto Chinese Business Association. He says the city's Chinese businesses, which have been hit particularly hard, have lost 50%-90% of their customers. "It is picking up a little," says Hui, "but it could take two years before the city returns to normal."

  • Chris Daniels

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