What Hong Kong taught Uber about other cities

OAKLAND, CALIF.» In late February, Uber executives were set to gather in San Francisco to form business plans for the year as the coronavirus steadily spread beyond China. While some executives who were initially invited had been told to stay home, the remaining few huddled at Uber’s headquarters to make plans for the inevitable pandemic.

One of them, Susan Anderson, who managed Uber’s business in Australia, New Zealand and North Asia, delivered bad news: In Hong Kong, Uber trips had declined rapidly as the coronavirus took hold.

“People were tracking what the rate of the virus spread was, and we saw that translate into a drop in trips pretty early on,” Anderson recalled in an interview. “It became obvious that this was not going to be contained.”

Months later, Uber is facing its greatest crisis: keeping the ride-hailing business afloat when many people are still staying home. Coronavirus totals in the United States, Uber’s highest-revenue market, continue to grow, challenging cities and local businesses that are trying to reopen. And rides, not surprisingly, are only haltingly returning to a semblance of what they were.

Hong Kong, on the other hand, has recovered from the pandemic faster than most other cities where Uber operates. The outbreak has been less severe there than in the United States, and many commuters have gone back to work. Although Uber’s business in Hong Kong is small and does not generate much revenue, the foothold gave the company a preview of how quickly its business would slip away during the pandemic — but also a best-case example of what its recovery elsewhere could look like.

At first, drivers were reluctant to get back behind the wheel. Commuters returned to Uber once restrictions were lifted, while infrequent riders did not. Hong Kong also provided a testing ground for new virus safety features, like facial recognition software to detect whether drivers were wearing masks, before they were introduced globally.

The city began lifting restrictions in February, but a second wave of cases in

March caused another dip in rides — a sign of the unsteady recovery that Uber is likely to see in the United States.

“If the world looked like Hong Kong, we would be in great shape,” Uber’s chief executive, Dara Khosrowshahi, said during a March call with financial analysts. At the peak of the outbreak in Hong Kong, rides declined 45%, Uber said.

In major U.S. cities, Uber rides dropped as much as 80%. On average, they had begun to recover about 12% last month, the company said. The recovery in Hong Kong has been stronger, with business up 70% from its lowest point.

There were signs of recovery in states that began reopening, like Georgia, where business was up 43%, and Texas, up 50%. But those states are starting to see virus numbers spike, and Uber’s experience in Hong Kong suggests that a downturn in business is likely to follow.

“It’s been very beneficial for us having a presence here,” Anderson said of Hong Kong. “It’s given us a few more weeks to understand what this might look like.” She added, “There are some things that are going to hold globally true and some things that really need regional tailoring.”

Some safety measures, like providing sanitizing products to drivers, became part of Uber’s global plans. After Hong Kong commuters returned to Uber more quickly than casual riders, the company increased its promotion of its commuting services.

In May, Uber began to require masks for drivers and passengers in the United States, but the simple act of asking people to put on a mask has become contentious.

In the months after the February leadership meeting, Uber’s business in larger U.S. markets all but vanished. By mid-March, its rides were down 70% in Seattle, and the outlook for the rest of the United States looked grim.

In May, the company was forced to drastically cut costs. It has laid off about 25% of its workforce, sold its bike and scooter business, and pulled its food delivery service from some of the markets where it lost too much money.

As cuts have continued, Uber’s message of recovery has become increasingly urgent. After running advertisements in April urging riders to stay at home and avoid the risk of transmitting the virus, the company has shifted to encouraging consumers to take their “second first ride” — a return to a new Uber, one shielded by masks and social distancing rules for riders and drivers.

In some cities, reopening is well underway. But as in Hong Kong, it is likely to happen in fits and starts. A now-familiar cycle is playing out for Uber in Atlanta, which began to lift restrictions in mid-May.

“I have not logged in,” said J.D. Harrison, who drives for Uber in Atlanta and runs a mobile dog-grooming business. “I have no interest in logging in, just until I can guarantee myself I’m not at risk by doing this type of work.”