PACIFIC ISLANDS FORUM SECRETARIAT

PIFS(13)FEMT.06

FORUM ECONOMIC MINISTERS MEETING

AND

FORUM ECONOMIC OFFICIALS MEETING

Nuku’alofa, Tonga

3 – 5 July, 2013

SESSION 2:

PROMOTING SUSTAINABLE DEVELOPMENT IN LARGE OCEAN STATES

TOURISM AS A PILLAR OF ECONOMIC GROWTH

This paper draws on the attached report by the South Pacific Tourism Organisation (SPTO), which provides

updates on the status of the tourism industry in the Pacific as one of the pillars for sustainable economic

development. For discussion.

2

Session 2

Tourism as a Pillar of Economic Growth

[PIFS(13)FEMT.06]

Purpose

This paper draws on the attached report by the South Pacific Tourism Organisation (SPTO),

which provides updates on the status of the tourism industry in the Pacific Island economies as one of

the pillars for sustainable economic development.

Background

2. In the 2011 Waiheke Declaration on Sustainable Economic Development, Forum Leaders

committed to promoting the Pacific as an exciting and diverse tourism destination, and supporting the

sector’s ability to generate income and employment for its people. Leaders emphasised the need for

critical infrastructure to support growth in the tourism sector as well as the need to focus on enhanced

local community participation and ownership. Leaders recognised the untapped potential of cruise ship

tourism to the region and the need for appropriate infrastructure and assistance to capitalise on this,

including through adequate resourcing of the SPTO.

3. At the 2012 FEMM, Ministers agreed to provide regional oversight and leadership in the

implementation of the Waiheke Declaration through a standing agenda item at FEMM. Ministers

directed members, relevant technical agencies and the Forum Secretariat to collaborate with relevant

development partners to update FEMM in areas of core interest, as well as sectoral and cross-cutting

issues including tourism.

Issues

4. The Pacific Island region hosts some of the premier exotic tourist destinations in the world with

travellers becoming more aware of the Pacific’s unchartered pristine waters. However, the Pacific’s

tourism industry largely comprises Small and Medium Enterprises (SMEs) characterised by limited

capacities to effectively address common challenges such as transport and infrastructure constraints,

restricted/limited market access, inadequate capacities and product development limitations, among

others.

5. Tourism in the region has performed reasonably well during the five years 2008-2012 in spite of

challenges posed by the global financial crisis. Visitor arrivals to the region in 2012 were approximately

1.6 million, an increase of 14% over 2011. Top destinations were Fiji, Cook Islands, Papua New Guinea

(PNG), Samoa and New Caledonia. The major tourism markets for the region are Australia and New

Zealand which account for over 50% of total arrivals. North America and Europe account for a further

30%, whilst Japan and Asia account for 9%, with the Pacific (intra-regional) and other countries

accounting for the remainder.

6. Tourism is vital to the sustainable growth of Forum Island Countries (FICs), contributing an

estimated 10.7% of the region's Gross Domestic Product (GDP) in 2012.1 In 2010 tourism accounted for

1 World Travel & Tourism Council, Economic Impact 2013 : Oceania

3

56% of Palau’s GDP, 44.4% of Cook Islands GDP, 34.1% of Vanuatu’s GDP, and 23.4% of Fiji’s

GDP.2 In most FICs, it continues to be the major driver of economic growth and foreign exchange

earnings. The 2012 Economic Impact report by the World Travel and Tourism Council showed that total

(direct, indirect and induced) contribution of tourism to the Pacific Island economies in 2012 was 2.7%

of total GDP (US$46.7bn)3. This is forecast to rise by 1.8 % in 2013.

7. Tourism has also contributed positively to employment and continues to be a major employment

provider to most of the FICs. The World Travel & Tourism Council (WTTC) reports that in 2012

tourism accounted for 11.7 % of Fiji’s employment, 7.6 % for Kiribati, 4.8 % for Tonga and 4.1 % for

the Solomon Islands.

Tourism and Transportation

8. Transportation is a particularly important area of linkage in the FICs. Improving transportation

infrastructure and services primarily to accommodate and boost tourism could bring positive benefits for

other sectors of the economy for example in the aviation industry. The level of airline services in the

region is largely dependent on passenger numbers. These same airline services could provide freight

capacity for fresh produce exports. However, the type of plane the airline carrier uses can be critically

important in regards to available cargo space.

9. Another possible positive transportation interaction can be the extension of road networks to

facilitate tourism, but which also serve to link agricultural areas to markets. There is also potential for

synergies with inter-island shipping to enhance economic viability of some routes.

Tourism and Agriculture

10. A study conducted by the Food and Agriculture Organisation (FAO) in January 2012 confirmed

that tourism has contributed positively to other sectors of the economy, particularly to the agriculture

sector. Perhaps the most obvious area for strengthening is the supply chain for tourism consumption

products – food and beverages, crafts, cosmetics, flowers, ornamentals, essential oils, massage oils and

spa products among others.

11. To service the tourism market, local producers need to find profitable and competitive ways to

meet the tourism industry’s demand for volume, quality, regularity, and safety requirements. The ability

of local agri-food systems to meet these requirements will be dependent both on agriculture supply

factors (natural resource base, farming systems in place, agro-processing and marketing capacity) and

the type of tourism development (mass tourism, high end niche, health and wellness, and eco-tourism).

The exposure of tourists to specific local products could also help export market penetration. Possible

examples for market penetration might include beef from Vanuatu, red papaya from Fiji, tuna jerky from

Kiribati and black pearls from Cook Islands.

12. The nexus between tourism and agriculture, and the environment is a crucial area for policy

concern. A boom in tourism in small island countries could result in a possible loss of natural resources

including prime agricultural land. Stress on natural systems and water resources and potential pollution

resulting from poorly planned development in either sector could have serious negative environmental

2 UNESCAP, Statistical Year Book for Asia & the Pacific, 2011

3 World Travel & Tourism Council, Economic Impact 2013 : Oceania

4

impacts. Increased competitiveness of both the agriculture and tourism sectors through linkages which

create enhanced synergies should be the overriding policy goal. National policy frameworks for

agriculture and tourism should recognise the benefits of positive linkages, and appropriate institutions

and instruments need to be in place to foster them.4 Further, at the national levels, every effort needs to

be made to minimise the leakage of the tourism income by ensuring that the respective sectors are able

to service the tourists’ needs with local products and services.

PROSPECTS FOR FUTURE GROWTH

13. Regional initiatives and developments particularly progress in the cruise ship and aviation

sectors, and increased room inventory indicate that the region’s tourism sector will continue to grow.

The growing middle class in emerging economies and new source markets such as Asia and Eastern

Europe (notably Russia) need to be factored into plans for the development of the industry.

Cruise Shipping

14. The world’s cruise industry has grown 125% and launched 143 new cruise ships, since 20005.

Emerging cruise markets of South America, Asia and Australia have contributed to the strong growth. In

addition to cruise shipping destinations of Fiji, New Caledonia and Vanuatu, other South Pacific nations

of French Polynesia, American Samoa, Samoa, Tonga, Cook Islands have also seen some growth.6

However, only 1% of the total worldwide cruise passengers, or around 200,000 passengers were forecast

to take a cruise to the South Pacific in 2012. Of that, approximately three quarters were forecast to be

from Australia. Since 2006, the South Pacific has lost market share due to an increase in New Zealand

and round Australia cruises.

15. There exists a great potential to increase the number of international cruise passengers to the

South Pacific. In addition to addressing infrastructure and delivery of the shore product, regional

awareness, by both cruise passengers and cruise operator itinerary planners is critical to the development

of the cruise market.

Aviation Expansion

16. Aviation is critical to the expansion of the tourism sector. The aviation environment is constantly

changing with new challenges emerging for Pacific carriers, hence coordination of tourism growth and

aviation services is critical. To facilitate aviation expansion, the development of an aviation strategy that

will include an analysis of national and regional aviation priorities, and the identification and assessment

of opportunities for aviation expansion as focal areas, is crucial.

REGIONAL TOURISM INITIATIVES 2012-2013 AND RESOURCE IMPLICATIONS

17. Close cooperation and collaboration between Pacific Islands are essential to deliver a consistent

high quality product and maximise the potential economic benefit for cruise shipping. However, to

cruise operators, the South Pacific is a challenging environment due to the great distances between

destinations, limited infrastructure in both port facilities and shore side passenger logistics, limited ship

services and storing, and the unsure availability of shore passenger products for 2000+ passengers.

4 Food and Agriculture Organisation, Agriculture and Tourism Linkages in Pacific Island Countries, January 2012.

5 South Pacific Tourism Organisation, Cruise Market Analysis, April 2012.

6 South Pacific Tourism Organisation, Cruise Market Analysis, April 2012.

5

18. In this regard, a number of key areas have been identified requiring development, include the

following:

i. Upgrade of marine infrastructure and support services;

ii. Developing institutional management and cooperation frameworks;

iii. Developing shore excursions and land based services; and

iv. Undertaking cruise destination marketing and promotion.

19. In addition to the further development of the Pacific’s cruise shipping industry, marketing and

developing other areas of the tourism sector has been the SPTO’s mandate, and as such, there have been

a number of initiatives implemented to assist the further development of tourism.

Pacific Islands Forum Secretariat,

Suva.

June 2012

6

ANNEX I: REPORT PROVIDED BY SPTO

TOURISM - THE PILLAR OF ECONOMIC GROWTH FOR PACIFIC ISLANDS

BACKGROUND

The Pacific Island region hosts some of the premier exotic tourist destinations in the world with

travellers becoming more aware of the Pacific’s unchartered pristine waters. Consequently, the changes

in travel patterns, markets and traveller motivations have brought about considerable growth and

demand for the Pacific Island destinations.Tourism is vital to the sustainable growth of Pacific island

economies, contributing an estimated 10.7 percent of the region's Gross Domestic Product (GDP) in

2012, according to the World Travel and Tourism Council7.

2. The Pacific is aware that it needs to enhance its current performance if tourism is to increase its

contribution to the region’s economy. With the exception of a small percentage of large scale businesses

owned by multinational corporations and foreign private investors, the Pacific’s tourism industry largely

comprises small and medium enterprises (SMEs) characterised by limited capacities to effectively

address common challenges (such as transport and infrastructure constraints, restricted/limited market

access, inadequate capacities and product development limitations, etc). Its status as a small scale

industry with limited capacity gives rise to the need for marketing and development support, if it is to

grow let alone compete globally.

3. Recognising these limitations whilst mindful of the need for the sector to strive towards it full

potential, our Pacific Leaders at the September 2011 Forum Leaders meeting in Auckland highlighted

the opportunities available in all countries and underscored the need to develop highly sophisticated

tourism operations based on the unique natural beauty and vibrant cultures, characteristic of the Pacific

region as a whole. The meeting resulted in the 2011Waiheke Declaration and commitment which for

tourism is:

“to promote the Pacific as an exciting and diverse tourism destination, and support the sector’s

ability to generate income and employment for its people”. In addition, “Leaders emphasised the

need for critical infrastructure to support growth in the tourism sector as well as the need to

focus on enhanced local community participation and ownership. Leaders recognised the

untapped potential of cruise ship tourism to the region and the need for appropriate

infrastructure and assistance to capitalise on this, including through adequate resourcing of the

South Pacific Tourism Organisation.”

STATUS OF THE TOURISM INDUSTRY

4. The Pacific’s tourism industry is at various stages of development, depending on the population,

land area, economic development, financial status of each Island state, amongst other factors. Due to

their ‘isolation’ or relative distances from major markets, limited resources, susceptibility to natural

disasters, heavy reliance on remittances, and minimal trade in goods and services, the Pacific Island

states have prioritised tourism in varying degrees. However, tourism in the region has performed

reasonably well during the five years 2008-2012 in spite of the above realities and challenges, and the

impact of the global financial crisis during the period.

7 World Travel & Tourism Council, Economic Impact 2013 : Oceania

7

5. As highlighted in the Table 1, countries with bigger land area and a growing population

contributed the most in terms of GDP. On the contrary and as to be expected, Smaller Island States (SIS)

still require more suport to improve connectivity and accessibility whether by sea or air domestically,

regionally and internationally; with the accomanying infrastructure, institutions and capacities to make

the industry work.

Table 1: PICs’ Population, Land Area & Contribution to GDP

Population

(2012 est)

Land Area

(sq kms)

GDP

(USD est)

2011

Arrivals

2012

(provisional)

% Change

(2012/2011)

Cook Islands 11,870 236 $183m 122,446 121,634 -0.66

Fiji 944,700 18,274 $4.3b 675,050 660,590 -2.14

FSM 106,104 702 $310m (N/A) (N/A) (N/A)

Kiribati 112,850 811 $624m 5,256 4,907 -6.6

Marshall Islands 69,747 181 $171m 4,559 (N/A) (N/A)

Nauru 14,019 21 $60m (N/A) (N/A) (N/A)

New Caledonia 264,022 18,575 $9.3b 111,875 112,204 0.29

Niue 1,269 260 $10m 6,094 5,048 -17.1

Palau 21,102 459 $221m 109,057 118,754 8.9

PNG 5,940,775 452,860 $18.5b 163,173 167,149 2.4

Samoa 219,998 2,821 $1.1b 127,420 134,660 5.7

Solomon Islands 595,613 27,986 $1.9b 22,941 (N/A) (N/A)

Tahiti 287,032 3,827 $5.7b 162,776 (N/A) (N/A)

Timor Leste 1,172,390 14,874 $10.6b (N/A) (N/A) (N/A)

Tonga 120,898 717 $786m (N/A) (N/A) (N/A)

Tuvalu 12,373 26 $37m 1,201 (N/A) (N/A)

Vanuatu 218,519 12,189 $1.2b 97,180 108,145 11.3

Total 1,529,597 1,598,984 13.9

(Source: National Tourism Organisations,National Statistics Offices and SPTO)

6. Visitor arrival to the region in 2012 was approximately 1.6 million, an increase of 14% percent

over 2011, with top destinations being Fiji, Cook Islands, PNG, Samoa and New Caledonia; statistical

data for Tahiti, another top destination, is forthcoming.

Table 2: Top Destinations 2012

Country 2012p Market Share 2012p

Fiji 660,590 41.3%

Papua New Guinea 163,173 10.4%

Samoa 134,660 8.4%

Cook Islands 121,634 7.6%

New Caledonia 112,204 7% Note: p – Provisional figures (Source: SPTO)

7. The major tourism markets for the region are Australia and New Zealand which account for over

50 per cent of total arrivals. North America and Europe account for a further 30 per cent, whilst Japan

8

and Asia account for 9 per cent, with the Pacific (intra-regional) and other countries accounting for the

remainder.

CONTRIBUTION OF TOURISM TO PACIFIC ISLAND ECONOMIES

8. The significant and important place that the tourism sector occupies in the Pacific Island

economies cannot be emphasised enough, particularly its contribution to overall GDP, employment and

socio-economic development as a whole. The 2012 Economic Impact report by the World Travel and

Tourism Council showed that total contribution of tourism (direct, indirect and induced) to Pacific

Island economies in 2012 was 2.7% of total GDP (US$46.7bn) and is forecasted to rise by 1.8% in

20138.

9. In 2012, the World Travel and Tourism Council report on Oceania highlighted that total

contribution of travel and tourism to employment, including jobs indirectly supported by the industry

was 12.6% of total employment (about 2,205,500 jobs). This number includes employment figures for

Australia (1,378,500 jobs)9 and New Zealand (426,500 jobs)

10; the remaining Pacific Island states

recorded about 400,500 jobs. Evidently, tourism plays a vital role in the economies of Pacific Island

countries and in most of these countries it continues to be the major driver of economic growth and

foreign exchange earnings.

Tourism contribution to GDP and Employment

10. Data from the United Nations Economic and Social Commission for Asia and the Pacific

(UNESCAP), in Table 3, provides an insight into the contribution of the Tourism sector towards Pacific

economies’ GDP. While data is unavailable for some countries, it is evident that tourism is a major

driver for economic growth for countries like Palau, contributing 56% of its overall GDP, and other

island countries like Cook Islands (44.4%), Vanuatu (34.1%), and Fiji (23.4%).

Table 3: Inbound Tourism Expenditure

Destination Millions (US$) % of GDP

1995 2005 2010 2011 2005 2010

Pacific 15,943 27,746 40,199 42,639 3.0 2.7

Cook Islands 28 91 110 49.8 44.4

Fiji 369 722 713 24.0 23.4

French Polynesia 326 759 13.9

Kiribati 2 3 2.9

Marshall Islands 3 6 3 4.1 2.0

Micronesia (F.S.) 17 25 6.8 8.4

New Caledonia 108 149 132 2.4 1.5

Niue 2 1 2

Palau 97 124 67.1 56.0

Papua New Guinea 9 3 4 0.2 0.0

Samoa 36 80 124 135 18.3 20.2

Solomon Islands 17 6 65 1.5 10.2

Vanuatu 104 242 252 26.4 34.1 (Source : UNESCAP, Statistical Year Book for Asia & the Pacific, 2011)

8 World Travel & Tourism Council, Economic Impact 2013 : Oceania

9 World Travel & Tourism Council, Economic Impact 2013 : Australia

10 World Travel & Tourism Council, Economic Impact 2013 : New Zealand

9

11. Tourism has also contributed positively to employment and continues to be a major employment

provider to most of the Pacific Island countries. The World Travel & Tourism Council (WTTC) reports

of 2011 and 2012 highlight the employment figures, summarised in Table 4, for some of SPTO’s

member countries:

Table 4: Tourism: Employment Contribution in Selected FICs

(Source: World Travel Tourism Council Reports 2011 & 2012)

Linkage between tourism and agriculture

12. A study conducted by the Food and Agriculture Organisation (FAO) in January 2012 addressed

key opportunities for growth and crucial areas of concern in the linkage between tourism and key sectors

of the economy. The report on the study confirmed that tourism, being a significant contributor itself to

GDP, has also contributed positively to other sectors of the economy, particularly to the Agriculture

sector as in the case of Pacific island economies of Fiji, Samoa, and Tonga. Perhaps the most obvious

area for strengthening linkage is in the supply chain for tourism consumption products – food and

beverages, crafts, cosmetics, flowers, ornamentals, essential oils, massage oils and spa products, etc –

thus reducing dependence on imported goods to supply tourist market needs and the leakage of foreign

exchange.

13. To service the tourism market, local producers need to find profitable and competitive ways to

meet tourism industry demand for volume, quality, regularity, and safety requirements. The ability of

local agri-food systems to meet these requirements will be dependent both on agriculture supply factors

(natural resource base, farming systems in place, agro-processing and marketing capacity) and the kind

of tourism development (mass tourism, high end niche, health and wellness, eco-tourism, etc). The

exposure of tourists to specific local products could also help export market penetration when such

returning visitors help build a domestic demand. Possible examples for market penetration might include

beef (from Vanuatu), red papaya (from Fiji), tuna jerky (from Kiribati) and black pearls (from Cook

Islands). The above discussion highlights linkages that can potentially increase opportunities for

domestic agriculture earnings and sector growth, but they also offer opportunities to help develop visitor

attractions and distinctive tourist destination brands by creative use and marketing of local produce and

scenery. To realise these benefits, the tourism industry needs to be proactive in utilising local produce

and agriculture sites as a tourist attraction. The industry therefore must build the technical capacity and

skills to accomplish this.

Linkage between tourism and transportation

14. Some other important areas of potential interaction between the two sectors include

transportation, communications, utilities and other service provision. Transportation is a particularly

important area of linkage in the Pacific island context. Improving transportation infrastructure and

Country Numbers Total Employment (%)

2011 2012 2011 2012

Fiji 38,500 39,500 11.7 11.7

Kiribati 1,500 2,000 6.2 7.6

Papua New Guinea 20,500 29,500 0.8 1.1

Solomon Islands 4,500 8,500 4.5 4.4

Tonga 1,500 1,500 4.1 4.8

Vanuatu 11,000 (n/a) 16.4 (n/a)

10

services primarily to accommodate and boost tourism could bring positive benefits for agricultural trade

on both domestic and international markets. The level of airline services in the region is largely

dependent on passenger numbers; these same airline services provide potential freight capacity for fresh

produce exports (e.g. fish, horticulture and floriculture). However, the type of plane the airline carrier

uses can be critically important in regards to available cargo space.

15. Another possible positive transportation interaction can be the extension of road networks to

facilitate tourism, but which also serve to better link agricultural areas to markets (e.g. the new Efare

Ring Road in Vanuatu). There is possible potential for synergies with inter-island shipping to enhance

economic viability of some routes. However, interactions between the two sectors need not necessarily

be positive. Indeed Tourism and Agriculture may compete for resources – land, labour, capital, water,

freight capacity and even development assistance. Furthermore, the type of tourism development may

significantly preclude some areas of opportunity for linkages (e.g. Cruise Ship tourism).

16. The nexus between the two sectors and the environment is a crucial area for policy concern. A

boom in tourism in small island countries could result in a possible loss of natural resources including

prime agricultural land. Stress on natural systems and water resources and potential pollution resulting

from poorly planned development in either sector could have serious negative environmental impact. In

contrast, ‘environmentally friendly’ agriculture can help sustain the Pacific’s pristine natural

environment which is ultimately the major attraction for tourism in the region. Mutual increases in the

competitiveness of both agricultural and the tourism sectors through linkages which create enhanced

synergies should be the overriding policy goal. Therefore national policy frameworks for agriculture and

tourism need to recognise the need for positive linkages and appropriate institutions and instruments

need to be in place to foster them.11

PROSPECTS FOR FUTURE GROWTH

17. Regional initiatives and developments indicate that the region’s sector will continue to grow,

given progress notably in the cruise and aviation sectors (additional airlines and budget carriers, new

generation aircrafts and new destinations). Additionally, the region will see an increase in room

inventory with the construction of new hotels and expansion of existing chains. The growing middle

class in emerging economies and new source markets as in Asia (East and Southeast Asia) and Eastern

Europe (Russia notably, etc) as these countries prosper need to be strategically factored. Crucially

important and welcomed as the basis for tourism growth is the priority accorded by Pacific states in the

‘blue-green economy’ which places sustainable development at the heart of all development.

1. Cruise Shipping Industry

18. SPTO has been engaged in some development projects and

activities targeting the cruise shipping industry with an aim to

strengthen national capacities that will ultimately lead to the growth

of the cruise market. According to a Cruise Market Analysis12

conducted in April 2012 for the South Pacific, the world’s cruise

11

Food and Agriculture Organisation, Agriculture and Tourism Linkages in Pacific Island Countries, Jan 2012 12

South Pacific Tourism Organisation, Cruise Market Analysis, Apr 2012

11

industry has grown 125% and launched 143 new cruise ships, since 2000. There has always been growth

in the cruise market despite uncertainty in global financial or political situations. The strong growth in

source markets such as Europe, Asia, South America and Australia has helped the cruise operators

manage demand fluctuations through being able to reposition their assets as and when required. Cruise

sales continue to be strong, with occupancy rates in 2011 of 103.1%.

19. Other emerging cruise markets of South America, Asia and Australia have continued strong

growth, with Australia in particular returning a Compound Annual Growth Rate (CAGR) of over 20% in

the 5 years to 2010. Asia cruise passenger growth remains bullish with an ever-growing affluent middle

class.

2. South Pacific Cruise Market

20. The same analysis reports that only 1% of the total

worldwide cruise passengers, or around 200,000

passengers were forecasted to take a cruise to the South

Pacific in 2012. Of that, approximately three quarters will

have originated from Australia. Since 2006, the South

Pacific has lost market share due to an increase in New

Zealand and round Australia cruises. There exists a great

potential to increase the number of international cruise

passengers to the South Pacific. Regional awareness, by

both cruise passengers and cruise operator itinerary planners is critical to the development of the cruise

market, in addition to addressing infrastructure and delivery of the shore product.

21. In addition to cruise shipping destinations of Fiji, New Caledonia and Vanuatu, other South

Pacific nations of French Polynesia, American Samoa, Samoa, Tonga, Cook Islands have also seen

growth.13

Tables 5 & 6 summarises the number of cruise ship port calls and passenger numbers per year,

and are indicative of the potential for further growth, if the Pacific’s cruise shipping sector is developed

and enhanced to achieve increasing numbers.

Table 5: South Pacific Cruise Ship Port Calls

Country 2007 2008 2009 2010 2011 2012 2013

Cook Islands 27 19 13 7 9 8 7

Fiji 31 45 56 59 63 72 77

Vanuatu 93 100 169 219 252

Samoa 17

Tonga 15 17

New

Caledonia 85 89 79 106 134 159 (Source : National Tourism Organisations, National Statistics Offices)

13

South Pacific Tourism Organisation, Cruise Market Analysis, April 2012

12

Table 6: Passenger Numbers

Country Passenger Numbers

2007 2008 2009 2010 2011 2012

Cook Islands 21,512 17,736 13,870 4,362 6,632 4,532

Fiji 2,435 41,669 63,292 60,301 58,722 80,003

Vanuatu 85,737 106,138 124,818 140,468 154,938 218,667

Tonga(p) 8,790 14,599 27,641 16,265 20,519 7,583

Samoa 16,439

New Caledonia 124,467 152,250 131,231 183,245 235,684 277,941

(Source: National Tourism Organisations, National Statistics Offices)

3. Aviation Expansion

22. Aviation is critical to the expansion of the tourism sector. The aviation environment is constantly

changing with new challenges emerging for Pacific carriers and so coordination of tourism growth and

aviation services is critical. To facilitate aviation expansion, the development of an aviation strategy that

will include an analysis of national and regional aviation priorities, and the identification and assessment

of opportunities for aviation expansion as focal areas, is crucial. While it is not the lead technical agency

in aviation matters, SPTO will be working closely with CROP agencies (e.g. SPC) and relevant partners

that have technical capacity in this area.

REGIONAL TOURISM INITIATIVES 2012-2013

Cruise Shipping Tourism

23. Close cooperation and collaboration between Pacific Islands is essential to deliver a consistent

high quality product and maximise the potential economic benefit. However, to cruise operators, the

South Pacific is a challenging environment for a number of reasons:

i. The great distances between destinations requiring higher speeds and high fuel consumption,

limited infrastructure in both port facilities and shore side passenger logistics

ii. Limited ship services and storing

iii. Availability and accuracy of technical information relating to the destinations and ship

operations

iv. Availability of shore passenger products for 2000+ passengers

24. In this regard, a number of key areas have been identified requiring development, such as (i)

upgrade of marine infrastructure and support services; (ii) developing institutional management and

cooperation frameworks; (iii) developing shore excursions and land based services; and (iv) undertaking

cruise destination marketing and promotion.

25. In addition to the further development of the Pacific’s cruise shipping industry, marketing and

developing other areas under the tourism sector has been the SPTO’s mandate and as such, there have

been a number of initiatives implemented to assist the further development of tourism as a pillar of

economic growth. It is worthwhile to also note initiatives for regional tourism development under the

13

EU-funded Pacific Regional Tourism Capacity Building Programme (PRTCBP), specifically through

the implementation of the following major activities:

Sector Planning and Policy Development:

i. Completion of Action Plan for Building a Tourism Research and Statistics Capacity in the P-

ACPs;

ii. Completion of in-country field work in the area of data and statistics for FSM, RMI,

Solomon Islands and Timor Leste;

iii. Preparation of Air and Cruise Visitor surveys for implementation in 2013. FSM/RMI,

Kiribati, Niue and Solomon Islands have been selected for the air surveys and Cook Islands,

Fiji, PNG and Samoa for the cruise surveys;

iv. Completion of a Cruise Market Analysis ;

v. Launch of Pacific Cruise Shipping Manual in Miami, Florida;

vi. Development of a Business Plan for the Vanuatu Tourism Office.

Marketing and Market Research:

i. Completion of three (3) fully-fledged niche market studies;

ii. Completion of photography in nine (9) countries (Cook Islands, Kiribati, Marshall Islands,

Papua New Guinea, Samoa, Solomon Islands, Timor Leste, Tonga, and Vanuatu);

iii. Completion of the revamped SPTO website;

iv. Expansion of the South Pacific Travel Trade Specialist Programme; and

v. Provision of SME e-marketing support in P-ACPs.

Human Resource Development (HRD)

i. Development and launch of Regional Tourism and Hospitality HRD Plan;

ii. Delivery of tourism and hospitality training in Kiribati, RMI and Palau;

iii. Delivery of two SME training workshops in Fiji; and

iv. Short-term attachment for Solomon Islands in the area of investment.

26. The significant growth in tourism is essential to the economies of the Pacific Islands as tourism

has established itself as an essential sector for many states in the region. In this regard, the SPTO, under

the above-mentioned areas, will continue its implementation and execution of development projects and

activities throughout the region.

Constraints

27. Tourism has the potential to play a substantially greater role in the regional economy; however,

there have been hindrances to its growth due to the following:

i. the geographical spread and small population base of Pacific Island countries;

ii. poor infrastructure in many countries (including cruise and aviation infrastructure);

iii. small size of the regional tourism industry relative to international tourism markets;

14

iv. lack of skilled personnel;

v. limited awareness at government level and the wider community of the potential and economic

benefits of tourism;

vi. weak institutional framework that constrains foreign direct investment;

vii. complex systems of land tenure and cultural values;

viii. inadequate conservation of key land and marine resources that support the tourism industry;

ix. high domestic and international transport costs; and

x. vulnerability to natural disasters.

Conclusion

28. The tourism sector as a services sector is a fast growing and labour-intensive industry that cuts

across other sectors (e.g. Agriculture, Fisheries, Transport) and involves many economic activities. For

the Pacific Islands, undoubtedly, it plays an important role in economic development. More so for the

Pacific, the tourism is a sector in which the region has competitive advantage. It has tremendous

untapped potential, which, if developed and properly managed, will significantly contribute to the

region’s economic growth, creating greater employment opportunities that will improve livelihoods of

the Pacific’s local communities.

29. To this end, tourism must be at the forefront of national and regional priorities, with the

implementation of relevant policies as an important part of governments’ plans. Budgetary provisions

and support are essential for the building of infrastructure to assist in the development of tourism in the

Pacific. In addition, aid specifically secured and channeled for the tourism industry must not only

prioritise the marketing of the region but importantly, cater for the development of its local tourism

industry for it to continue as a pillar of economic growth.

30. The Pacific Island Leaders through the 2011 Waiheke Declaration have laid the framework and

direction for Pacific tourism. The onus is on each tourism institution to map out their respective policies

and programmes to ensure that the sector continues to contribute meaningfully to economic growth for

the island states. The SPTO with her partners, notably the EU, will stand ready to play its part and assist

the Pacific states protect and promote their tourism resources as the basis for economic prosperity.