Hotel Online  Special Report

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FocusOn Pacific Islands; Well Placed to
Lead World Tourism Growth 

 
The Pacific Ocean is said to be the largest geographical feature on earth. Yet little is known about it, and up until now, analysis of the hotel and tourism markets of the Pacific Islands has been very limited. This edition of FocusOn aims to rectify this by providing an up to date summary of the key tourism and hotel trading markets of the major Pacific Island destinations including Fiji, Cook Islands, Samoa, French Polynesia, Vanuatu and New Caledonia.

Pacific Islands Overview

Since 1991, international arrivals to the major Pacific Island destinations analysed in this report have increased at an average rate of 4.4% pa to reach 892,228 during 2001. Of these islands, Samoa experienced the strongest growth (averaging 8.4% pa), followed by French Polynesia with 6.5% pa and the Cook Islands with 6.4% pa.

These rates compare favourably to the global growth rate of 4.0% pa over the same period. In contrast, Vanuatu, Fiji and New Caledonia recorded growth of 3.0%, 2.2% and 2.2% pa respectively over the ten year period.  During 2001, international visitor growth to most of the Pacific Island markets was tempered by the global economic downturn and the fallout from the events of September 11. The notable exception was Fiji, which experienced a rebound in visitors after the coup during 2000. Given the size of Fiji�s market, its growth countered the decline of the other islands, and overall arrivals to the six markets increased by 4.4% during 2001.

To put this into a regional context, international arrivals to these Pacific Islands currently represent two thirds of the arrivals to Bali and one third of international visitors to Phuket.  Looking towards the future, however, it is expected that these markets will attract some of the displaced tourism demand from Bali following the recent tragic bombings there.

However, the future of the tourism markets for all islands depends on sufficient air capacity.  According to the forecasts by Pacific Asia Tourism Association (PATA), Fiji, the Cook Islands and Vanuatu are all predicted to grow at above average rates to 2004.
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The following graph demonstrates the relatively stable trading of most Pacific Island markets except Fiji which has fluctuated depending on the political climate and currency movements.  Revenue per available room (RevPAR) has generally been in the range of US$35-US$50 for all key markets.

Fiji

Fiji is a group of over 320 islands in the South Pacific, situated approximately 3,150 kilometres northeast of Sydney, 2,130 kilometres north of Auckland and 5,000 kilometres southwest of Hawaii.

The official population was 844,330 as at July 2001 and the economy relies upon the tourism, sugar and clothing industries. Tourism is Fiji�s main foreign exchange earner, contributing around 20% of GDP. The major resorts are at Denarau Island and along the Coral Coast of Viti Levu (the main island), with a variety of smaller resorts situated offshore in the Mamanuca and Yasawa islands.

Tourism

International arrivals to Fiji have grown at an average of 3.0% pa between 1991 and 2001.  This result was adversely affected by the sharp decline in arrivals during 2000, as a result of the political coup in May. Arrivals in that year fell by 28.3%, to a seven-year low of 294,070.  However, international tourism numbers have been in recovery mode since the coup in May 2000.

During 2001 international arrivals reached 348,014, which represents an increase of 18.3% over 2000 � a strong result given the events of September 11. During 2001 visitors stayed for an average of 8.7 days, a slight increase on the 2000 figure of 8.5 days. For the eight months to August 2002, visitor arrivals continued to grow, increasing by 16.4% to reach 298,194 for the period.
 

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The Fiji Visitors Bureau forecasts that international arrivals will grow by 13.0% to a total of 393,000 during 2002, continuing the strong recovery since the coup.  Based on 2001 figures, the major source markets of visitors to Fiji are Australia (28.2%), New Zealand (19.1%) and US (16.6%). The UK (8.8%), Pacific Islands (6.8%) and Continental Europe (6.0%) are the next largest sources of visitors.

South Korea posted the greatest increase during 2001 with growth of 140.5%. However, Continental Europe continued a downward trend initiated in 1997 posting a decline of 7.1%. Year to date figures for August 2002 indicate significant improvement from the source markets of UK, Australia and Japan, which recorded growth rates of 45.1%, 35.5% and 24.4% respectively over August 2001 levels.

Arrivals from Australia, New Zealand and Japan tend to peak around the middle of the year, whilst North American and European arrivals are more focused around the October to February period. Fiji�s peak season is from June to October.

Latest data indicates that 80.0% of visitors to Fiji do so for holiday, with a small amount of visitation for business, attending conferences and visiting friends and relatives. The Fiji International Visitors Survey also indicates that at least 90.0% of all travellers used hotel accommodation during their stay in Fiji.

Air Traffic

Fiji�s major carrier is Air Pacific, which operates flights to the key source markets of Japan, North America, New Zealand, the South Pacific and Australia. During the peak period in 2002, Air Pacific increased its capacity by 17.0% to reach 9,700 seats per week.

Fiji is also serviced by Air New Zealand, which offers flights from Auckland and Christchurch as well as Los Angeles and Hawaii. Regional airlines offer weekly flights from destinations such as Nauru, Noumea and Western Samoa.  The resumption of services by Korean Air in November 2000 had a significant impact on Korean visitor numbers, although notably these 747 flights also service the New Zealand market.

Tourism Demand Generators

Visitors to Fiji are attracted by the picturesque natural environment and the plethora of water-based sports available.

The Fiji Visitor Bureau has a current year budget of F$11 million. It runs targeted marketing campaigns in the main source markets in conjunction with the airlines, wholesalers and accommodation providers.

Fiji also plays host to a number of outdoor sports events such as the Rip Curl Oceania Surfing Cup, an International Triathlon and Outrigger Championships. In October 2002 Fiji hosted the World Eco-Challenge. This American concept is aimed at a worldwide television audience, and is featured on US cable television networks as well as numerous international networks. In June/July 2003 the Pacific Games are to be held in Suva with an anticipated 5,000 participants.  Recent infrastructure developments include an upgrade of the international airport terminal, street beautification projects in Suva and Nadi, as well as refurbishment works at several existing resorts.

Tourist Accommodation Supply

According to the Fiji Bureau of Statistics, the room supply in hotels, resorts and other forms of licensed lodging houses totalled approximately 5,380 as at December 2001. The majority of these comprise less than 25 rooms and only five have more than 250 rooms.

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Approximately 31.0% of the total rooms are located in the Nadi area, 25.0% are situated along the Coral Coast and a further 12.4% of the total room supply is located in the offshore Mamanuca / Yasawa groups.

Future supply includes the development of a 427-room Hilton Hotel and 300 room Novotel on Denarau Island, proposed resorts along the Coral Coast and a new wing of 38 rooms on Mana Island.

Performance

During 2001 there was a slight decline in the overall number of room nights occupied (RNO) due to the strong pre-coup performance in the previous year. This caused annual occupancy to fall by 2.7% to 47.2%.

Total revenue (turnover) peaked in 1999 at F$313.6 million, before dropping significantly during 2000. Despite reduced revenue levels, spend per room continued to grow reaching F$255 in that year. The decline in hotel revenue continued in 2001, falling a further 7.5% to F$228.8 million, while the average spend per occupied room also declined to F$247 during 2001. A breakdown of the nightly spend per room during 2001 shows guests spent on average F$135 on accommodation, F$54 on food and F$31 on beverages.

Market Outlook 

Factors that will influence the market in the short to medium term are the maintenance of political stability, the introduction of new rooms and the extent of opposition from competitive destinations such as Bali and Phuket. Fiji is well placed to receive any displaced demand from Bali since the recent bombings. Overall, the Fiji tourism market is well into a recovery phase with substantial investment in new/improved product underway. Importantly, major conference/series groups are now returning to Fiji after a virtual cessation in the 12 months following the coup.

Cook Islands

The Cook Islands have a total land area of 240 square kilometres, the largest of which is Rarotonga with an area of 67 square kilometres.  At March 2002, the total population was in the order of 17,700, with a resident population of approximately 13,400. Almost 60.0% of the resident population is based in Rarotonga, the commercial and political centre of the nation, home to Avarua (the capital), the international airport and the vast majority of its resorts. The local economy relies heavily on tourism, as well as offshore banking services and the islands� status as a tax haven.

Tourism 

Between 1991 and 2001, the number of visitor arrivals to the Cook Islands grew at an average of 6.4% pa. This rate was boosted by two years of significant growth in 1999 and 2000, during which visitor arrivals increased by 14.3% and 31.3% respectively.

Despite registering favourable growth of 2.2% during 2001, the global economic slowdown and international terrorism resulted in arrivals declining by 12.3% during the December quarter. During the nine months to September 2002, this decline continued, with arrivals falling by 6.4%. However, monthly arrivals appear to have been recovering since June.

The Cook Islands Tourism Corporation aims for arrivals to rebound back to 2001 levels during 2003, and record 6% annual growth thereafter.
 

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Based on 2001 figures, the largest source of visitors to the Cook Islands is Europe/UK, followed by New Zealand, Australia and North America.

Between 1997 and 2001, the highest growth in visitor arrivals was recorded by Cook Islanders living overseas. The increasing migration of the working age population to Australia and New Zealand resulted in this segment increasing at an average rate of 33.4% pa over this period. Of the foreign markets, arrivals from Australia increased at 30.9% pa due to the 1999 Air New Zealand initiative to improve movement between Australia and the Pacific. Other significant growth markets included Canada (19.5% pa) and New Zealand (12.4% pa).

During the nine months to September 2002, arrivals from New Zealand have actually defied the downward trend to record an increase of some 25.8% over the same period of the previous year.  In contrast, Australian arrivals have been affected by diminished connectivity between the east coast of Australia and the Cook Islands via Auckland.

Prior to 2001, the guests during the months of October, November and December, with a trough in demand occurring during May.

Air Traffic

Since the collapse of the charter airline Canada 3000 in November 2001, the Cook Islands have suffered from the volatility associated with having only one carrier servicing the islands.  The March 2002 quarter saw the lowest number of flights in any March quarter since 1998. The total number of flights fell 22.0% to record 118 for the three month period.

Air New Zealand currently provides 10 services per week between the Cook Islands and Auckland with Boeing 767-200/300 jets, each providing capacity of around 200-230 seats. By the end of 2003, the airline expects to service the destination with Airbus A320s, which will provide for greater flexibility in flight scheduling.

The Cook Islands� peak tourism lobby groups have entered discussions with other airlines with the aim to securing at least one more airline for the destination. Based on our discussions with the Cook Islands Tourism Corporation and the Chamber of Commerce, it would seem that they are confident that Aloha will commence operations of a twice weekly service between Hawaii and the Cook Islands from late 2002 with Boeing 737-700 jets, subject to the resealing of the runway at Aitutaki.

Tourism Demand Generators

The Cook Islands offer mountainous jungle areas, white sandy beaches and a protective coral reef. Tourists are drawn to this idyllic setting to swim, snorkel, dive, sail and windsurf on the clear turquoise waters, as well as hike, climb and cycle on land.

Tourist Accommodation Supply

According to Statistics Cook Islands, the number of hotels and motels has grown from 17 in 1987 to 35 in 2001. Over the same period, the number of hotel and motel rooms has almost doubled from 409 in 1987 to 793 in 2001. Almost three quarters of all accommodation establishments across the Cook Islands are on the main island of Rarotonga, demonstrating its current status as the dominant force in Cook Islands tourism.

The Cook Islands do not currently have an internationally branded resort, and of the current supply, only two hotels are considered to be close to the necessary size in terms of room count that most international operators prefer.  The improved trading environment of the past few years following the strong growth in visitor arrivals has stimulated and rekindled a number of new and proposed developments in Rarotonga.  Apart from the many smaller developments that have been approved or mooted, the main additions to room supply are as follows:

Performance

According to Statistics Cook Islands, between 1995 and 1998, occupancies languished in the 57%-61% range and ADR recorded between NZ$77 and NZ$80. This relatively flat trading environment reflects the impact of limited visitor arrival growth coupled with increasing room supply over the period.

As visitor arrivals surged and a number of higher quality properties opened in 1999 and 2000, ADR increased by 10.4% and 32.1% respectively and occupancies peaked at 76.3%.  This is also the year during which the Canada 3000 service peaked in terms of passenger numbers, bringing increased levels of higher yielding North American business to the islands.  Following the spectacular growth of 2000, a slowdown was expected in 2001. This, coupled with the lower demand of the December quarter caused occupancies to slip to 71.1%, but ADR grew marginally to NZ$143. According to the latest data, this downward trend in occupancy gathered momentum during the first quarter of 2002. Occupancy fell 23.9% to 61.1%, the lowest March quarter result since 1998.

Market Outlook 

The following events have significantly impact visitor arrivals and therefore hotel market performance across the Cook Islands;

  • the diminished flight capacity following the demise of Canada 3000;
  • the impact of the events of 11September and the current global economic slowdown; and
  • negative publicity associated with the Dengue Fever outbreak in early 2002.
Similarly the combination of these events is likely to continue to adversely affect hotel market performance in the Cook Islands over the next twelve months. We therefore expect 2002 to end with occupancies below the 71.1% achieved in 2001 and ADR to come under downward pressure as hoteliers offer discount rates to capture demand in a shrinking market place. 

Assuming that additional air flight capacity comes on line in 2003 with the commencement of services from Hawaii by Aloha and the global economy begins to recover during the course of 2003, we expect occupancy to recover during the second half of 2003 and beyond. ADR growth would then be likely to lag the occupancy recovery by the usual 12 months or so. Needless to say, events such as the outbreak of war in the Middle East would make it extremely difficult for the Cook Islands hotel market to stage such a recovery.

Over the medium term, the greater profile and marketing benefits associated with the arrival of an internationally branded hotel (such as that proposed for the Vaimaanga Hotel Development) would inevitably generate derived demand as tourists and wholesalers react favourably to the long awaited arrival of a branded hotel on the Cook Islands. This would also flow over to positively affect other accommodation providers on the island as the coverage associated with international branding exposes Rarotonga and the Cook Islands to a broader market.

Samoa

Samoa is an independent sovereign state located east of the international date line and is positioned approximately 2,890 kilometres from Auckland, 1,200 kilometres from Fiji, 4,400 kilometres from Sydney and 8,400 kilometres from Los Angeles.

Samoa comprises two relatively large islands, Upolu and Savaii, which account for approximately 96% of the total land area and there are also eight smaller islands. The capital of Samoa is Apia situated on the island of Upolu with a population of approximately 35,000. The total population of Samoa is approximately 164,000. Faleolo International Airport is situated approximately 35 kilometres from Apia.  The economy has benefited recently with the strong expansion in construction activity by the continuation of major government projects.

Tourism

Over the period 1991 to 2001, Samoa experienced a growth rate in total arrivals of 8.4% pa, the highest the Pacific Island markets covered in this report. After two years of significant growth during 1993 and 1994, the rate of growth has dropped of considerably, recording 3.8% pa between 1995 and 2001. During 2001, total arrivals increased by 0.7% to reach an all time high of 88,263.

The average length of stay in Samoa is approximately 6 days which corresponds with the length of many holiday packages.

Visitors from nearby American Samoa, which is approximately 45 minutes flying time away, are largely for the purpose of visiting friends and relatives and accounted for 35.1% of total arrivals during 2001. The second largest source market is New Zealand, followed by Australia and the US.

During 2001, the most significant growth was achieved by visitors from Other Asian countries (Asia excluding Japan), which grew by 38.8% over the year 2000. Australia and New Zealand each achieved marginal growth (2.5% and 1.8% respectively), however the source markets of America and the Pacific Islands recorded declines of 6.3% and 6.8% respectively.
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Visitor arrivals to Samoa tend to peak in the September and December quarters, with approximately 15-20% more visitors during these periods than in the preceding two quarters.

During 2001, the largest proportion of visitor arrivals was for the purpose of visiting friends and relatives (37.7%). As explained previously, this is due to the high level of visitation to the country from nearby American Samoa, which has a large population in Samoa. The next most popular purpose of visit is holiday, which accounted for 32.1% of arrivals during 2001.

Air Traffic

Samoa has a modern international airport which can accommodate planes as large as Boeing 747s. Apart from the country�s national carrier, Polynesian Airlines, other carriers servicing Samoa include Air New Zealand, Air Pacific and Samoa Air which offer direct flights or connections to the US, Australia, New Zealand, Hawaii and other Pacific Islands. There are some constraints on the air access to Samoa in terms of weekly frequency and there are very few direct flights. These constraints mainly relate to the small size of the market in terms of passenger volumes and the limited capital base of Polynesian Airlines.

Tourism Demand Generators

Samoa generally appeals to that segment of the holiday market seeking a relatively natural Pacific island experience in a low key, less developed tourist destination when compared with Fiji or French Polynesia. Apart from the airport there is minimal tourism infrastructure apart from hotel and sale accommodation.

Tourist Accommodation Supply

According to the Samoa Visitors Bureau, there are 1,050 hotel rooms in Samoa of which approximately 70.0% are located in Apia. Three establishments have more than 50 rooms, but the majority of these hotels have only 20-30 rooms.  In addition there are approximately 100 beachfront fales as well as two resort style properties.

Based upon limited available information, the following table provides an overview of Samoa�s tourist accommodation properties.
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Despite a number of proposals for new hotel and resort developments, few have proceeded.  Approximately 50.0% of the existing hotel room stock is considered to be in need of refurbishment. Recent project announcements have included approval of a 70 room resort near the airport as well as a proposal by a New Zealand developer to construct 25 condominiums in a staged project situated on a resort site on the outskirts of Apia.

Performance

No information is available on accommodation performance indicators such as occupancy and average daily rate for Samoan hotels.

Market Outlook 

Whilst the Samoan tourism market is relatively small in comparison to some other Pacific Island neighbours, it has demonstrated a reasonably consistent level of visitor arrivals over the past few years. The trend of maintaining visitor arrivals from key source markets appears set to continue to this �safe� and up to now �unspoilt� destination.

Samoa has relatively good air access underpinned by its own Polynesian Airlines operating modern aircraft.

A number of ongoing challenges exist for Samoa. It will be necessary to improve the standard of room stock as well as price competitiveness in terms of both airline package and hotel room rates, which are relatively high for the standard of accommodation offered. A further challenge will be for Samoa to develop a tourism product that differentiates itself from the other Pacific Island destinations. This solution could include the development of low-density beachfront fales offering an eco-style holiday experience.

French Polynesia ( Tahiti )

The French Overseas Territory of French Polynesia, comprises some 121 islands, of which 76 islands are inhabited. The islands are grouped into five archipelagos: Society; Gambier; Tuamotu; Austral; and Marquisas. The population of French Polynesia as at January 2000 was estimated at 231,500. Located on the island of Tahiti Nui, Papeete is the main administration and commercial centre. It has a population of approximately 120,000 and is home to the international airport and port facility which are the entry points to French Polynesia.  Local currency is the French Pacific Franc (Fcfp), which has fixed exchange parity with the Euro.

Tourism

Total visitor arrivals to French Polynesia have grown at a solid 6.5% pa on average between 1991 and 2001. Total arrivals peaked at 233,326 during 2000 before falling by 2.4% during 2001.  The average length of stay for visitors to French Polynesia is 9.2 days, but varies greatly between source markets, corresponding to their relative distance from French Polynesia.

The North American market represents the largest source of visitors to French Polynesia. In 2001 visitors form the US and Canada accounted for 46.9% of total arrivals. Other significant markets include France, Other Europe and Japan.  The North American market has achieved the largest growth in recent years, recording growth of 17.8% and 36.6% in 1998 and 1999 respectively.

Visitor arrivals peak during the months of June, July and August, with the December quarter yielding the least visitors. This corresponds with the tropical weather patterns, in particular the wet season between November and March.
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Air Traffic

The number of passengers arriving by air to French Polynesia has increased dramatically since 1990. Aside from two years of decline during 1991 and 1996, the number visitors by air have grown in each year, averaging 8.4% growth pa to peak at 296,973 during 2000. More recent data is not available.

Air France is the largest single carrier servicing French Polynesia, accounting for 21.0% of air visitors during 2000. Air New Zealand is the second major air service provider, accounting for 16.8% whilst several other major international airlines service the destination. Regionally, Air Tahiti Nui accounts for 16.5% of total visitors by air.

Cruise Ships

The cruise ship industry experienced significant growth in 2000 which continued into 2001, with 33,023 passengers being received for the six months to June 2001. These passengers in turn generated approximately 247,000 hotel nights with both pre and post cruise accommodation, together with island holidays. The recent failure of the Renaissance group with its two cruise ships will adversely affect the future performance of the cruise sector.

Tourism Demand Generators

French Polynesia and Tahiti is one of the world�s most famous and attractive tourist destinations offering both the remoteness of an island holiday experience, together with the warm weather which provides an idyllic leisure environment.  Some of the key attributes of this destination include:

  • Central Pacific location for source markets such as North America, South America, Asia, Japan and Australia/New Zealand;
  • Generally a non-stop flight avoiding transit and security concerns;
  • Outstanding physical beauty including coral reefs, volcanic islands and vegetation;
  • Warm climate, warm water with safe swimming/diving;
  • High quality and unique types of resort accommodation generally in secluded island locations; and 
  • French Territory which enhances the physical safety and security of the destination.
Tourist Accommodation Supply

As at December 2001, the Tahiti hotel market had a total of 11 establishments with 1,246 hotel rooms. This represents a decline of two properties since 1999. Tahiti accounts for 36.6% of total hotel rooms in French Polynesia including a number of internationally operated resorts with greater than 150 rooms as well as smaller locally run properties.

Performance

The demand for room nights in Tahiti has fluctuated since 1995. Apart from two years of growth during 1998 and 1999, demand has fallen each year since 1995. During 2001, room night demand declined by 6.4%.

Occupancy peaked at 65.5% during 1995, before demand declines pushed it down to 53.9% by 1997. During 2000 occupancy once again breached the 60% mark to record 60.9% before falling back to 57.0% during 2001. The average daily rate for hotels in Tahiti has fallen in the six years form 1995 to 2001. After reaching a cyclical high of US$81 during 1998, ADR fell back to US$65 during 2000 before recovering by 2.2% to US$67 in 2001. In turn revenue per available room (RevPAR) finished 2001 at US$38, down from the cyclical high of US$47 recorded during 1998.

Market Outlook

Some of the key factors which will influence this market in the short to medium term include:

  • Airline seat availability which is likely to gradually improve in-line with Air Tahiti�s expansion plans as well as the existing major carriers as they recover from the 2001 global downturn in international air travel;
  • The cost of airfares and holiday packages to this destination;
  • The high level of security offered by this destination and the number of direct non-stop flight options from US and Japan;
  • The new hotel rooms and refurbished inventory being provided particularly on Bora Bora and Moorea;
  • The continuation of the very favourable taxation regime for the development of new hotels;
  • The potential expansion of the cruise ship holiday option; and
  • French Polynesia�s position in the Pacific Islands market as the premier �South Seas� holiday destination.
Vanuatu

There are 83 islands in the 800 kilometre archipelago that forms the nation of Vanuatu.  Vanuatu�s nearest neighbours are Fiji, 800 kilometres to the east and New Caledonia, 400 kilometres to the south west. As at 1999, total population was 186,678, with approximately 20% of the people residing in the capital, Port Vila. Commerce and tourism are the leading forces in the country�s economy, with a developing primary industry sector.

Vanuatu is a tax haven with no income tax, estate duty, succession duty, gift duty, tax treaties or withholding tax. International banking services are available and several major accounting firms have offices in Port Vila.

Visitor arrivals to Vanuatu have grown at an average 3.0% pa between 1991 and 2001. After peaking at 57,591 during 2000, visitors were affected by the disruptions to international travel during 2001 and declined by 7.5% to record 53,300.

During the first six months of 2002 the downward trend continued with a 14.9% drop in visitor numbers compared with the same period in the previous year. This is partly due to the cancellation of Melbourne � Port Vila flights.
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The major source market of Vanuatu is Australia, with New Zealand and other Pacific nations being the next largest source of visitors.  As displayed in the graph, Vanuatu experiences seasonality in visitor arrivals, peaking in the September quarter each year before bottoming during the March quarter due to the tropical climate and associated weather patterns.

Air Traffic

Air Vanuatu and Air Calin have approximately 18 scheduled Boeing 737 flights per week to the international airport at Port Vila. There are direct jet services to Sydney, Brisbane, Auckland, Nadi and Noumea.

Tourism Demand Generators

Vanuatu is one of the closest South Pacific destinations to Australia and enjoys a compatible time zoning with most of the important source markets around the eastern Pacific rim. This proximity and ease of access, along with the trend towards short breaks are the significant demand drivers underpinning the local tourism industry. Visitors can enjoy the vibrant atmosphere of Port Vila with its mixed British and French history and diversified range of restaurants and casinos as well as experiencing the local Polynesian culture. Port Vila also regularly features on the itinerary of many South Pacific Cruises.

Tourist Accommodation Supply

Currently there are four larger hotels in Port Vila, being the Crowne Plaza, Le Meridien and Palms Casino, the Melanesian and Irririki Island Resort. Collectively these four properties provide just over 400 rooms. There are approximately 12 more hotels in the Port Vila area that rank slightly lower in standard and approximately 15 smaller hotels and resorts either on other islands or further than one hour�s drive from the capital.

At present, there is one 75 room hotel casino under construction alongside the harbour in Port Vila.

Performance

Although there are no publicly available statistics on the performance of hotels and resorts in Vanuatu, our experience in this location suggests that the larger hotels have historically achieved an occupancy of approximately 70% and an ADR of US$70.

Market Outlook

It appears that the reduced flights and a return of political stability in Fiji has lead to a reduction in the number of Australian and New Zealand visitors choosing to go to Vanuatu. However, the competitive situation should rebalance itself in the medium term. The addition of another casino hotel in Port Vila will add to the appeal of the destination, however the opening date of this venue has not been confirmed.

New Caledonia

New Caledonia is a group of islands in the South West Pacific, situated approximately 1,980 kilometres northeast of Sydney, 1,860 kilometres north of Auckland and 1,270 kilometres southwest of Fiji. At 24,000 square kilometres, New Caledonia has the world�s largest coral lagoon, which includes a 1,600 kilometre barrier reef and a sea environment home to an abundance and diversity of marine life. The majority of New Caledonia�s tourism related facilities are located in the Southern Province of the main island which incorporates Noumea.  The population was estimated at 204,863 as at July 2001 and the economy largely relies upon the nickel, tourism and marine exports.

According to the Banque de France, tourism is New Caledonia�s second largest foreign exchange earner after nickel exportation, contributing 25 billion FCFP to the economy.  The major resorts are located in the south main land area, with a variety of smaller resorts situated in the northern province and Loyalty Islands.

Tourism

International arrivals grew an average of 2.2% pa between 1991 and 2001. However, during 2001 international arrivals fell by 8.3% to record 100,515. Data for the eight months to August 2002 indicates international tourism to New Caledonia has recovered, recording an increase of 3.1% to reach 65,182 for the period. We note that international arrivals excludes arrivals from cruise ships, yachtsman and day trip passengers.

During 2001, visitors stayed for an average of 14 days, which represents a decrease from the 2000 figure of 16 days. The French were the main impetus behind this decline with their average length of stay decreasing from 34 nights to 27 nights, while all other key source markets reduced their average length of stay by 1 night.

Based on 2001 figures, the major source markets of visitors to New Caledonia are Japan, France, Australia and New Zealand.

Australia was the only key source market to achieve growth in 2001, increasing by 6.6%.  However France, New Zealand and Japan led the decline in tourist visitations posting declines of 17.9%, 15.9% and 10.0% respectively. Year to date figures for August 2002 indicate significant improvement from the source market of France which recorded growth of 19.3% over the eight months to August 2001. Australia and Japan both recorded minor declines while the New Zealand market has declined a substantial 33.5%.  largely as a result of the closure of Club Med in December 2001.

New Caledonia�s peak season is from July to December with March and April also relatively strong. Arrivals from Australia and France tend to have extended peak periods lasting around eight to nine months of the year, whilst Japan visitations are more focused around the November to April period, and New Zealand visitation peaks between July and September.

According to statistics provided by ISEE and NCTPS 65.0% of visitors to New Caledonia, do so for a holiday, while 11.4% of travellers visit friends and relatives and 10.0% travel for business reasons. The majority (68.7%) of visitors to New Caledonia are aged between 20 and 60 years of age.
 

Air Traffic

Air capacity reached its lowest recorded point in the past 11 years during 2001, falling over 8% to record 4,779 seats per week. The decline in air capacity from its peak of 9,231 seats per week in 1998 have been largely impacted on by the cessation of flights to New Caledonia by Corsair in 1998 and AOM at the beginning of 2001. Air France have also reduced the number services over this time. Aircalin operates 16 flights per week, Air France (5 times per week), Qantas (3 times per week), Air New Zealand (2 times per week) and Air Vanuatu (once a week).

Cruise Ships

The cruise industry represents a significant proportion of international arrivals to New Caledonia. During 2001 for instance, the 50,635 passengers arriving by cruise ship represented 33.1% of all visitors to the country.

The number of cruise ships arriving in New Caledonia over the past eight years has fluctuated from a low of 25 in 1998 to a high of 57 in 2000. Despite the number of cruise ships declining to 39 during 2001, international passengers recorded a 4.1% increase for the year.  Between 1990 and 2001 the number of international passengers arriving by cruise ship has increased at an average rate of 2.4% pa.  New Caledonia also receives visitations from yachtsman and day trip passengers, which together comprised 1.3% of all visitors to New Caledonia during 2001.

Tourism Demand Generators

The Southern Province has led a sustained campaign for tourism since 1990. This includes informing local residents about the importance of tourism, providing financial support for tertiary studies in tourism, improving infrastructure such as roads, access offered to different parts of New Caledonia and signage. In June 2001, in association with airline companies and tourism professionals, the Southern Province initiated the creation of New Caledonia Tourism South to promote the destination overseas.

The Southern Province also provides financial aid to hotel and tourism businesses to encourage development and employment. In 2000, the Southern Province provided FCFP 291 million in financial aid to 27 projects, 17 of which concerned hotel businesses.

Recent infrastructure developments include the renovation of the Magenta Domestic Airport which included the addition of a two level building featuring arrival and departure terminals and three boarding halls. Other developments include the construction of the first pressurised submarine observatory in the world, an underwater walkway and the introduction of a new urban public transport system.

Tourist Accommodation Supply

The majority of commercial accommodation is located at Noumea, with other accommodation located in the Southern Province and the Isle of Pines. There is little accommodation provided in the Northern Province and other islands of New Caledonia.

According to ISEE and NCTPS, the room supply in hotels, resorts and other forms of licensed lodging houses totalled approximately 1,746 in Noumea as at December 2001, largely as a result of the opening of the Escapade Island Resort in July 2001. This is significantly higher (12.4%) than the 1,553 accounted for in 2000. Year to date 2002 figures report a 19.8% decline in room stock to record 1,400 rooms which reflects the closing of the Club Med.

Due to the limited supply of tourist accommodation facilities outside Noumea, there are no compiled statistics available on the supply situation in other areas of the country.  Future supply includes the development of a 25 bungalow Oure Lodge on the Isle of Pines.

Performance

Although room night demand in Noumea has continued to grow from its low in 1995, it has still not recovered to historic levels achieved in 1990. During 2001 there was a 2.3% increase in the overall number of room nights demanded over the previous year. However, substantial supply increases resulted in annual occupancy falling by 8.7% to record 47.1%.

Total rooms revenue in Noumea has continued its upward trend from 1996 reaching approximately FCFP 4 billion during 2001.  During 2001, ADR increased by 4.3% to reach FCFP 13,335 for Noumea.

Due to the limited supply of tourist accommodation in areas other than the Southern Province, performance statistics are difficult to obtain. The average room rate during 2001 in the Southern Province recorded growth of 5.3% to reach FCFP 11,243 which is approximately 15.7% lower than the average daily rate in Noumea.

Market Outlook

Factors that will influence the market in the short to medium term are:

  • Support for tourism by the Southern Province including major infrastructure improvements;
  • Promotion of New Caledonia overseas;
  • Financial support offered to tourism related businesses by the Southern Province;
  • Reduction in air capacity by Air France at the end of 2002;
  • Growth from Aircalin;
  • Competition for French business from other French Territories in the South Pacific including nearby Vanuatu and French Polynesia; and
  • The trend of a declining average length of stay of all visitors.


Profiles of Contributors

Troy Craig, Senior Vice President, Corporate Advisory
Author of Cook Islands overview
Troy Craig is responsible for Jones Lang LaSalle Hotels� valuation and advisory services in Australasia. Key areas of responsibility include income based hotel/resort/tourism property valuations, feasibility studies, cashflow forecasting and demand studies. During his four years based in Singapore, Troy carried out assignments in 28 markets across 14 countries throughout the region including Thailand, Indonesia, India, China, as well as resorts in destinations such as Bali, Phuket the Maldives, Tahiti and Cebu. Troy has since returned to Australia and valued properties in the Cook Islands amongst others.

Mike Tidbold, Senior Vice President, Corporate Advisory
Author of Samoa and Tahiti overviews
Mike Tidbold has over 30 years experience in the property industry and has focused on the provision of advisory services including market demand studies, financial feasibilities, valuation and project consultancy in the hotels, resorts and tourism sector of the industry. He has also contributed a number of articles on tourism property which have been published in the Australian Property Institute magazine.

Michael Clarke, Senior Vice President, Corporate Advisory
Author of Vanuatu and Fiji overviews
Michael Clarke is an executive within our corporate advisory business unit with responsibility for a wide range of hotel valuation and tourism consultancy assignments throughout the Asia Pacific region. This includes demand and feasibility studies, highest and best use analysis and advice on management agreement terms. With over 20 years in the property industry, Michael has valued over A$1.5 billion of hotels and resorts in every state of Australia. He has also carried out
valuations in Indonesia, Guam, Fiji, Norfolk Island.

Glen Boultwood, Analyst, Corporate Advisory
Author of New Caledonia overview
Glen Boultwood is an Analyst whose responsibilities span across Corporate Advisory, Corporate Finance and Research. Glen�s role is predominantly in valuation, consulting and advisory to the hotel industry and financial intermediaries.

Disclaimer Copyright � All material in this publication is the property of Jones Lang LaSalle Hotels (NSW) Pty. Ltd (ABN 65 075 217 462). No part of this publication may be reproduced or copied without written permission. The information in this publication should be regarded
solely as a general guide. While care has been taken in it�s preparation, no representation is made nor responsibility accepted for the accuracy of the whole or any part. This publication is not part of any contract and parties seeking further details should contact the author.

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Contact:
For further information on the
Pacific Islands please contact:

Troy Craig and Glen Boultwood: +61 2 9220 8777
Mike Tidbold and Michael Clarke: +61 7 3231 1400
Jones Lang LaSalle Hotels
Level 18
400 George Street
Sydney NSW 2000
www.joneslanglasallehotels.com

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Also See: Troy Craig and Max Cooper Promoted at Jones Lang LaSalle Hotels Sydney Office / July 2002
Sourcing Almost 100% from the Domestic Japanese Market, Theme Parks Boom in Japan / June 2002


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