Tourism – what’s the point?

October 14, 2016 3:08 pm | Posted in Opinions | Share now TwitterFacebook

Too many people just don’t understand why we should be investing in tourism, writes Glen Craig.

Having lived in Vanuatu more than a decade, I have found when I speak about the positive economic effects of tourism in different forums or to Public Servants and Ministers, there is a clear lack of understanding how tourism trickles down into the economy.

Tourism has been woefully underfunded for years in this country. We spend more on rental cars for government staff than we do on tourism marketing. With the appointment of Adela Aru as the new General Manager of the VTO, this may bring a new sense of urgency to the Department.

On a per-visitor basis, we are the lowest spenders compared with Samoa, the Cook Islands, New Caledonia and Fiji. And yet we are the closet country to Australia, the biggest market.

Tourism is great, not just for visors to Vanuatu, but for our local economy. It’s an exceptional source of income, because it’s money that wouldn’t have been earned if the tourists were not coming here.

Tourism allows Vatu to be injected into a community in a variety of ways. The great benefit of this industry is that it’s labour intensive, which means jobs, and many of the operations within it are small Ni Vanuatu businesses. This means that every dollar coming into the tourism sector land right where it’s needed most, and is directly related to a boost in local spending. Vanuatu has the potential to become a more popular tourist destination and that creates the economic opportunity.

Tourism brings jobs. This ranges from directly influenced positions like tour guides, hotel staff, buses, taxis and restaurants to indirect jobs like suppliers and service providers.

What’s great about all these businesses is that they not only pay wages to their staff, but source goods and products locally, giving a boost to local industry.

What’s great about tourism is that the supporting industries like retail, manufacturing and food production also benefit, we see the local farmers and fishermen grow their business as demand increase and increased demand for the local products that tourists want to buy.

Tourism produces increased spending in communities. First you have the money that is spent directly by tourists in the economy, not just on tourism, but also on basic human requirements such as food, clothing, hairdressing, medical services, and transportation. These come along with buying souvenirs from the markets and doing a tour.

Tourism dollars that are earned by businesses and individuals are more often than not re-injected into the Vanuatu economy. You then have more vatu being earned locally, and that is spent in the local economy as well. This is why tourism revenues are often said to have a multiplier effect. A large percentage of every tourist dollar earned is circulated back into the economy, again and again. Ultimately, the more tourist dollars coming in, the larger the economic benefit for everyone.

Tourism also allows an economy to diversify, to develop new forms of income. This acts as an insurance policy in case of hard times, because the additional dollars coming in can help support traditional industries if and when they come under financial pressure. This is especially important for communities that rely on a single industry. It’s also important for rural and outer island communities, where there is significant risk based on farming conditions and global commodity prices for Copra and Kava.

The additional revenue that comes into a community also benefits the local council or governments. It means more tax dollars, which allows public projects to be launched or developed. This means the infrastructure improves, with new roads being built, parks developed and public spaces improved. The better facilities brings in more visitors, but is also a benefit to local residents, especially when there is enough revenue to build new airports, schools and hospitals, which all support the economic development even further.

Without good infrastructure, the flow of goods and services is impossible, but tourism revenues allow this to be supported. Bringing greater tourist numbers to Vanuatu creates opportunities for entrepreneurs to establish new services and products, and for facilities that would not be sustainable based on the local population of residents alone.

Tourists are all potential customers, and with the right approach can be targeted in a business strategy that allows for fantastic success, more revenue for the community and more VAT for the government. I’m not talking about doubling tourist numbers overnight but an increase of 10-15,000 per year for the next 5 years would be significant and sustainable. The government need to review and increase the funding it gives directly to tourism marketing in this country. For the cost of rental cars and a few political junkets overseas, we could massively increase the tourism budget and obtain the flow on effects of happy visitors.

Glen Craig is the Managing Partner of Pacific Advisory, a Vanuatu based advisory firm