Fiji Tourism Development: Analytical Report

Fiji Tourism Development: Analytical Report 1|Page

Mochamad Nalendra Pradono

This work is purposed for Contemporary Tourism and Development in Emerging Economies (APG 5390) assignment, Master International Sustainable Tourism Management, Monash University Cover image: Yasawa Island Photograph: Mochamad Nalendra Pradono Total word count: 4361

Master of International Sustainable Tourism Management Monash University ID : 26443007 M : +61449 596 258 E : [email protected]

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Executive Summary The visitor economy is the primary economic driver in most of Small Island Developing States including Fiji, supported by other industry such as agriculture. Tourism in Fiji contributed US$ 952 million and provided 103,300 jobs in 2008. Overall, the tourism industry growth for the last decades has grown positively, apart from several declines caused by political instability and natural disasters. In a sustainable tourism development concept, the economic benefits should be distributed to the whole local community as well as for environment preservation. As a result, it is crucial to scrutinize the challenges, key strategic issues, and critical factors to bring Fiji toward sustainable development. Field observation and industry speakers hearing have been conducted to draw the general business environment and socio-political condition within the country. Then, qualitative analysis is presented to discover findings related to this purpose. Overall, there are three key strategic issues that have to be emphasized, i.e. high economic leakage, high dependency of western market, and unbalance infrastructure development across the islands. Therefore, integrated program that comprises of local entrepreneurship empowerment and eco village-based tourism should be the main priority while developing new potential markets, such as China and other Asia countries.

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Table of Contents Executive Summary ................................................................................................................................. i 1. Introduction ........................................................................................................................................ 1 1.1 Background ................................................................................................................................... 1 1.2 Objectives...................................................................................................................................... 1 2. Fiji International Tourism Development Profile................................................................................ 2 2.1 The Fijian Tourism Economic Development ................................................................................. 2 2.2 Industry Growth Drivers ............................................................................................................... 4 2.3 Markets and Segments ................................................................................................................. 4 2.4 Tourism Dispersal ......................................................................................................................... 7 2.5 The Key Industry Players ............................................................................................................... 9 3. Evaluation of Fiji Against 7 Challenges of Tourism Development in Emerging Economies ........... 11 3.1 Access to Investment Capital ...................................................................................................... 11 3.2 Access to Human Resource ......................................................................................................... 11 3.3 Transport Access ......................................................................................................................... 12 3.4 Infrastructure .............................................................................................................................. 13 3.5 Marketing and Research Funding ............................................................................................... 13 3.6 Government Support for Tourism .............................................................................................. 13 3.7 History and Politics...................................................................................................................... 14 4. The Contemporary Direction of the Development of the Industry in Fiji ...................................... 16 4.1 Strategic Issues Facing the Further Development of the Fijian Tourism Economy .................... 16 4.1.1 A Need to Reduce Economic Leakages ................................................................................ 16 4.1.2 High Dependency of Western Markets ................................................................................ 16 4.1.3. Lack of Development in Less Touristic Area ....................................................................... 16 4.2 The Critical Success Factors of the Future Sustainable Tourism Development .......................... 17 4.2.1 Fostering Entrepreneurship and Strengthening Inter-Sectoral Linkages ............................ 17 4.2.2. Strengthening Asian Markets.............................................................................................. 18 4.2.3 Developing Ecotourism Tourism .......................................................................................... 19 Conclusion ............................................................................................................................................ 20 References ............................................................................................................................................ 21 Appendices ........................................................................................................................................... 24 Appendix A ........................................................................................................................................ 24 Appendix B ........................................................................................................................................ 24 Appendix C ........................................................................................................................................ 25 Appendix D ........................................................................................................................................ 25 ii | P a g e

Appendix E ........................................................................................................................................ 26 Appendix F ........................................................................................................................................ 27

List of Figures Figure 1: Tourism Receipt vs International Visitor Arrival vs Important Events...................................... 3 Figure 2: Travel and Tourism Direct Contribution ................................................................................... 3 Figure 3: Market Composition ................................................................................................................ 5 Figure 4: Visitor Arrivals Changes by Nationality .................................................................................... 5 Figure 5: Visitor Arrivals by Gender and Age .......................................................................................... 6 Figure 6: Visitor Arrivals by Occupation .................................................................................................. 7 Figure 7: Tourist Dispersal Map .............................................................................................................. 8 Figure 8: The Tourism Environment System ............................................................................................ 9 Figure 9: Strategic Issues vs Critical Factors Matrix .............................................................................. 17

List of Tables Table 1: Fiji’s Industry Players ............................................................................................................... 10

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1. Introduction 1.1 Background With more than one billion international tourists in 2012, tourism has continually shown as a lucrative industry and become one of the fastest growing sectors in the world (UNWTO, 2016). The tourism industry has also provided 235 million jobs and generated US$ 1.3 trillion worldwide (UNWTO, 2016). In the context of Asia Pacific, World Bank (2016) has made a forecast that transformational tourism could earn additional revenue of US$ 1.7 billion and 116,000 jobs to Pacific Island Countries in 2040. The tourism industry is not only potentially able to bring enormous economic impact but also provides opportunities for employment and higher standards of living (Rao, 2002). As tourism is most successful in acting as a catalyst for economic development, it is usually perceived as an attractive development option, especially when other economic alternatives are limited. Island destinations would certainly fall into this category due to their relative physical and social isolation, and limited natural resource endowments which make SIDS (Small Island Developing States) high import dependent destinations (Kim & Uysal, 2002; Singh, 2006) Fiji, which consists of 322 islands, used to depend on sugar commodity for over 100 years before developing its tourism (Rao, 2002). Then, Fiji became dependent on tourism as its significant economic activity in the 1960s (Narayan, 2000). For over the last decade, Fiji tourism has grown rapidly and become the largest export in the country. For instance, in 1998, sugar exports were accounted for FJ$ 244 million, equal to 9.5 percent of GDP, while tourism exports were comprised of FJ$ 548 million or 22.5 percent of the GDP (Narayan, 2000). In spite of that, foreign exchange leakage in Fiji’s tourism is calculated to be roughly 60 to 70 percent (Robertson & Tamanisau, 1989).

1.2 Objectives This report discusses three main points that consist of 1) Fiji’s international tourism development in the past ten years, 2) evaluation of Fiji tourism against tourism development challenges in emerging economies, and 3) strategic issues to develop future Fiji’s tourism economy before coming to the general conclusion.

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2. Fiji International Tourism Development Profile 2.1 The Fijian Tourism Economic Development Overall, regarding international visitor arrival and receipt, the development of tourism industry in Fiji has shown a positive trend in the last 15 years; apart from the declines caused by political instability, natural disaster, and global crisis (see Figure 1). After the coup in 2000, the number has increased to more than double throughout the period, from 294,000 to 693,000 tourists alongside tourism earnings from US$ 291 million to US$ 971 million. A theory model can project the aftermath of the coup (see Appendix A) There were two major declines in 2000 and 2009. In the period between 1999 and 2000, the foreign tourist number together with receipt dropped suddenly from 410,000 to 294,000 and from US$ 365 million to US$ 291 million respectively. This is because of the short-term implication of the military coup that affected the travel ban from different source markets, such as Australia, New Zealand, and the UK (Fletcher & Morakabati, 2008). Secondly, the number decreased from 585,000 to 542,000 in 2009 due to the global crisis and flood. However, the government doubled its tourism budget from FJ$ 12 million in 2008 to FJ$ 23.5 million for 2009 (Sydney Morning Herald, 2009), as a result there was an outstanding performance from 2009 to 2011. Comparing the two coups; the industry has recovered rapidly after the coup in 2000, while the recovery after 2006 coup was a struggle. This was because of the impact of the economic crisis, natural disaster, and political turmoil that appeared in a short period. It can be evident that the growth of the international visitor number between the coup in 2000 and in 2006 was 86.7 percent, while the increase between the coup in 2006 and in 2014 was 26.6 percent.

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Tourism Receipt vs Visitor Arrival 1200 Flood

1000

Military Coup

800 600

Military Coup Inflation

Global Crisis

400 200 0

750,000 700,000 650,000 600,000 550,000 500,000 450,000 400,000 350,000 300,000 250,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Tourism Receipt (in milions US$)

International Visitor Arrival

Figure 1: Tourism Receipt vs International Visitor Arrival vs Important Events Source: Fiji Bureau of Statistics (2017), World Bank (2016a), Prasad (2010)

Regarding socio-economic impacts on Fiji’s tourism, the highest percentage of both direct contributions to GDP and employment were in 2008 with 15.31 percent and 13.7 percent respectively (see Figure 2). Tourism industry generated US$ 952 million and provided 103.300 jobs in 2008 (WTTC, 2016).

Travel and Tourism Direct Contribution 16 15 14 13 12 11 10 9 8 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Direct Contribution to GDP (%)

Direct Contribution to Employment (%)

Figure 2: Travel and Tourism Direct Contribution Source: WTTC (2016)

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2.2 Industry Growth Drivers In the past 20 years, Fiji’s tourism has continued to grow and aims at the next level of development. Both internal and external factors (see Figure 3) that happened in the long period were indivisible from the growth. The restructuration of landownership, investment, and business environment in the tourism sector as the aftermath of the coup has shifted the industry to the capitalist economy that supports private sector and foreign investment. The relationship between the development of Fiji Tourism and Foreign Direct Investment (FDI) in hotels, resorts, and infrastructure has been investigated by Jayaraman and Singh (2007). The research revealed a positive association between the two variables (see Appendix C). For some developing countries like Fiji, FDI in tourism is more vital in their overall economic activities, which has contributed to assist developing international-standard hotels and resorts. Therefore, FDI has helped Fiji to become a likely tourist destination in the Pacific. Other key drivers, such as Low-Cost Carrier (LCCs), Working Holiday Visa in Australia, Internet, and Word of Mouth (WOM), have contributed to the number of independent travellers to Fiji. The worldwide innovation of the LCCs in the last two decades affected backpacker’s travel itinerary and pattern (Hampton & Hamzah, 2010; Pearce, Murphy, & Brymer, 2009). Thus, Fiji became the sojourn and affordable destination for the long-haul travellers, such as European Backpackers. Similar to Working Holiday Marker (WHM) in Australia, they often travel to Fiji before returning to their homeland. Major influencers are retrieved from other travellers, family, and relatives alongside the internet (Kevin & Irena, 2015).

2.3 Markets and Segments Fiji has been promoting from the early day as the ideal south seas tropical island with cultural uniqueness and offers an experience that is not provided in urbanized Western lifestyle (Britton, 1983). This strategy has led to Fiji’s market composition, which is dominated by western tourists. Australia dominates the market with 46 percent, followed by New Zealand and the USA with 20 % and 9 % respectively (see Figure 3). On the report of Fiji Tourism (2016), these markets are aimed as core market, while Continental Europe, United Kingdom, India, South Korea, and China are projected as the secondary market.

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Visitor Arrivals 12 Months to November 2016

46%

9%

20%

Australia

New Zealand

USA

Canada

United Kingdom

Cont. Europe

Japan

China

South Korea

Rest of Asia

Pacific Islands

Others

Figure 3: Market Composition Source: Fiji Bureau of Statistics (2016)

In addition, China and the rest of the Asian markets were growing markedly (25,8 percent and 42.6 percent), when Australia market declined slightly (see Figure 4). This data can be an evidence that the Chinese market has a potential to grow as well as other Asian countries.

Visitor Arrivals Changes by Market (y-o-y) 400000 350000 300000 250000 200000 150000 100000 50000 0

50.0% 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0%

2016

2015

Change

Figure 4: Visitor Arrivals Changes by Nationality Source: Fiji Bureau of Statistics (2016)

In the matter of market segment, youth segment dominates the demographic of Fiji’s visitor. It can be seen that the segment with age cohort of 25-29 and 30-35 are the largest number of visitors with over 3,000; for both male and female in November 2016 (see Figure 5). Youth segment, which becomes an Page | 5

attractive segment for many destinations, is the people within the age between 18 and 35 (Kale, McIntyre, & Weir, 1987). This segment is also suitable for emerging economies as they are willing to travel often, stay longer (Moisă, 2007), consume local product (World Tourism Organization, 1990) and disperse to regional area.

Figure 5: Visitor Arrivals by Gender and Age Source: Fiji Bureau of Statistics (2016)

Professional worker, families, and student were the most occupation/relationship of the visitors in November 2016 (see Figure 7). In many cases, youth travellers are associated with students (Boukas, 2013) and professional worker. Riley (1988) also contends that these travellers have the motivations to escape from their daily routine, from jobs, from career decisions, and delay work. These segments are in line with brand themes (see Appendix A) of Fiji, which consists of families, relaxation, romance, and adventure (Tourism Fiji, 2016).

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Arrival by Occupation - November 2016 Retirees, housewives, Children & Others Not Stated Students Armed Force Elementary Occupation Plant & Machine Workers Craft Workers Skilled Agricultural Fisheries Service Workers Clerical Workers Technician & Related Workers Professional Workers Legislators 0

2000

4000

6000

8000

10000

12000

14000

Figure 6: Visitor Arrivals by Occupation Source: Fiji Bureau of Statistics (2016)

2.4 Tourism Dispersal Tourist dispersal in Fiji can be traced back from the colonial era. The origins of the tourist area in Fiji was concentrated in Suva as the city that was well known as the ‘crossroads’ for steamship lines in the Pacific. Then, a rapid development came after World War II by establishing Nadi Airport in the western part of Viti Levu and drew tourists from Australia and New Zealand. In the 1970s, a highway, which connects between Nadi and Suva, was built to support tourism development along the coral coast (Rao, 2002). In 2002, Islands destination was opened to the travellers as a daily ferry service called Awesome Adventure was formed (Awesome Adventure, 2016). It connects the main island to the exotic islands, such as Yasawa and Mamanuca Islands. Vanua Levu, however, was left aside from the development of tourism for many years because of the sugar and copra plantation (Lonely Planet, 2017) until foreign-owned hotels were constructed in Suva Suva (Lewis-Cameron & Roberts, 2010).

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Figure 7: Tourist Dispersal Map Source: Fiji Bureau of Statistics (2016)

In the past decades, tourists have dispersed to the most of the main islands in Fiji with different market proportion. In accordance with Fiji Bureau of Statistics’ (2016) report, the majority of Australian market concentrates in the main island of Viti Levu, while the U.S. market has the largest percentage in Kadavu Island and Vanua Levu. It is believed that the two largest markets have different characteristics in terms of the type of traveller and willingness to spend. The pattern of the type tended to be mostly families from Australia, backpackers from Europe, and more experienced travellers from North America (Harrison, 2003a). Besides, Australian spend less than American (see Appendix D) as getting to the islands outside Viti Levu needs additional cost for the transportation. Also, Vanua Levu is being marketed specifically for high-end market wanting to indulge in five-star hotels with their own luxury facilities and transport services (Campbell, 2010).

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2.5 The Key Industry Players Determining the key industry players in Fiji, where the industry relies heavily on the private sector, can be identified by applying the tourism environment system (see Figure 7). This model, purposed by Travis (1989), consist of 1) tourist, 2) transportation and communication, 3) attractions, 4) people and place, 5) service and facilities, 6) information direction.

Figure 8: The Tourism Environment System Source: Travis (1989)

According to the model, people represented the demand population produced by individual travellers or travel agents (Flognfeldt, 2005). Then, the tourists use a transportation service, Page | 9

such as airplane or cruise ship, to take them to the destination. Fiji Airways, which serves 50 destinations in 13 countries (including codeshares), play a pivotal role in bringing the world to the destination. It connects directly to the primary market, such as Australia, New Zealand, and the U.S. Low-Cost Carriers (LCCs), however, also generate significant demand in the last decade, especially from the backpacker segment. On the other hand, cruise ship conveys the higher segment of tourist. The foremost contribution to the growth is Tourism Fiji. This National Tourism Organization acts as information direction that is responsible for marketing the destination (Fiji Tourism, 2016). Overall, the marketing core functions of Fiji Tourism are brand, product, and customer management (Kotler, Kartajaya, & Setiawan, 2010) to drive the sustainable growth. Managing brand is about shaping Fiji’s image and perception into the market through branding strategy, while managing product is by encouraging the industry to cater the needs. The NTO, additionally, has a role in keeping the traditional market, growing the emerging market, and expanding the new market (Fiji Tourism, 2016).

Table 1: Fiji’s Industry Players No 1

People

Transportation

Attractions

Travel Agents

Fiji Airways

Tour Operators

People and Place National Park

Service and Facilities 5 Star Hotels (e.g. ShangriLa, Sheraton)

2

Other Flight Carriers / LCCs (e.g. Jet Star)

NonGovernmental Organization (e.g. MDF)

Resorts (e.g. Blue Lagoon, Oarsman Bay)

3

Cruise Operators (e.g. Emerald Princess) Public Transport (e.g. Bus, Taxi)

Foundation (Vinaka Fiji)

Backpacker Hostels (e.g. Bamboo) Restaurants

4

Information Direction National Tourism Organization (e.g. Tourism Fiji) Destination Management Organization (e.g. Denarau Island)

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3. Evaluation of Fiji Against 7 Challenges of Tourism Development in Emerging Economies 3.1 Access to Investment Capital Financing has been a great challenge when developing a country, especially SIDS. In 1996, Fiji government published a report that 25 percent of the population live below the poverty lines and the number is increasing every year. For this reason, the government established the National Microfinance Unit (NMFU) in 1999 to promote and embrace the development of microfinance in Fiji. The program has made positive outputs in terms of improved income, the ability to pay the school fees, household assets, employment in the business and SMEs (Kinivuwai, 2005). In terms of investment, foreign direct investment (FDI) has contributed towards developing resort and hotel facilities of international standards, which has helped the country to emerge as a leading tourist destination in the Pacific over the years. As a consequence, most of the mass tourism product is owned by expatriates and results in Fiji to have a high level of economic leakage (Hall, 1994). The statistic shows that 94 percent of the 132 tourism projects (between 1988 and 2000) were owned by foreigners (Narayan & Prasad, 2003). Most of the foreign investors lease from traditional landowners, who own 83 percent of the land in Fiji, for at least 99 years. This land is leased and controlled by Native Land Trust Board (NLTB) as a representative of landowners from various clans – mataqali (Rao, 2002).

3.2 Access to Human Resource The economic development in SIDS is often hindered by human resources development, such as lack of skills and human capital in the local community (Harrison, 2003b). This is because of the majority of SIDS, including Fiji, have small populations to provide skilled and unskilled labour to support their economies. To cope with this issue, tourism industry players often have expatriate employment to dominate senior levels (McElroy & de Albuquerque, 2002). For instance, the Fiji Islands Bureau of Statistics indicates that 15% more expatriates were employed in tourism related jobs than locals (Shakeela, Ruhanen, & Breakey, 2011, p. 333) This circumstance has become one of the major challenges for developing sustainable tourism in the country. However, Mowforth and Munt (2009) argue that the positive impact of tourism development is influenced by the ample use of expatriate workforce. These workers

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may bring a new set of knowledge and skills to Fiji that could help companies to be more competitive as well as assist the industry to grow (ILO, 2001, as cited in UNCTAD, 2007). Anticipating the need for skilled labour, the government provided an additional fund to the National Universities such as Fiji National University, The University of South Pacific, and University of Fiji since 2011. This fund was allocated to provide vocational and job training for tourism and hospitality skill sets such as catering, eco-tourism, culinary, and computers (Fiji Government, 2012)

3.3 Transport Access SIDS faces some vulnerabilities especially location remoteness and scattered islands. Thus, transportation access is considered to be substantial challenges in both international and domestic accessibility. Fiji depends heavily on air transport to bring the world to the island, while small planes and vessels are major interisland transportation. Fiji Airways with direct non-stop flights from source markets like Australia, New Zealand, and the U.S. plays a pivotal role in Fiji tourism growth. The national carrier along with other foreign carriers (e.g. Qantas, Virgin, Jetstar, Air New Zealand, and Korean Air) contributed to the 1.2 million international passengers and over 450,000 domestic passengers through Nadi International Airport annually (Airports Fiji, 2016). Another alternative international tourists’ transport is cruise ships. Although cruise tourism is still a minor part of the total number of tourist to Fiji, there has been a positive growth throughout the year. The average annual number of cruise passengers during 1996-2000 were 14,200 and increased to 88,000 in 2014 (Jayaraman, 2016). In terms of domestic transportation, Fiji Link which is a subsidiary carrier of Fiji Airways, offers domestic flights to twelve destinations including Suva, Labasa, Taveuni, and Kadavu. The popular destination route was Nadi-Suva (see Appendix F) with 1,551 passengers in April 2013. In addition, Awesome Adventures is the backbone of backpacker tourism in Fiji, which carried over 24,000 passengers per year to, from, and around the Yasawa Islands (Awesome Adventure, 2005).

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3.4 Infrastructure Balancing the infrastructure development both in urban and rural SIDS is a great challenge. The regional development and infrastructure in Fiji is led by the tourism industry that is predominantly owned by foreigners. The development is only conducted selectively in an area where can it benefits the foreign investor by lobbying the government policies (Britton, 1983). For example, In the 1970s, the government started to build major infrastructures (e.g. airport, roads, and hotels) on the western side of Viti Levu, which was seen by the investor as a more potential precinct for tourism than in the eastern part of the island (Rao, 2002). The obvious ramification of this phenomenon is an enormous imbalance between the infrastructure in the western and the eastern part of Fiji. In the western part, the standard quality of infrastructure relatively meets the needs of international tourists, such as five-star hotels in Denarau Island, inter-island transportation, international airport, and roads. This development of tourism has benefited the locals in the area, compared to another island, such as Vanua Levu, which experienced underinvestment in infrastructure and amenities.

3.5 Marketing and Research Funding In the last two decades, the Fiji government significantly injected additional budget to the marketing campaign of Fiji tourism. The marketing campaign includes refreshing the brand, improving positioning, and developing a brand blueprint that suits across all markets (Tourism Fiji, 2016). In 2016, the budget allocation increased FJ$6.5 million from the previous year to FJ$30 million (SPTO, 2015). The fund was allocated to the potential segments such as diving, wedding, honeymoon, cruise, adventure, and sports tourism internationally. Research is critical for decision-making to provide business intelligence to formulate Fiji’s marketing, action plan, and public relation that target potential markets and segments. Recently, Fiji has published a quotation to attract an experienced market research company to conduct a research that focused on customer behaviour (SPTO, 2014).

3.6 Government Support for Tourism After the 1987 coup, the government was forced to change trade policy from import substitution to export promotion following IMF’s recommendation of structural adjustment policies (SAPs). However, the policymakers did not realize that the service industry will Page | 13

become the essential sector in driving economic development and growth (Narayan & Prasad, 2003). Consequently, the lack of government involvement in infrastructure and tourism sectors had led Fiji loss of half Australian market to Bali between 1982 and 1995 (McDonnell & Darcy, 1998). After the problems from sugar and garment sectors arose, tourism has been acclaimed as the engine for growth and development. Fiji government has a high commitment on NTO. Since then, the marketing budget has been increased to sustain the growth of visitor number, foreign exchange, and employment (Rao, 2002). In 1988, the tourism industry’s earnings surpassed those of sugar and garment (see Appendix E). The key role of the government can be summarized as follows (Fiji Government, 2016; Narayan & Prasad, 2003): 

Formulating tourism development plan in short and long term



Supporting village eco-tourism based on the benefit of the locals



Progressive tourism marketing action through the NTO and private sector to increase visitor arrivals



Stimulating new investment in tourism to maximize its potential



Securing airline seats through new air service agreement



Promoting training and education to provide quality workforce within the industry

3.7 History and Politics Other challenges that are common in developing countries, especially the Commonwealth countries is political instability (Fletcher & Morakabati, 2008). The political turmoil as a consequence from coups has both short and long-term implications for Fiji’s tourism industry. Although every coup has affected in the declining number of tourists in the short period of time, it brought evolution to the regulation, strategy, and policies in the long-term. According to Rao (2002), the political instability caused a positive impact on the development, for example, Fiji government supported the tourism sector by injecting more fund to the NTO (National Tourism Organization). The marketing strategy and campaign had been successful in attracting more tourists to Fiji through its office networks around the world (The Fiji Times, 2015). In addition, the government has reformed its public sector and privatization regulation to accommodate the demand of the market responsively. As a consequence, Transnational Corporation (TNC), which base is located in another country and operates in one and more Page | 14

countries, has been able to operate in Fiji. TNC is claimed as the basis for promulgating technical knowledge, embracing global communication, as well as establishing new markets for Fiji (Dwyer, 2015).

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4. The Contemporary Direction of the Development of the Industry in Fiji 4.1 Strategic Issues Facing the Further Development of the Fijian Tourism Economy 4.1.1 A Need to Reduce Economic Leakages Tourism should be benefiting the whole community, especially those who live under the poverty line. However, this statement is not really widely happening in Fiji and becomes the main issue. It can be evident in some Islands that there is a clear living standard gap between resort guests and the villagers (de Kadt, 1979). For example, the discrepancy becomes apparent when comparing the standard amenities and infrastructure between the guests in Blue Lagoon and the villagers in Nacula Island, even though the resort has a corporate social responsibility program. This is because the benefits of tourism in the island do not trickle down to the bottom of the pyramid (Scheyvens & Russell, 2009) as the estimated 60% of tourism income leakage goes to the foreign investors (Levett & McNally, 2003). The domination of foreign investment in Fiji also discourages the local participation. Britton (1983) found that handicraft and entertainment groups, which have low rates of earnings, were the main beneficiaries for the indigenous people of Fiji. It is also worsened by the handicrafts made in China and other Asian countries that dominate the market.

4.1.2 High Dependency of Western Markets As discussed earlier, Fiji’s marketing strategy, in the beginning, has influenced many Western tourists to come to the island and become major markets such as Australia, New Zealand, and the USA. These countries contributed 75 percent of total Fiji tourism market, while only New Zealand had positive growth in 2016 compared to 2015. Despite the fact that there is a possibility of weaker Australian dollar in the future, the Fiji government is still focused only on the traditional tourist market by increasing its share (Earl, 2015). 4.1.3. Lack of Development in Less Touristic Area Compare to the rapid development in the Viti Levu and Yasawa Islands, the infrastructure in Vanua Levu outside Savu Savu has been negligible especially in the villages (Campbell, 2010). This is because Fiji Government has prioritized tourism area which has a considerable number of foreign investment and the tourist number who visited Vanua Levu is still limited. The cost of domestic transport is noticeably high and prevents the budget traveller to spend more Page | 16

nights in Vanua Levu. The development of alternative tourism in the rural area of Vanua Levu would face difficulties, unless the government put attention on course of action for the basic infrastructure revitalization in the island.

4.2 The Critical Success Factors of the Future Sustainable Tourism Development In response of the strategic issues above, a matrix of recommendations can be formulated and combined with the critical success factors for developing sustained Fiji tourism industry (see Figure 9). No.

Strategic

Critical Success Factors

Issues Fostering Local Ownership

Developing China and

Embrace Ecotourism in

and Strengthening Inter-

Asian markets

Rural Area

Sectoral Linkages 1

High Economic Leakage

2

High dependency on Western Market

3

Unbalance Infrastructure Development

= Environmental Benefit

= Social Benefit

= Economic Benefit

Figure 9: Strategic Issues vs Critical Factors Matrix

4.2.1 Fostering Entrepreneurship and Strengthening Inter-Sectoral Linkages Although tourism provides jobs and contributes to the national economic growth, it is not an instinctive solution for alleviating the poverty. Thus, it is necessary to embrace local participation through investment and entrepreneurship in Fiji’s tourism (ILO, 2010). Smallscale and alternative tourism has often been put forward as the solution for the community involvement, but a lack of business knowledge among the local population and poor access to capital has become impediments (Scheyvens & Russell, 2009). The education sector has to be emphasized not only on hospitality and tourism skill, but also on entrepreneurship. Page | 17

Moreover, lack of local-source used in tourism industry exacerbates the leakage in the country. A study highlighted that up to 80 percent of fruits and vegetables are imported to supply the needs of Fiji’s tourism sector (FAO, 2011). The barriers that should be solved are the quality of local products and insufficient quantities to supply hotels, resorts, and restaurants (Rogerson, 2012, as cited in Pratt, 2013). Thus, Fiji’s agriculture industry should be redesigned to cater tourism industry and persuade industry players for using local ingredients – which can be marketed as a premium product – to create inter-sectoral linkages. 4.2.2. Strengthening Asian Markets Interestingly, China and other Asian markets had outstanding performance in the same period and may have a future potential market for Fiji (see Figure 4). According to a study, the current Chinese outbound travel market consists of roughly 22 million in 2009 (Li, Harrill, Uysal, Burnett, & Zhan, 2010) and predicted to increase up to 134 million in 2020, followed by Japan and South Korea with 19.2 million and 18.4 million respectively (MasterCard Insight, 2014). Regarding GDP and outbound growth, China and India are estimated to be the two largest markets in the future (see Figure 9). The brand and product management of Fiji tourism, therefore, should start to modify for the foreseeable future markets.

Figure 10: Outbound Travel vs Real GDP Growth Source: MasterCard Insight (2014)

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4.2.3 Developing Ecotourism Tourism Developing an alternative product is needed to cope with the serious issues in Fiji such as high level of leakages and lack of development in the less touristic area. It is believed that villagebased ecotourism could act as a panacea to these issues. Based on Harrison, Sawailau, and Malani (2003), ecotourism has several advantages: 

Need relatively little capital in small scale operation



Village-based



Operated and owned by local villagers



Fewer leakages than mass tourism



Cater the niche market of tourists who have desire to learn

The community in the village has to be involved mostly in the decision-making of tourism development. Without this involvement, the ecotourism in Fiji could not be sustainable (Bianchi, 2003). It also requires some degree of training and evaluation program both from the government and the private sector. Ecotourism development in rural areas such as in Vanua Levu can be a trigger for the infrastructure enhancement among locals.

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Conclusion The report has discussed the past, present, and future of the tourism development in Fiji based on secondary data and field observation. The most obvious finding to emerge from this study is that even though Fiji tourism growth has relatively shown a positive trend, in terms of sustainable tourism, it leaves some issues and challenges. Firstly, Fiji relies heavily on the western market (i.e. Australia, New Zealand, and The U.S.) which most of these markets experienced negative growth, except New Zealand, while Chinese and other Asian markets has undergone an outstanding increase. Secondly, apart from acting as a catalyst for the tourism development, foreign investment and ownership that have the control on the industry do not significantly benefit the locals. The main reason for this is because the money that tourists spend has leaked from the island. Also, most of the locals who live in the bottom of the pyramid – which are accounted for 35.2 percent of the total population (World Bank, 2016) – cannot absorb the economic benefits due to lack of participation and entrepreneurship. Thirdly, there is a significant gap between Viti Levu and other Islands (e.g. Vanua Levu) in terms of infrastructure development. Therefore, the benefits of tourism are difficult to reach the community on the less developed island. It is suggested that an alternative tourism product should be flourished particularly in the less developed island. Then, entrepreneurship has to be embraced and becomes the main program of the government, including to provide training and financial support to produce more local owners that integrate with the ecotourism strategy.

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Appendices Appendix A

Source: Fletcher and Morakabati (2008)

Appendix B

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Appendix C Fiji’s Tourism Foreign Direct Investment

Source: Jayaraman (2014)

Appendix D Average Spending per Visitor by Market (September 2016) Market Australia New Zealand U.S.A.

Total Earnings (Million FJ$) 212.7 86.2 32.9

Number of Arrivals 35478 17701 4193

Average Spending / Visitor (FJ$) 5995.265 4869.781 7846.411

Source: Fiji Bureau of Statistics (2016)

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Appendix E Tourism, Garment, and Sugar Exports for Fiji (1980 – 2001)

Source: Narayan and Prasad (2003)

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Appendix F

Source: Innovata (2012)

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