PACIFIC ISLANDS OVERVIEW

Transcription

1 PACIFIC ISLANDS TOURISM & HOTEL MARKET OVERVIEW

2 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. 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, 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. 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. 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. 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 International Arrivals to Key Pacific Island Markets Visitors 500, , , , , Fiji New Caledonia Cook Islands Source: SPTO French Polynesia Samoa Vanuatu 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. RevPAR Movements Key Pacific Island Markets $100 RevPAR (US$) $80 $60 $40 $20 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 $ Fiji New Caledonia Source: Respective tourism bureaux French Polynesia Cook Islands Page 1

3 MAP OF SOUTH PACIFIC ISLANDS Page 2

4 FIJI International Visitors to Fiji 1991-Ytd 2002 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. Number of Visitors 500, , , , ,000 The official population was 844,330 as at July 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. Key Economic Indicators 2002 (f) GDP Growth -2.8% 2.6% 4.4% Inflation 3.0% 2.3% 2.5% Exchange Rate US$ Inter-Bank Rate 1.0% 1.0% 1.0% Source: Fiji Bureau of Statistics, Reserve Bank of Fiji, OANDA. Tourism International arrivals to Fiji have grown at an average of 3.0% pa between 1991 and. This result was adversely affected by the sharp decline in arrivals during, 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. During international arrivals reached 348,014, which represents an increase of 18.3% over a strong result given the events of September 11. During visitors stayed for an average of 8.7 days, a slight increase on the 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. - Source: SPTO 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 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. Over the past ten years, international arrivals to Fiji have grown at an average of 3.0% pa International Visitors to Fiji by Country of Origin Other Europe 6% Pacific Islands 7% UK 9% Ytd August Ytd August 2002 USA 17% Other 9% Japan 6% Australia 27% Source: Fiji Bureau of Statistics New Zealand 19% South Korea posted the greatest increase during with growth of 140.5%. However, Continental Europe continued a downward trend initiated in 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 levels. Page 3

5 The resumption of services by Korean Air in November had a significant impact on Korean visitor numbers, although notably these 747 flights also service the New Zealand market. At least 90.0% of all travellers used hotel accommodation during their stay in Fiji 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. Monthly International Arrivals to Fiji Number of Visitors 50,000 40,000 30,000 20,000 10,000 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 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2002 Source: Fiji Bureau of Statistics 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. Tourism Demand Generators Visitors to Fiji are attracted by the picturesque natural environment and the plethora of waterbased 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. The majority of these comprise less than 25 rooms and only five have more than 250 rooms. Page 4

6 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. Only five hotels have more than 250 rooms. 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. Trading Performance Fiji Hotels Occupancy 80% 60% 40% 20% 0% Occupancy Spend per Room Source: Fiji Bureau of Statistics $300 $250 $200 $150 $100 $50 $0 Spend per room (F$) Market Outlook Performance During 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 at F$313.6 million, before dropping significantly during. Despite reduced revenue levels, spend per room continued to grow reaching F$255 in that year. The decline in hotel revenue continued in, falling a further 7.5% to F$228.8 million, while the average spend per occupied room also declined to F$247 during. A breakdown of the nightly spend per room during shows guests spent on average F$135 on accommodation, F$54 on food and F$31 on beverages. 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. Major conferences are now returning to Fiji after a virtual cessation in the 12 months following the coup. Page 5

7 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. Key Economic Indicators /00 (f) /01 (f) /02 (f) GDP Growth 2.9% 3.3% 3.8% Inflation Exchange Rate US$* Source: Cook Islands Ministry of Finance, OANDA * NZ$ Actual figures. Tourism International Visitors to Cook Islands 1991-Ytd 2002 Number of Visitors 80,000 60,000 40,000 20,000 - Based on figures, the largest source of visitors to the Cook Islands is Europe/UK, followed by New Zealand, Australia and North America. International Visitors to Cook Islands by Country of Origin North America 18% Ytd Sep 01 Ytd Sep 02 Source: Cook Islands Statistics Office Other Pacific Islands 2% Cook Islanders 7% New Zealand 27% Between 1991 and, 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 and, during which visitor arrivals increased by 14.3% and 31.3% respectively. Europe/UK 31% Source: Cook Islands Statistics Australia 15% Despite registering favourable growth of 2.2% during, 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 levels during 2003, and record 6% annual growth thereafter. Between and, 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 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. Page 6

8 Prior to, the Cook Islands received more guests during the months of October, November and December, with a trough in demand occurring during May. Monthly International Arrivals to Cook Islands Number of Visitors 8,000 6,000 4,000 2,000 Air Traffic - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2002 Source: Cook Islands Tourism Corporation Since the collapse of the charter airline Canada 3000 in November, 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. 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 /300 jets, each providing capacity of around 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 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. Over the same period, the number of hotel and motel rooms has almost doubled from 409 in 1987 to 793 in. 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 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 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: Supply Additions in the Cook Islands As at October 2002 Project Rooms Date of Completion RECENTLY COMPLETED Pacific Resort & Villas add n 14 Rarotongan Beach Resort 3 add n Crown Beach Resort add n 10 UNDER CONSTRUCTION AND PROPOSED 100m north of Pacific Resort and Villas Resort in Aitutaki Rarotongan Beach Resort 150 On hold add n Crown Beach Resort add n 38 Planned Vaimaanga Hotel dev t. 191 Planned Source: Industry Sources Page 7

9 Performance According to Statistics Cook Islands, between and, 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 and, 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, a slowdown was expected in. Following the spectacular growth of, a slowdown was expected in. 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 Occupancy fell 23.9% to 61.1%, the lowest March quarter result since. the diminished flight capacity following the demise of Canada 3000; the impact of the events of 11 September and the current global economic slowdown; and negative publicity associated with the Dengue Fever outbreak in early 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 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. Trading Performance Cook Islands Hotels 80% $160 Occupancy 60% 40% 20% $120 $80 $40 ADR (NZ$) 0% Market Outlook The following events have significantly impact visitor arrivals and therefore hotel market performance across the Cook Islands; Occupancy Source: Statistics Cook Islands ADR $0 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. Page 8

10 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. Between 1991 and, total arrivals grew by 8.4% pa, the highest of all Pacific Island markets studied. The economy has benefited recently with the strong expansion in construction activity by the continuation of major government projects. Key Economic Indicators 2002 (f) GDP Growth 6.9% 6.5% 4-5% Inflation 1.0% 4.0% 3-4% Exchange Rates (ytd) US$ Interest Rates %* Source: Treasury Department, OANDA * As at March 2002 Tourism Over the period 1991 to, 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 and. During, 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. International Visitors to Samoa Visitors 100,000 80,000 60,000 40,000 20,000 0 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. The second largest source market is New Zealand, followed by Australia and the US. During, the most significant growth was achieved by visitors from Other Asian countries (Asia excluding Japan), which grew by 38.8% over the year. 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. International Visitors to Samoa by Country of Origin Other Pacific Islands 4% US 10% Australia 13% Source: Samoa Visitors Bureau Fiji 2% Other 10% Source: Samoa Visitors Bureau American- Samoa 35% New Zealand 26% 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. Page 9

11 During, 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. 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 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. Samoa Accommodation Supply Type No. Properties Total Upolu* Savaii Deluxe Standard Budget Total Source: Samoa Visitors Bureau *Apia is located on Upolu 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. Page 10

12 (T FRENCH POLYNESIA (TAHITI AHITI) 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 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. Total arrivals peaked at 233,326 during before falling by 2.4% during. 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. International Visitors to French Polynesia Number of Visitors 250, , , ,000 50,000 - Source: SPTO The North American market represents the largest source of visitors to French Polynesia. In 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 and respectively. International Visitors to French Polynesia by Country of Origin Other Europe 14% New Zealand Australia 2% 3% Japan 8% France 23% Source: Ministry of Tourism Other 4% US 46% 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. Monthly International Arrivals to French Polynesia Number of Visitors 30,000 25,000 20,000 15,000 10,000 5,000 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Ministry of Tourism Page 11

13 Air Traffic The number of passengers arriving by air to French Polynesia has increased dramatically since Aside from two years of decline during 1991 and, the number visitors by air have grown in each year, averaging 8.4% growth pa to peak at 296,973 during. More recent data is not available. Air France is the largest single carrier servicing French Polynesia, accounting for 21.0% of air visitors during. 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 which continued into, with 33,023 passengers being received for the six months to June. 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 Tahiti is one of the world s most famous and attractive tourist destinations 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 The number of passengers arriving by air to French Polynesia has increased dramatically since 1990 As at December, the Tahiti hotel market had a total of 11 establishments with 1,246 hotel rooms. This represents a decline of two properties since. 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. Apart from two years of growth during and, demand has fallen each year since. During, room night demand declined by 6.4%. Page 12

14 Occupancy peaked at 65.5% during, before demand declines pushed it down to 53.9% by. During occupancy once again breached the 60% mark to record 60.9% before falling back to 57.0% during. The average daily rate for hotels in Tahiti has fallen in the six years form to. After reaching a cyclical high of US$81 during, ADR fell back to US$65 during before recovering by 2.2% to US$67 in. In turn revenue per available room (RevPAR) finished at US$38, down from the cyclical high of US$47 recorded during. Trading Performance Tahiti Hotels Occupancy 80% 60% 40% 20% 0% Occupancy ADR Source: Ministry of Tourism $100 $80 $60 $40 $20 $0 ADR (US$) 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 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 nonstop 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. Page 13

15 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, 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. Key Economic Indicators Inflation 1.9% 0.4% Exchange Rate Vatu US$ Interest Rate GDP Growth averaged 3.5%pa over the 10 years to. Source: Bureau of Statistics, OANDA Commerce and tourism are the leading forces in the country s economy. Tourism Visitor arrivals to Vanuatu have grown at an average 3.0% pa between 1991 and. After peaking at 57,591 during, visitors were affected by the disruptions to international travel during 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. International Visitors to Vanuatu Number of Visitors 70,000 60,000 50,000 40,000 30,000 20,000 10, Source: SPTO 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. Page 14

16 Quarterly International Arrivals to Vanuatu Visitors 18,000 16,000 14,000 12,000 10,000 8,000 Air Traffic Q1 99 Q2 99 Q3 99 Q4 99 Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Source: Vanuatu Immigration Department Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 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. 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 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. 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. The addition of another casino hotel in Port Vila will add to the appeal of the destination/ Port Vila also regularly features on the itinerary of many South Pacific Cruises. Page 15

17 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. International Visitors to New Caledonia Ytd 2002 Visitors 150, ,000 50, Source: ISEE, NCTPS Ytd Aug Ytd Aug 2002 The population was estimated at 204,863 as at July 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. Based on 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, 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. 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. International Visitors to New Caledonia by Country of Origin Tourism International arrivals grew an average of 2.2% pa between 1991 and. However, during 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, visitors stayed for an average of 14 days, which represents a decrease from the 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. New Zealand 8% Wallis / Futuna Vanuatu 7% 2% Australia 19% Source : ISEE/NCTPS Other 7% Japan 28% France 25% French Polynesia 4% Page 16

18 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. Monthly International Arrivals to New Caledonia Number of Visitors 12,000 10,000 8,000 6,000 4,000 2,000 - Source: ITSEE 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 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Air capacity reached its lowest recorded point in the past 11 years during, 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 have been largely impacted on by the cessation of flights to New Caledonia by Corsair in and AOM at the beginning of. 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). The Southern Province also provides financial aid to hotel and tourism businesses to encourage development and employment. Cruise Ships The cruise industry represents a significant proportion of international arrivals to New Caledonia. During 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 to a high of 57 in. Despite the number of cruise ships declining to 39 during, international passengers recorded a 4.1% increase for the year. Between 1990 and 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. Tourism Demand Generators The Southern Province has led a sustained campaign for tourism since 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, 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, 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. Page 17

19 Tourist Accommodation Supply Trading Performance Noumea Hotels 80% $16,000 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, largely as a result of the opening of the Escapade Island Resort in July. This is significantly higher (12.4%) than the 1,553 accounted for in. 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, it has still not recovered to historic levels achieved in During 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%. Occupancy 60% 40% 20% 0% Total rooms revenue e in Noumea has continued its upward trend from. Market Outlook Occupancy Source: ISEE / NCTPS 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. ADR $12,000 $8,000 $4,000 $0 ADR (FCFP) Total rooms revenue in Noumea has continued its upward trend from reaching approximately FCFP 4 billion during. During, 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 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. Page 18

20 PROFILE 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. For further information on the Pacific Islands or other hotel consultancy, please contact our experts: Troy Craig and Glen Boultwood: Mike Tidbold and Michael Clarke: Page 19

21 Dedicated Hotel Offices Sydney Level George Street Sydney NSW tel: fax: Bangalore Millers Boulevard 70/2 Millers Road Bangalore tel: fax: Munich Maximilianstrasse München tel: fax: New York 153 E.53rd Street, 33 rd Floor New York NY tel: fax: Brisbane Level 33 Central Plaza One 345 Queen Street Brisbane QLD 4000 tel: fax: Jakarta Jakarta Stock Exchange Building Tower 1, 17 th Floor Suite #1701, Sudirman Central Business District Jl. Jend Sudirman Kav Jakarta tel: fax: Tokyo 3F, ATT New Tower Akasaka Minato-ku Tokyo tel: fax: Singapore 9 Raffles Place #38-01 Republic Plaza Singapore tel: fax: Paris 58/60, Avenue Grande Armee Paris tel: fax: Barcelona Passeig de Gracia 11 4a Planta, Esc. A Barcelona tel: fax: Madrid Paseo de la Castellana 33 Edificio Fenix Planta Madrid tel: fax: Frankfurt Platz der Einhert Frankfurt am Main tel: fax: Los Angeles Suite South Grand Ave Los Angeles CA tel: fax: Chicago 200 Randolph Drive Chicago IL tel: fax: Miami Gables International Plaza Suite 1004, 2655 Le Jeune Road Coral Gables FL tel: fax: London 22 Hanover Square London W1A 2BN tel: fax: Jones Lang LaSalle Hotels is the largest and most qualified specialist hotel investment services group in the world. Through our 16 dedicated offices and the global Jones Lang LaSalle Network of 10,000 professionals across more than 100 key markets on five continents, we are able to provide clients with value added investment opportunities and advice. Our recent track record for the last year alone included the sale of 7,972 hotel rooms to the value of US$1.3 billion in 39 cities and advisory expertise for 100,550 rooms to the value of US$26.3 billion across 255 cities. Disclaimer Copyright All material in this publication is the property of Jones Lang LaSalle Hotels (NSW) Pty. Ltd (ABN ). 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. Page 20