The Future of Pacific Tourism March 2023 Cover Image: The Drua Experience, Fiji Inside Cover mage: Palau B THE FUTURE OF PACIFIC TOURISM MARCH 2023 © 2023 International Bank for Reconstruction and Rights and Permissions Development / The World Bank The material in this work is subject to copyright. Because 1818 H Street NW The World Bank encourages dissemination of its knowledge, Washington DC 20433 this work may be reproduced, in whole or in part, for Telephone: 202-473-1000 noncommercial purposes as long as full attribution to this Internet: www.worldbank.org work is given. This work is a product of the staff of The World Bank with Please cite the work as follows: external contributions. The findings, interpretations, and “World Bank. 2023. The Future of Pacific Tourism”. conclusions expressed in this work do not necessarily reflect Support the views of The World Bank, its Board of Executive Directors, or the governments they represent. The report received support from the World Bank Group Partnership Fund for the Sustainable Development Goals, The World Bank does not guarantee the accuracy, and the Pacific Facility, a multidonor trust fund that the completeness, or currency of the data included in this work World Bank administers and the governments of Australia and does not assume responsibility for any errors, omissions, and New Zealand support. or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, Design processes, or conclusions set forth. The boundaries, colors, Titanium Room for the World Bank denominations, and other information shown on any map in this work do not imply any judgment on the part of The Cover Image Credit World Bank concerning the legal status of any territory or Island Encounters Photography the endorsement or acceptance of such boundaries. The Drua Experience, Fiji VOU Fiji Dance Company Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. THE FUTURE OF PACIFIC TOURISM MARCH 2023 1 Image: Marshall Islands 2 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Acknowledgements A World Bank team from the Finance, Competitiveness, and (Tourism Specialist, Asian Development Bank), and Stephen Innovation (FCI) Global Practice led by Antoine Coste (Senior Pratt (Professor of Tourism and Hospitality Management, Economist), Jessie McComb (Senior Private Sector Specialist), University of the South Pacific). The team is thankful for the and Blair Lapres (Economist) and consisting of Jennifer Bartlett colleagues who supported and provided input for this work, (Senior Consultant), Andrew Beath (Senior Economist), Alba including Giorgia Demarchi (Senior Social Development Suris (Analyst), and Jessica Wilson (Consultant) prepared this Specialist, Gender), Matthew Dornan (Senior Economist, Social report. The team worked under the guidance of Stephen Protection and Jobs), Dimitria Gavalyugova (Extended-Term Ndegwa (Country Director for Papua New Guinea and the Consultant, Gender), David Gould (Program Leader), Shohei Pacific Islands), Hassan Zaman (Regional Director, East Asia Nakamura (Economist, Poverty and Equity (POV)), Taufik and the Pacific), and Cecile Niang (Practice Manager, FCI). Indrakesuma (Economist, POV), Kasia Mazur (Environmental Economist, Environment Nature and Blue Economy), Chris The report also benefited from advice from Martha Licetti Miller (Senior Private Sector Specialist, FCI), Darian Naidoo (Practice Manager, Markets, Competition, and Technology), (Economist, POV), Sara Diane Turner (Extended-Term Alvaro Gonzalez (Lead Economist, FCI), Louise Twining-Ward Consultant, Latin America and the Caribbean Sustainable (Senior Private Sector Specialist, FCI), Kim Edwards (Senior Development), and John Perrottet (Consultant, FCI). The Economist, Macroeconomics, Trade, and Investment), Vincent team is grateful for the time and insights that the public and Palmade (Lead Economist, FCI), Becky Last (Operations private sector representatives of the tourism sector across the Officer, International Finance Corporation), Sara Currie region provided. THE FUTURE OF PACIFIC TOURISM MARCH 2022 3 List of Acronyms CAGR Compound annual growth rate FJD Fijian dollar FSM Federated States of Micronesia GDP Gross domestic product GST Goods and services tax ICT Information and communications technology IFC International Finance Corporation IVA International visitor arrivals IVS International visitor Survey MBIE New Zealand Ministry of Business, Innovation and Employment MSME Micro, small and medium-sized enterprises NTO National tourism organization PNG Papua New Guinea PIC Pacific Island country PPP Public-private partnership RMI Republic of the Marshall Islands TVET Technical and vocational education and training SIDS Small island developing states SME Small and medium-sized enterprises USD United States dollar VAT Value-added tax 4 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Contents Acknowledgements 3 List of Acronyms 4 Key Messages 7 Executive Summary 8 The Boom of Pacific Tourism and COVID-19’s Impacts 10 Obstacles to Expanding Pacific Destinations’ Presence in High-Value Markets 11 Policy Priorities for Competitive and Sustainable Pacific Tourism 12 Introduction 17 Chapter 1: The Boom of Pacific Tourism and COVID-19’s Impacts 23 1.1. Tourism’s Contribution to Economic Development in the Pacific 23 1.2. Differentiating PICs as Tourism Destinations 33 1.3. Strategic Tourism Market Segmentation in the PICs 38 1.4. Potential Benefits of Targeting High-Value Markets for the PICs 44 Chapter 2: Obstacles to Expanding Pacific Destinations’ Presence in High-Value markets 47 2.1. Uncoordinated Tourism Development Efforts 47 2.2. MSMEs’ Fragility Threatens Tourism Competitiveness and Diversity 50 2.3. Inadequate Skills Inhibit Tourism Value Creation 54 2.4. Limited Progress Towards Environmentally Sustainable Tourism 55 2.5. Vulnerability to Climate Change and Natural Disasters 59 Chapter 3: Policy Priorities for Competitive and Sustainable Pacific Tourism 63 3.1. Improving Tourism Governance 66 3.2. Refocusing Destination Development 72 3.3. Building Human Capital in the Tourism Workforce 78 3.4. Mainstreaming Resource Efficiency and Resiliency in Destinations 81 Conclusion 85 Annex A: Tourism Typology and Country Characteristics 87 Annex B: Methodological Notes 93 Annex C: Overview of Recent Tourism Development Strategies in the PICs 109 Annex D. Implementation Tools for Policy Reform and Destination Management 111 References 112 THE FUTURE OF PACIFIC TOURISM MARCH 2023 5 Image: Samoa 6 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Key Messages • Tourism has been and remains an important element of Pacific Island countries’ (PICs’) growth strategies. International arrivals to the 11 countries covered in this report doubled between 2000 and 2019, reaching an all-time high of 1.5 million (1.8 million including cruise ship and day visitors). In a region with major structural obstacles to growth and few opportunities for diversification, tourism growth has been a key source of foreign exchange, income, tax revenue, and jobs in most PICs and has contributed to reducing poverty. In 2019, tourism generated USD 2.4 billion in receipts (more than 10 percent of gross domestic product in seven of these countries) and directly employed approximately 71,000 people through formal jobs and many more through informal and indirect jobs that the sector supports. Although they face some common challenges, PICs are at very different levels of tourism development because they have different characteristics, endowments, and levels of government support, and priorities to expand the sector will be country specific. •  At the same time, tourism growth has increased PICs’ vulnerability to shocks affecting the sector. COVID-19 has been the worst crisis affecting the sector, with severe economic and social consequences. With the collapse of international arrivals, tourism receipts in PICs were down 81 percent in 2020 from the previous year and dropped further in 2021 as borders remained closed across the region. Estimates developed for this report suggest that adverse developments in the tourism sector accounted for one-quarter to half of the poverty increase between 2019 and 2020 in Fiji, Kiribati, and Vanuatu. Although tourism had resumed in most PICs by October 2022, the industry will need time to recover fully. Increasing resilience in the Pacific tourism sector and fostering economic diversification remain priorities, especially given PICs’ exposure to the harms of climate change. Ensuring that reforms and investments made to support tourism growth provide economic and social benefits beyond the sector is essential to broaden the gains and enhance resilience. •  Targeting high-value markets would enhance tourism’s economic impacts while minimizing environmental and social harms. At USD 1,226 on average, receipts per arrival were only 3 percent higher in 2018 than in 2012. Calculations performed for this report suggest that, even with fewer total arrivals, targeting higher- value markets could yield aggregate revenue 5 to 20 percent higher than by following a volume-led strategy. PICs have identified policy objectives to increase value from tourism and can compete in several high-value segments (e.g., luxury tourism, adventure tourism, diving, cultural tourism, long-stay tourism), but attracting travelers in these segments will require targeted policy decisions to attract private investment; improve infrastructure and public facilities; and adjust destination positioning, marketing, and tourism offerings. Although most PIC governments share core goals of developing higher-value tourism that is also more economically and socially inclusive, sustainable, and resilient, more efforts will be needed to translate these goals into concrete policy action. THE FUTURE OF PACIFIC TOURISM MARCH 2023 7 Executive Summary Over the two decades preceding the COVID-19 pandemic, to leave long-lasting marks. In particular, some firms, tourism became one of the most important drivers of especially small and medium-sized enterprises; jobs; and economic growth across the Pacific. Faced with a unique skills may not come back, even when aggregate demand set of structural constraints on economic development recovers. (particularly those related to scale and remote geography), This study takes a fresh look at tourism’s role in the 11 Pacific Island countries (PICs) examined in this study development in the Pacific; its future after COVID-19; (Federated States of Micronesia, Fiji, Kiribati, Palau, Papua and the scope to foster a green, resilient, competitive, New Guinea, Republic of Marshall Islands, Samoa, Solomon and inclusive sector. As the crisis subsides, tourism is Islands, Tonga, Tuvalu, Vanuatu),1 have increasingly relied likely to reemerge as a key driver of economic growth on tourism to generate revenue and employment where and source of livelihoods for PICs, despite differences in opportunities for other sectors are limited. At the regional recovery pathways across the region. Moreover, COVID-19 level, arrivals grew 3.6 percent per annum on average over recovery provides an opportunity to address preexisting the two decades preceding the pandemic and reached an challenges related to Pacific tourism’s economic, social, and all-time high of approximately 2 million arrivals in 2018 environmental impacts. Although most PIC governments (including cruise ship visitors). Although the nature and share objectives of developing higher-value, more- scale of the sector’s development have varied between inclusive, sustainable tourism sectors, concrete progress countries, each PIC has made international tourism an has been limited, and efforts to regain visitor numbers important element of its development strategy. With its quickly without addressing underlying constraints could undeniable economic contribution, tourism’s growing slow progress. This study was a core input to the World importance has also increased the PICs’ reliance on the Bank’s recent update to the Systematic Country Diagnostic sector and exposure to shocks affecting it. This reliance also for nine PICs, which highlights sustainable tourism as raises questions about the extent to which tourism, and the a key economic opportunity for development in these investments and reforms made to support its growth, have countries.2 It complements and builds on the 2016 Pacific had broader economic impacts beyond the sector. Possible report, which assessed opportunities to increase arrivals in a context of rapid tourism growth by considering The COVID-19 crisis had a devastating impact on tourism changes to the industry’s model that could maximize in the Pacific with severe and potentially durable tourism’s economic, social, and environmental benefits economic and social consequences. The pandemic has for Pacific Islanders. This study does this by (i) taking stock been the worst crisis in the history of modern tourism, of the evidence on tourism’s historical contribution to with small island developing states (SIDS) including PICs, development in the PICs and of the COVID-19 crisis’ impacts, especially hard hit (World Bank 2020a; UNWTO 2020a). (ii) analyzing current obstacles and potential opportunities COVID-19 brought international travel to and from the for a more competitive and sustainable Pacific tourism, Pacific to a standstill in March 2020 for more than two focusing on selected issues key to target higher-value years. It is estimated that international visitor spending markets, and (iii) recommending policy priorities and in PICs declined by about 81 percent in 2020, more than in investment needs to (re)position the Pacific tourism most other SIDS, and kept falling in 2021. This had dramatic model for the future and broaden its benefits, focusing on economic and social impacts on firms and workers that rely competitiveness, environmental sustainability, resilience on tourism, and relief measures that some PIC governments and inclusiveness. Given the scarcity of data on Pacific adopted have only partially offset this. The crisis pushed tourism and frequent discrepancies between sources, one many people into poverty, particularly in tourism-reliant of the study’s main contributions is to provide a detailed countries such as Fiji and Vanuatu. Although most PICs had quantitative assessment of the sector and its economic reopened their borders to international visitors by October impacts, for instance on jobs, poverty, and public revenue, 2022, and leaders such as Fiji and Palau are experiencing based on an extensive data-collection, cross-checking, robust recovery, the sector’s prolonged closure is likely integration exercise. 1 Although PNG is not usually classified as a PIC, it is covered in this study and included when referring to the PICs. Other PICs and territories  also have notable tourism industries (e.g., Cook Islands, French Polynesia, Guam, Northern Marianas, New Caledonia) but are not covered in this report because they are not World Bank members. Nauru, a World Bank member, is considered a PIC but is not studied here because of its limited tourism assets, low tourist volumes, and lack of sector data. 2 The update to the PIC9 systemic country diagnostic covers FSM, Kiribati, Nauru, Palau, RMI, Samoa, Tonga, Tuvalu, and Vanuatu. 8 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Image: Vanua Levu, Fiji Credit: Elliot Wright THE FUTURE OF PACIFIC TOURISM MARCH 2023 9 The Boom of Pacific Tourism household surveys in several PICs suggested that a 1 percent increase in tourism sector GDP between 2016 and 2019 was and COVID-19’s Impacts associated with reductions in poverty by 0.68 percent in Fiji, Tourism had become a major economic sector in the 0.074 percent in Vanuatu, and 0.078 percent in Kiribati.3 years before the pandemic. Despite the paucity of detailed This is consistent with previous assessments that the fast tourism data in the Pacific, evidence reveals tourism’s large growth of tourism-related service sectors and linked job and growing contribution to growth and development creation have been a major source of poverty reduction in in most PICs over the last two decades. Tourism receipts Fiji in recent decades (World Bank 2017a). for PICs were growing at more than 5 percent per annum In addition to direct and indirect private revenues, before the pandemic, from USD 1.5 billion in 2010 to USD tourism has become an increasingly essential source 2.4 billion in 2019, at which point they accounted for more of tax revenue for PIC governments. In Fiji, tourism was than 10 percent of gross domestic product (GDP) for seven among the largest sources of revenue for the state before of the 11 studied PICs. This proportion was among the the pandemic, generating about Fijian dollars (FJD) 1 billion highest for Fiji, Palau, Samoa, and Vanuatu – approximately (USD 452 million) annually, about 28 percent of total revenue 25 to 35 percent of GDP – making them some of the most in 2019/20. Although lower in absolute terms in other PICs, tourism-dependent countries in the world. The economic various sectoral taxes (e.g., airport departure taxes and value of tourism extends beyond direct receipts, since many arrival fees, turnover and bed taxes, site user fees) and economic activities, such as agriculture, construction, and value-added tax (VAT) or goods and services taxes (GSTs) manufacturing, are indirectly associated with tourism and from tourism contribute significantly to public budgets. travel. Available data suggest that the total contribution of travel and tourism to GDP in PICs was well above the Beyond the regional picture, PICs are at very different world average in 2019 (especially for Fiji and Vanuatu) albeit levels of tourism development because they have lower than the averages for SIDS in other regions, including different characteristics, endowments, and levels of the Caribbean and Indian Ocean. Although Pacific tourism government support. Although they share key traits supply chains depend on imports for many inputs, like other that have influenced how they have emerged as tourism sectors of the economy, there is evidence of growing linkages destinations, critical country-specific factors have also with local food producers in several PICs, broadening the influenced the nature and scale of the sector, including size, sector’s impact and enhancing its inclusiveness. Likewise, location and accessibility, historical and strategic ties, and local firms have generally captured a sizeable share of the tourism assets. This study proposes a typology to classify income that Pacific tourism generates, and foreign players PICs in four categories of Pacific destinations that can be have contributed to the sector’s development. used to identify the most relevant policy priorities for each. Tourism growth has generated many direct and indirect COVID-19 dealt a major blow to Pacific tourism, jobs in the Pacific. Before the pandemic, tourism directly disproportionately affecting the economies most employed approximately 71,000 people in formal jobs reliant on the sector. Although COVID-19 is not the first across the PICs, including a larger proportion of women shock to affect tourism in the region, where political crises than their share in PICs’ labor forces. It directly represented and natural disasters have led to temporary declines in approximately 26 percent of the formal workforce in international arrivals on several occasions in the past, it is Palau, followed by Vanuatu, Fiji, Tonga, and Samoa, where the largest on record and could prove the most durable. tourism jobs accounted for eight to 11 percent of direct With the onset of the pandemic and the subsequent collapse employment. The quality of local tourism jobs varies within of arrivals, tourism receipts in PICs were approximately countries, with wages and other benefits depending on 81 percent lower in 2020 than in 2019. Fiji, which accounted the size and sophistication of the employer. Beyond formal for more than half of aggregate receipts in 2019, faced the direct jobs, tourism supports many informal direct jobs, largest losses in absolute terms, although smaller economies for which no official estimates exist. Moreover, tourism also suffered significant losses. Given the continued border indirectly supports many jobs (e.g., providers of goods and closures in 2021, receipts are expected to have been even services such as agricultural products in tourism businesses’ lower that year. Public finances have faced a large shortfall supply chains). The available data suggest that, before the in tourism taxes and a decline in VAT and GST receipts, which pandemic, total employment in PICs relied less on travel and can partly be attributed to the sector’s collapse. The crisis tourism than in other SIDS, particularly in the Caribbean, has resulted in a dramatic decline in tourism employment where these sectors supported almost half of the jobs. That across PICs that persisted while borders remained closed. said, tourism directly or indirectly supported an estimated In turn, this has severely affected livelihoods and increased 88,200 jobs – one-quarter of total national employment – poverty rates in tourism-reliant economies, accounting for in Fiji alone in 2019. one-quarter to half of the poverty increase in Fiji, Kiribati, and Vanuatu between 2019 and 2020. Tourism jobs and income have helped reduce poverty in PICs in the years before the pandemic. There is evidence Targeting higher-value market segments based on from the global literature that tourism can significantly PICs’ comparative advantages would increase the reduce poverty. An elasticity analysis using the latest economic value of tourism, support PICs’ development 3 Based on the upper-middle-income poverty line of USD 5.5 per capita per day in 2011 purchasing power parity terms.  10 THE FUTURE OF PACIFIC TOURISM MARCH 2023 agendas, and reduce negative environmental and product uniqueness, have higher levels of spending per social externalities. Increasing the value, sustainability, trip, prioritize sustainability, and can have more inclusive and inclusivity of the tourism sector is a dominant theme spending. They are therefore particularly attractive for in all PICs’ tourism strategies and polices, with a focus on PICs; but attracting travelers in these segments will require generating revenue from higher-spending tourism markets. targeted efforts to adjust destination positioning and Nevertheless, although average spending per arrival varies marketing and tourism offerings. Targeting higher-value according to country, most PICs have not managed to tourism markets is a shared objective of tourism policy increase such spending significantly over the last decade. makers and businesses in PICs, but policies and metrics have A few PICs have developed viable high-volume market often focused on increasing arrivals, even though simple segments, but all PICs can compete and increase their numerical simulations conducted in this report suggest presence in various high-value segments (e.g., luxury that welcoming fewer, higher-value tourists could yield tourism, adventure tourism, diving, cultural tourism) (Box higher total revenue in PICs over time, with fewer negative ES1). Such segments, which are driven by destination and externalities. Box ES1. Summary of Tourism Market Segmentation in the Pacific Volume markets in Pacific Island countries (PICs) center on sun and sand, family, and cruise markets. A need for relaxation, rejuvenation, and spending time with family motivates visitors, who are typically price sensitive. High-value markets in PICs include luxury tourists (couples, honeymooners, wedding, and wellness markets), long-stay tourists (digital nomads, retirees) and experiential or niche tourists, including adventure tourists, diving, and cultural tourism. Destination branding and unique experiences available drive these markets. Word of mouth, social media, and in the Pacific, trusted tour operator recommendations are strong influences. A friendly regulatory environment for visas, taxation, and land ownership; good information and communications technology infrastructure; and robust health care also motivate long-stay tourists. PICs have the opportunity to leverage trends in high-value experiential tourism to increase revenues from tourism arrivals. A 2019 market research study identified three segments of Pacific adventure and cultural travelers – ‘Adventure Intensives, ‘Experience Samplers, and ‘Cultural Explorers (IFC 2019a) – that together account for almost 20 percent of Australian and 29 percent of U.S. online, travel consumers who are motivated to travel for specific interests. Similarly, recent World Bank consumer research on three key European outbound markets (Germany, Sweden, United Kingdom) identified five market segments amongst travelers (World Bank 2022a). Three of these segments, which account for 66 percent of respondents, focus on nature-based and sustainable tourism and are the highest spending of all traveler types. These travelers tend to participate in more activities, are more likely to purchase local goods and services, and have greater interest in nature-based experiences. Tapping into these markets will require changes to PICs’ marketing strategies – updating and expanding distribution channels; increasing the supply of active, nature-based experiences; and enhancing communication. Both research studies reveal that market segments that purchase goods and services from a broad range of local micro, small, and medium-sized enterprises can drive high-value tourism. In both studies, market segments were developed based on psychographic models that consider motivations for travel, personality traits, and travel behaviors. They revealed that high-spending tourists seek unique experiences, desire connections with local communities and businesses, engage in travel as a way to learn, and engage in sustainable practices. This highlights an important difference between high-value tourism and high-end or luxury tourism, which may have more limited impacts on local economies. Obstacles to Expanding providers, including MSMEs, (iii) low availability of skills needed in high-value markets, (iv) the still limited adoption Pacific Destinations’ Presence of resource efficient and environmentally-friendly practices in High-Value Markets by tourism businesses, and (iv) the vulnerability of tourism To achieve their goal of attracting more high-value businesses to natural disasters. Although these challenges tourists, PICs must identify binding constraints and do not cover all the structural constraints undermining priority actions for governments and businesses. The tourism development in the Pacific,4 they were selected as objective to refocus the sector on these segments has met limited success so far, due notably to (i) uncoordinated particularly relevant to the objective of targeting high-value tourism governance, policy and management, (ii) limited markets based on research and consultations with tourism tourism offerings and weak ecosystems of tourism service stakeholders in PICs. 4 T  hese challenges include connectivity, land rights, security, health, and preservation of ecosystems, which are analyzed elsewhere or require country- specific analysis outside the scope of this regional report. THE FUTURE OF PACIFIC TOURISM MARCH 2023 11 To maintain and increase tourism expenditures per efficiency at scale, although numerical simulations show arrival, it will be essential to ensure that a diversity of that there are profitable investment opportunities in energy, tourism facilities and services are provided locally by water, and material efficiency for different categories of facilitating private sector growth, including of MSMEs. Pacific tourism businesses. The entry of many new MSMEs before the pandemic has Natural disasters, which climate change is enriched the offering of tourism services and the quality exacerbating, will continue to affect the sector and of visitor experiences, making PICs more attractive test its competitiveness, highlighting the need for as destinations, but structural challenges, including more investment in resilience. Tourism MSMEs often lack business environment constraints such as burdensome the awareness, knowledge, technical capacity, and financial business regulations, poor hard and soft infrastructure, resources to reduce their exposure to disaster and climate and lack of access to finance and skills have undermined risks by making such investments. Governments have an entrepreneurship and business growth. Moreover, the important role to play in fostering more-resilient tourism COVID-19 shock disproportionally affected tourism MSMEs, sectors by adopting measures to reduce exposure (e.g., which led many to close or switch to other activities and investment in resilient infrastructure, land-use planning sell assets. The financial position of many tourism MSMEs and zoning, adoption, and enforcement of building codes) has been significantly undermined and could remain fragile and manage the residual risk (e.g., early-warning systems) even after reopening. The ability of Pacific MSMEs to and helping firms and workers recover quickly from shocks. recover fully, invest in new and better services, and adapt to Establishing a stronger evidence base regarding potential structural industry trends, including digitization, will be key long-term benefits of investment in resilience, which this to competing in higher-value markets, maintaining visitor report attempts to illustrate with simulations for several satisfaction, and increasing spending. Simulations suggest PICs, can help unlock public and private funding. that seemingly small decreases in visitor satisfaction can lead to significant losses in tourism revenue over time. Policy Priorities for To cater to higher-value segments, the Pacific tourism Competitive, Sustainable industry requires specialized skills, which are often in Pacific Tourism short supply locally. Several factors can explain local skills PICs have long strived for a more-valuable tourism shortages affecting Pacific tourism businesses, including industry and can leverage recovery from the pandemic restrictions on recruiting expatriates, lack of basic and as an opportunity for reset. To do so, they must prioritize advanced education, and occupational migration. COVID-19 policies and investments that address underlying tourism has heightened skill constraints in the Pacific tourism sector. sector market failures and structural challenges that Public and private investments in specialized vocational COVID-19 has exacerbated. Even before the pandemic, training programs could help improve local skills that the PICs struggled to implement strategies to enhance the industry needs, complementing other policies that may be sector’s sustainability and attract higher-value tourists. needed in different PICs (e.g., public investment in basic Now, with additional pressures to regain visitor numbers education, reform of migrant worker programs, relaxation of and limited fiscal space, identifying and prioritizing the restrictions on expatriate recruitment). Investments should most effective policies and public sector investments is all be guided by international best practices and carefully the more critical. Moreover, to maximize tourism’s role as designed, because there is no guarantee that their benefits a catalyst for development, stronger linkages between will justify the investment cost. tourism development strategies, other national strategies Minimizing tourism’s negative environmental impacts (e.g., poverty reduction, resilience), and efforts to address and mainstreaming sustainable tourism can help PICs structural barriers to inclusive growth and economic preserve their fragile ecosystems and gain a competitive diversification in PICs will be needed. edge in high-value markets. Like in other regions of the This report’s last chapter highlights four themes of world, there are cases of poorly managed environmental policy challenges that must be addressed to add value impacts of tourism in the Pacific, which harm the in the tourism sector and create more competitive, environment and assets for PICs’ tourism offerings. Many sustainable, inclusive, resilient Pacific destinations in Pacific tourism businesses rely on high-cost, high-impact the medium to long term:5 These include: (i) Improving energy sources, water supply, and waste management tourism sector governance, (ii) Refocusing destination practices, often for lack of access to better alternatives. development priorities to enhance service quality and In addition to their economic benefits, greener practices market diversification, (iii) Enhancing skills and training in and resource efficiency can help attract ecofriendly travelers the tourism workforce, and (iv) Mainstreaming resource willing to pay a premium for sustainable tourism experiences efficiency and resilience in the sector. Prioritization of these and generate broader economic, social, and environmental themes and their subcategory policy areas can be informed benefits. Despite these potential benefits, businesses and by examining them at a market segment level and identifying governments in PICs have struggled to invest in resource where policy reforms can benefit the development of 5 A  lthough short-term measures to solidify and broaden the recovery from COVID-19 may be required in PICs, recommendations on this have been covered extensively in other publications and are not repeated here. 12 THE FUTURE OF PACIFIC TOURISM MARCH 2023 multiple market segments (Figure ES1). Targeted policies levels of tourism maturity, follow-up work and dialogue to strengthen tourism should be coordinated with efforts using country-specific data and information will be required to address broader horizontal constraints on growth that to determine specific needs, depending on countries’ are particularly problematic in PICs. Although the report endowments, obstacles faced in tourism, and policy attempts to distinguish policy priorities for PICs at different aspirations as expressed in national tourism strategies. Figure ES1. Framework for Policy Intervention Prioritization Note:  Dark blue indicates critical areas of policy reform to stimulate and cater to demand from specific market segments, medium blue indicates important areas, and light blue indicates moderatly important areas. Improving Sector Governance given tourism’ significant contributions to Pacific economies and public revenues; (ii) empowering national To achieve meaningful change in the sector, PICs must tourism authorities/offices and destination management establish a more-integrated institutional and policy organizations, notably by allocating appropriate resources framework for tourism. Several factors, including a to finance tourism policy and filling expertise gaps through mismatch between tourism authorities’ mandates and partnerships; and (iii) institutionalizing and strengthening resources, the wide scope of regulatory areas relevant for mechanisms for ongoing public-private dialogue on tourism. tourism, and coordination failures (within the government and between the government and the private sector), Investing in data and digital technologies will be key for partly explain the limited results of tourism strategies. policy effectiveness. Although progress has been made Tourism policies and strategies can no longer be standalone in compiling sector statistics, lack of granular data on documents with implementation left to tourism ministries the supply and demand sides of tourism remains a major and agencies. Across all types of PCIs, a new model impediment to evidence-based policy making in PICs. This is should focus on (i) ensuring integrated policymaking a priority and offers avenues for cooperation between PICs, through a strong “whole of government” approach, for working with regional bodies such as the Pacific Tourism instance anchored in permanent cross-ministerial tourism Organisation. Countries should aim to restart or launch committees with high-level leadership and private sector international visitor surveys to collect data on existing engagement, and with a stronger role for ministries of markets and coordinate across regulatory and licensing finance/economy to coordinate reforms and investments agencies to create robust supply-side databases. National THE FUTURE OF PACIFIC TOURISM MARCH 2023 13 tourism authorities or marketing agencies should seek Enhancing Skills and the Workplace partnerships with market research firms, universities, and Environment regional organizations to build market intelligence on new Concrete action to address the skills shortage is necessary target markets. Strong leadership and a clear strategy for digital transformation has been shown to be an essential part for Pacific tourism to shift to high-value markets and of supporting a mindset shift in digital adoption. This means reduce economic leakage. Even before the pandemic, raising awareness of digital opportunities, establishing the the Pacific tourism industry found it challenging to source building blocks for an inclusive digital data economy, and workers with the right types and quality of skills. The labor building capacity in the public and private sectors. shortage that the pandemic caused has exacerbated this challenge across the region, decreasing firm productivity Refocusing Destination and increasing the cost of in-house training. Addressing these systemic, economy-wide challenges will require Development a combination of skills development (e.g., technical and Building on integrated tourism planning, the right vocational educational training with deeper industry measures can help PICs build diversified high-quality involvement, market-specific skills, digital skills). Measures destinations that attract high-value tourists. To do so, to improve the workplace environment to attract and retain the public and private sectors must work together to invest workers must accompany interventions to address skill in targeted destination development through marketing and mismatches: better labor policy6 and reforms to promote product development paired with consistent, transparent respectful workplaces, for example by addressing risks of communication to markets. This should include a focus on: gender-based violence and sexual harassment. Product development and diversification: This is needed to i.  respond to tourists’ demands for unique, high-quality Mainstreaming Resource Efficiency experiences, for example by disseminating market and Resilience intelligence, creating product development support Enhancing tourism’s resilience and resource efficiency programs, developing tour routes, making better use of will require a coordinated approach by governments, quality standards, and managing protected areas using destination management organizations, and the modern methods. industry. Enhanced knowledge, especially on climate adaptation and resilience at the destination level, and Enabling environment for firms and investors: This would ii.  strategic investment in essential services (e.g., electricity, include simplified business regulations, greater access water, wastewater, and waste management), targeted to finance and payment services, and streamlined firm policy and regulatory reforms (e.g., circular economy, entry and exit processes. Targeted measures to open construction standards), and programs that encourage and markets for female entrepreneurs are also needed equip the private sector to make sustainable investments as they face specific constraints, including in terms must underpin this approach. These supply-side actions of access to land and credit, regulatory obstacles, and must also be paired with robust disaster preparedness access to government support schemes. Reforms in this planning and management. area would address barriers to growth for tourism and other important sectors in the region. Policy recommendations made in this report focus on high-level constraints that must be addressed across Market diversification: This will require that destination iii.  market segments, but this guidance represents only management organizations invest in marketing to a starting point for PICs, each of which must examine build awareness of the destination and its full offering its policy objectives –economy wide and tourism specific – in target markets and to communicate a consistent to determine the best strategic segment to target and the message. Public relations campaigns may be needed for most important policy actions. This will need to be supported countries with less-developed tourism sectors or those by deeper, country-specific analysis, which can be based on with a poor image. Regulatory reforms, for instance on the models presented in the simulations included below, immigration and aviation policy, may also be required to to provide the evidence-base and specific policy guidance to tap into certain high-value and niche markets. achieve greater value from each PIC tourism sector. 6  Particularly for labor mobility programs that build the skill base rather than undermine it. 14 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Image: Tuvalu THE FUTURE OF PACIFIC TOURISM MARCH 2023 15 Image: Papua New Guinea 16 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Introduction The Pacific Island countries and Papua New Guinea (e.g., commodity price fluctuations, natural disasters and face major structural challenges that have inhibited other climate-related hazards), partly explain why the their ability to expand and diversify their economies. level and growth of gross domestic product (GDP) and real As illustrated in Map 1, the 11 PICs examined in this study income per capita in the Pacific has been much lower since (Federated States of Micronesia (FSM), Fiji, Kiribati, Palau, the 1990s than in comparator countries (Khor, Tumbarello, Papua New Guinea (PNG), Republic of Marshall Islands, and Kronenberg 2016).8 Manufacturing-led development Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu),7 models have not worked in the region, given major with a combined population of about 11.3 million people (8.8 million of which are in PNG) (Table 1), are scattered constraints on production and trade. PICs export only a few on hundreds of islands across the Pacific in an area natural resource commodities and agricultural and fishery equivalent to 15 percent of the globe’s surface. Lack of products, relying on imports for fuel, food, and most other scale in the economies and limited access to markets, products. Much of the region’s growth in recent years has combined with high exposure to external shocks come from the services sector, including tourism. Map 1. Pacific Island Countries and Papua New Guinea 130˚ E 140˚ E 150˚ E 160˚ E 170˚ E 180˚ 170˚ W 160˚ W Hawaii 140˚ W 130˚ W 120˚ W LAO (U.S.) Northern P. D. R. Mariana THAILAND Islands (U.S.) 20°N Guam (U.S.) MARSHALL ISLANDS N O R T H PA C I F I C O C E A N PHILIPPINES FEDERATED STATES PALAU OF MICRONESIA Palmyra 10°N Atoll (U.S.) Howland (U.S.) Baker (U.S.) Jarvis (U.S.) NAURU 0° PAPUA KIRIBATI I N D O N E S I A NEW GUINEA SOLOMON TUVALU TIMOR-LESTE ISLANDS Tokelau (N.Z.) 10°S SAMOA 10°S Wallis-et- Futuna (Fr.) Cook Is. American VANUATU Samoa (U.S.) (N.Z.) French Polynesia (Fr.) FIJI Niue 20°S (N.Z.) 20°S New Caledonia (Fr.) TONGA Pitcairn Islands (U.K.) A U S T R A L I A 30°S 30°S S O U T H PA C I F I C O C E A N NEW IBRD 46680 | JUNE 2022 40°S ZEALAND This map was produced by the Cartography Unit of the World Bank Group. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of the World Bank Group, any judgment on the legal status of any territory, or any endorsement or 100˚ E 110˚ E 120˚ E 130˚ E 140˚ E 150˚ E 160˚ E 180˚ 170˚ W 160˚ W 150˚ W acceptance of such boundaries. 7  Although PNG is not usually classified as a PIC, it is covered in this study and included when referring to PICs. Other PICs and territories also have notable tourism industries (e.g., Cook Islands, Guam, Northern Marianas, New Caledonia, French Polynesia) but are not covered in this report because they are not World Bank members. Nauru, a World Bank member, is considered a PIC but is not studied here because of its limited tourism assets, low tourist volumes, and lack of sector data. 8 The study cited uses different country groups as comparators, including Asian low-income countries, Eastern Caribbean SIDS, and other small states.  THE FUTURE OF PACIFIC TOURISM MARCH 2023 17 Table 1. Land Area and Population Region Country Land area (km2) Population (thousands) Federated States of Micronesia 702 114 Kiribati 811 118 Micronesia Palau 460 18 Republic of the Marshall Islands 181 59 Fiji 18,000 890 Papua New Guinea 463,000 8,776 Melanesia Solomon Islands 28,000 670 Vanuatu 12,000 300 Samoa 2,800 197 Polynesia Tonga 748 105 Tuvalu 26 12 Total 526,728 11,257 Source:  World Development Indicators (database). World Bank, Washington, DC (accessed November 2022), https://databank.worldbank.org/source/world-development-indicators. Between 2000 and 2019, tourism became one of the locally, notably in farming and fishing, or abroad. This means most important drivers of economic growth across the that some firms, particularly micro, small, and medium- Pacific, generating revenue and employment, where sized enterprises (MSMEs); jobs; and skills may not come opportunities for other sectors were limited. With few back even when aggregate demand recovers, with potential opportunities for PICs to enter global value chains, most adverse impacts on tourism offering and PIC economies. of their governments have seen tourism as a pathway to economic prosperity and have sought to capitalize on their As the crisis subsides, tourism is likely to reemerge as a natural and cultural endowments to develop the sector by key driver of economic growth and source of livelihoods adopting targeted policies and making needed investments. for PICs, despite differences in recovery pathways across As international tourist arrivals grew across the region, so the region. In the context of a weak private sector – did financial receipts and GDP contribution, although the especially in comparison with the heavy weight of the public benefits have been uneven across PICs. As this report shows, sector in these economies – tourism is an important source tourism has made a substantial economic contribution to of tax revenue and foreign exchange. It is also a key source PICs overall, but growing dependency on the sector has of much-needed jobs and income for Pacific islanders, increased these countries’ vulnerability to various shocks including women and youth. It is one of the few sectors that can disrupt the sector, such as natural disasters and that can offer formal employment opportunities to low- the COVID-19 pandemic. Another question that has become and semi-skilled workers. In 2017, the Bank’s flagship report, more relevant as tourism has grown is whether the policies Pacific Possible, estimated that, by 2040, PICs could reap an adopted and investments made to foster this growth additional USD 1.7 billion in revenue annually and 116,000 have benefitted other sectors and increased economic jobs by boosting demand from certain high-potential diversification. markets (Box 1). Although overall growth potential remains strong, sources of growth may diverge from pre-pandemic The COVID-19 crisis has had a devastating impact on projections, especially as countries seek a more-sustainable tourism in the Pacific, with severe immediate impacts and -valuable tourism future. As governments have a chance and likely durable consequences. The pandemic has been the worst crisis in the history of modern tourism, with small to reset their tourism sectors, some previous opportunities island developing states (SIDS) especially hard hit (UNWTO should be reconsidered. For example, focusing on market 2020a; World Bank 2020a). COVID-19 brought international segment diversification (e.g., adventure or wellness tourism) travel to and from the Pacific to a standstill in March 2020 rather than specific source markets (e.g., China) can reduce for more than two years. It is estimated that international vulnerability to future demand-side shocks. Similarly, with visitor spending declined by about 81 percent in PICs in greater focus on value per arrival and sustainability, volume 2020, more than in most other SIDS (PNG TPA 2022; SPTO cruise tourism may no longer be an attractive segment to 2021b; UNWTO 2022b). Tourism has now resumed across develop. The report presents and prioritizes policy guidance much of the region, and some Pacific tourism destinations that supports holistic tourism sector growth across a range could rebound fully by 2023 under an optimistic scenario of market opportunities (including most outlined in Pacific (PATA 2022). Despite these positive trends, COVID-19’s deep Possible) to foster sustainable economic gains. In the damage to global tourism value chains will continue to affect context of small economies like PICs’, tourism development supply and demand for years. In PICs, the sector’s prolonged policies can also be leveraged to address broader cross- closure is likely to leave long-lasting marks as many firms cutting constraints on economic transformation in terms of closed or transitioned to other activities and thousands such factors as the quality of the investment climate, the of workers turned to alternative livelihood opportunities state of the infrastructure, connectivity, and level of skills. 18 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Box 1. Pacific Possible Interventions and Long-Term Results The Pacific Possible study examined opportunities in four tourism products and markets to generate long-term transformational change for Pacific Island countries’ economies: • Targeting the Chinese visitor market could add more than 650,000 tourists, bringing nearly USD 950 million in additional tourism receipts and generating more than 65,000 additional jobs. • Engaging more directly in the growing Pacific cruise industry by introducing a home-based cruise offering could add more than 250,000 tourists, generating an additional USD 60 million in tourism receipts and more than 4,000 additional jobs. • Expanding high-end resort offerings could add more than 130,000 tourists, bringing more than USD 450 million in additional tourism receipts, and generating more than 30,000 jobs. Expanding long-stay visitor options for retirees could add 10,000 resident foreign retirees, bringing USD 200 •  million in additional receipts and generating more than 13,000 additional jobs. Policy recommendations focus on increasing transportation connectivity by expanding and establishing markets, developing long-term markets, improving the investment climate and effectiveness of public sector participation, reducing barriers to travel (e.g., visa regimes), and improving supply linkages with the tourism sector to increase efficiency and value (e.g., agricultural linkages). Market-specific actions were also identified for each of the four opportunities. These interventions centered mostly on destination development (product development and marketing) and enabling environment recommendations and did not directly address wider tourism governance challenges and key enabling factors such as skills, resource efficiency, and resilience, which are examined in the present report. Source:  World Bank 2017b. The COVID-19 recovery provides an opportunity to increase visitor numbers to the pre-pandemic growth trend address Pacific tourism’s preexisting challenges, as quickly as possible. Although this is a justified objective, although there are also risks. Many observers expect the particularly for less-developed PIC destinations that can still pandemic to catalyze durable changes in the global tourism arguably develop the carrying capacity for more visitors, in industry. At the global level, COVID-19 has reignited debates the longer run, broader economic benefits would come from about the industry’s economic, social, and environmental addressing the structural problems that limit the sector’s impacts, particularly under a volume-driven growth model, capacity to enter higher-value markets and undermine and its role in the fight against climate change.9 There economic growth beyond tourism. have been calls to reimagine tourism by addressing its preexisting structural problems and rebuilding the industry’s This study takes a fresh look at tourism’s role in competitiveness in light of changes resulting from the development in the Pacific; its future after COVID-19; pandemic (Destination Think 2020; IMF 2021a; UNDP 2020; and the scope to foster a green, resilient, competitive, UNWTO 2020b; World Bank 2020a).10 Similar debates have inclusive sector. It complements and challenges the been had about challenges faced in terms of competitiveness, previous analysis in Pacific Possible by factoring in the impacts inclusion, environmental sustainability, and resilience of the pandemic and considering changes to the industry (UNESCAP 2020), many of which have been identified at that could maximize economic value for Pacific Islanders, least since the 1990s (Scheyvens and Russell 2009).11 During in line with the World Bank’s twin goals (eliminate extreme the crisis, Pacific stakeholders have emphasized the role of poverty, boost shared prosperity) and the Sustainable a sustainable, ocean-based tourism sector to build back Development Goals.12 It also takes a holistic approach to better (Krishnamurthi 2020; SPREP 2020; Taylor 2020; analysis and policy guidance, identifying policy interventions UNESCAP 2020). Recent surveys in tourism-dependent that can stimulate demand in different high-value tourism PICs have revealed community aspirations for a reset of markets while generating as much benefit for the broader the regional tourism model to provide broader benefits economy as possible, enhancing the sector’s resilience, and to the local economy (Movono and Scheyvens 2020). PICs improving its sustainability. The study was a core input to have not taken specific action to chart a more-sustainable the World Bank’s recent update to the Systematic Country and -inclusive path for tourism growth. There is a risk that Diagnostic for nine of the PICs, which highlights sustainable some policy makers will focus on short-term measures to tourism as a key economic opportunity for development in 9 See Gösling and Higham (2021) for reflections on climate mitigation challenges in tourism and a vision for a low-carbon, resilient, inclusive tourism  development model that increases domestic value creation while stabilizing or reducing arrivals. 10 F  or instance, the United Nations World Tourism Organization encouraged tourism stakeholders to focus recovery efforts on six pillars: public health, social inclusion, biodiversity conservation, climate action, circular economy, and governance and finance. 11 As discussed in this report, key concerns include geographic concentration of tourism activity, limited diversity of products and markets, lack of  entrepreneurship within the sector, “leakages” of tourism expenditures outside of PICs, and limited linkages with domestic goods and services providers (IMF 2021a, 37-40). 12 See UNESCAP (2020) for a discussion of tourism’s potential contribution to the Sustainable Development Goals. THE FUTURE OF PACIFIC TOURISM MARCH 2023 19 these countries and emphasizes the role of resilience (Box 2).13 The study’s structure provides a backward- and forward- It was prepared by analyzing available data and information looking analysis of tourism in the Pacific. The first chapter from previous reports, government sources, and the presents the available evidence on tourism’s historical academic literature and collecting new information in contribution to economic development in PICs and on consultations with regional and national stakeholders. COVID-19’s impacts, differentiating between destinations Given the scarcity of data on Pacific tourism and frequent at different maturity levels and reviewing several frequently discrepancies between sources, one of its main contributions debated topics, including tourism’s role in poverty reduction is to provide a detailed quantitative assessment of the sector and distribution of its gains. The chapter also discusses and its economic impacts, for instance on jobs, poverty, and current and potential tourism market segments in the public revenue, based on an extensive data collection, cross- Pacific, assessing potential benefits of targeting higher- checking, and integration exercise. value markets. To inform strategic choices for the industry in the medium to long term, the second chapter more The study focused on selected challenges for long-term closely examines current obstacles to and potential development of high-value tourism that are relevant at opportunities for a more competitive, sustainable Pacific the regional level. Although the pandemic is not fully over, tourism, focusing on factors deemed key to targeting the study focuses not on immediate priorities to help the higher-value markets. The third chapter discusses and sector weather the crisis but on medium- and long-term recommends medium- to long-term policy priorities and needs for after COVID.14 Although it is regional in scope and investment needs to (re)position the Pacific tourism model, does not pretend to establish a precise diagnostic for any focusing on competitiveness, environmental sustainability, particular country in the region, the study strives to consider resilience, and inclusiveness. the different country contexts and to identify priorities of PICs with different endowments and tourism maturity and This report is intended to serve as a basis for a renewed potential opportunities for regional cooperation. The analysis policy dialogue on tourism’s contribution to building considers broad constraints on tourism development and more competitive, inclusive, sustainable, and resilient particular attention is paid to small local providers of tourism economies in the Pacific. This dialogue between PIC services, referred to as MSMEs throughout this report, which governments, tourism stakeholders, and development can play a large role in increasing the quality and diversity of partners, including the World Bank, should take place at a destination’s offering. Finally, the study does not address the country level to identify specific local challenges and in detail all structural barriers to tourism development in the opportunities. It could also be pursued at the regional level Pacific but focuses on priorities to increase economic value to explore potential synergies and cooperation modalities. by repositioning the sector in higher-value markets that As the Pacific recovers from the COVID-19 crisis, the were identified through research and consultations with World Bank stands ready to help the 11 countries covered tourism stakeholders in PICs.15 As such, it complements other in this report identify and implement priority reforms and ongoing World Bank analytics and operations addressing, for investments in tourism and linked sectors through further instance, tourism’s environmental impacts and connectivity. analytical work, technical assistance, and financial support. Box 2. Development Pathways Identified in the Systematic Country Diagnostic Update for Nine Pacific Island Countries (PICs) Like the initial PIC Systematic Country Diagnostic, which the World Bank published in 2016, the 2022 update highlights the role of economic geography (extreme remoteness; small, dispersed populations) and exposure to shocks as key structural constraints on growth and economic diversification across the region. Given these challenges and considering challenges that have arisen because of the COVID-19 pandemic and increasing awareness of disaster risks, the Systematic Country Diagnostic update identifies three pathways to end extreme poverty and boost shared prosperity in the Nine PICs it covers: Expand economic opportunities: Revitalize and realize sustainable tourism, expand economic opportunities 1.  in oceanic fishing, enhance labor mobility opportunities, and improve digital connectivity and services in the private and public sectors. Maximize human capital and its economic returns: Improve the quality of education and increase access to 2.  secondary and higher education; strengthen health care systems to increase coverage, quality, and resilience; and increase women’s paid employment and reduce gender-based violence. Build resilient incomes and livelihoods: Strengthen climate and disaster risk management tools and policies, 3.  develop adaptive social protection systems, and support resilient agriculture for small-scale farmers and coastal fisheries. The update to the PIC9 Systemic Country Diagnostic covers FSM, Kiribati, Nauru, Palau, RMI, Samoa, Tonga, Tuvalu, and Vanuatu. 13 14 On short-term priorities for recovery of tourism, see IMF (2021) and World Bank (2020). 15 Such priorities include connectivity, land rights, security, health, and preservation of ecosystems. As discussed in Chapter 3, some have been analyzed  elsewhere, and others are too complex to cover in a regional report and require an in-depth, country-specific analysis. 20 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Image: Fiji THE FUTURE OF PACIFIC TOURISM MARCH 2023 21 Image: Vanua Levu, Fiji Credit: World Bank 22 THE FUTURE OF PACIFIC TOURISM MARCH 2023 1. The Boom of Pacific Tourism and COVID-19’s Impacts 1.1. Tourism’s Contribution measures of the sector’s economic impact, although data shortcomings make detailed analysis and regional to Economic Development comparisons challenging (Box 3). One of this report’s in the Pacific main contributions is to consolidate data from existing Tourism has had increasingly strong benefits for PICs’ sources and provide new quantitative evidence of tourism’s economies since the turn of the century. Tourism receipts contribution, for instance to public revenue and poverty and employment indicators have been the prevailing reduction. Box 3. Measuring Tourism’s Economic Impact in the Pacific Calculation and reporting of economic indicators for tourism are relatively new for Pacific Island countries (PICs), and methods are often inconsistent. Use of a tourism satellite account was unique to Fiji until 2022, when PNG released its first tourism satellite account report.a Otherwise, PICs have determined the value of tourism using balance of payments or the more rudimentary approach of multiplying visitor numbers by average visitor spending, where available. Agencies such as the Pacific Tourism Organisation, the United Nations World Tourism Organization, and the World Travel and Tourism Council use country data to produce reports on key tourism indicators using different methodologies. As a result, different sources cite conflicting figures for some countries. This study draws on receipts, gross domestic product (GDP), and employment data from a variety of sources. UN World Tourism Organization data were used for receipts where available and substituted for data from countries’ tourism or statistics authorities.b Tourism’s contribution to GDP was calculated using these receipts data and World Development Indicator data for national GDP. Tourism employment data were sourced from the Pacific Tourism Organisation’s 2019 Annual Review, except where more-recent data were available from statistics authorities. The report also includes supplementary data for the six countries for which the World Travel and Tourism Council estimated the total (direct, indirect, and induced) contribution of tourism to GDP. As argued in the last chapter of this report, developing the capacity to collect and analyze different types of tourism-related data should be a priority for PICs, to enable more evidence-based policy for the sector. a. T  ourism satellite accounts are standard statistical frameworks for economic measurement of tourism that allow tourism statistics to be harmonized and reconciled from a national accounts perspective and enable economic data on tourism comparable to other economic statistics to be generated. b.  ourism receipts are expenditures of international inbound visitors, including payments to national carriers for international transport T and prepayment for goods and services received in the destination country. Tourism receipts are not perfectly equivalent to the sector’s value added (as included in GDP) because they do not deduct tourism businesses’ domestic and imported supply chain purchases. Historical Tourism Demand individual country compound annual growth rates ranged from 0.6 to 6.1 percent (Figure 2). Some other PICs that Arrivals of international tourists to the Pacific account for a small percentage of total arrivals to the region doubled from 2000 to 2019. In 2019, PICs saw combined have seen sustained growth in arrivals since 1999, with international overnight tourism reach an all-time high of 1.5 million arrivals16 (1.8 million including cruise ship and day Tuvalu achieving the fastest pace (albeit from a low base). visitors) (Figure 1), but volumes and growth were highly Several countries, notably Fiji, PNG, and Vanuatu, have also uneven between countries, with Fiji accounting for more seen strong, if uneven, growth in the cruise ship market, than half of overnight arrivals, followed by Samoa, Vanuatu, a segment that more than tripled from 1999 to 2019, PNG, Palau, and Tonga, with a combined share exceeding to reach approximately 511,000 day-passenger visits one-third.17 Growth in arrivals had averaged 3.6 percent (Figure 3).18 COVID-19 significantly and temporarily impacted per annum over the two preceding decades, although visitor arrivals growth (Box 4). 16  hese arrivals accounted for 73 percent of international overnight visitors to a larger group of 16 PICs: the above countries plus American Samoa, T Cook Islands, French Polynesia, New Caledonia, and Niue. 17  Based on data from the United Nations World Tourism Organization Tourism Dashboard and updates from national tourism and statistics authorities. 18 Arrivals data uses UNWTO data where available and reliable. SPTO, NTO and NSO data used where not available. THE FUTURE OF PACIFIC TOURISM MARCH 2023 23 Figure 1. Regional Growth in All Visitor Arrivals in Pacific Island Countries, 1995-2021 Source:  UNWTO 2022b; FSM Statistics 2022; PVA 2021; PNG TPA 2022; Solomon Islands NSO 2022; STA 2022; Tonga Statistics Department 2022. Figure 2. Disaggregated Growth of International Figure 3. Growth of Cruise (Day) Overnight Visitor Arrivals in Pacific Island Countries, Visitor Arrivals in Pacific Island Countries, 1999–2019 1999–2019 Source:  UNWTO 2022b; FSM Statistics 2022; PNG TPA 2022; STA 2022; Source:  UNWTO 2022b; FSM Statistics 2022; PVA 2021; Solomon Islands Tonga Statistics Department 2022. NSO 2022; STA 2022; Tonga Statistics Department 2022. Neighboring markets have accounted for most arrivals Japan, and the United States. Some countries have taken in PICs, driven by proximity, air connectivity, and steps to diversify source markets, with Palau, for instance, targeted marketing. Australia and New Zealand are by far targeting Taiwan, and Fiji increasing marketing activities in the dominant source markets for PICs as a whole (Figure Japan and North America. Fiji was able to increase arrivals 4), accounting for more than 60 percent of arrivals to Fiji, from Canada and the United States by 63 percent between Samoa, Tonga, and Vanuatu in 2019, but for some countries, 2013 and 2019 and tripled arrivals from Japan between 2014 such as FSM and Palau, more tourists arrive from China, and 2019. 24 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Figure 4. Top Source Tourism Markets for Pacific Island Countries, 2019 Source:  FBOS 2022; FSM Statistics 2022; Kiribati NSO 2022; PVA 2021; PNG TPA 2022; RMI EPPSO 2022; Solomon Islands NSO 2022; STA 2022; Tonga Statistics Department 2022; Tuvalu CSD 2022; Vanuatu NSO 2022. THE FUTURE OF PACIFIC TOURISM MARCH 2023 25 Box 4. COVID-19 Impacts on Tourism Demand and Recovery PICs rapidly closed their borders to international visitors in March 2020 at the onset of the pandemic and maintained strict travel restrictions during the crisis. They imposed rigorous, prolonged restrictions on inbound and outbound travel to contain the spread of the virus, with restriction levels remaining long after Caribbean small island developing states decreased restrictions (Figure 5). The extended border closures protected public health but resulted in an unprecedented 84 percent decline in combined annual visitor arrivals to PICs in 2020 and a further 83 percent decrease in 2021. Combined inbound overnight visitors plummeted from an all-time high of 1.51 million in 2019 to around 240,000 in 2020 (mainly first quarter arrivals). Combined international overnight arrivals remained low in 2021, at about 40,000. Figure 5. Stringency of Travel Restrictions in the Caribbean and Pacific and Pacific Island Country Reopening Dates Source:  University of Oxford 2022. Notes:  Caribbean countries include Aruba, Bahamas, Barbados, Belize, Cuba, Dominica, Dominican Republic, Guyana, Haiti, Jamaica, Suriname, Trinidad and Tobago, and U.S. Virgin Islands. PICs include Fiji, Guam, Kiribati, Papua New Guinea, Solomon Islands, Tonga, and Vanuatu. The Travel Restrictions Index is calculated on a scale of 0 (least restrictive) to 100 (most restrictive), using data from the Oxford COVID-19 Government Response Tracker. As PICs gradually reopened their borders in 2022, visitor arrivals to the region began to rebound, with partial or full recovery anticipated by 2024. Risk appetites for reopening to tourism varied across PICs, but most took a conservative approach.a By October 2022, all but Tuvalu had reopened their borders with some vaccination, testing, and masking restrictions in place. Tuvalu was expected to reopen by the end of 2022. As of August 2022, Fiji had received 354,277 visitors (60 percent of 2019 levels for the same period) with third quarter arrivals anticipated to be 80 percent of third quarter 2019 volumes. In its first month of opening, Vanuatu received 3,439 international visitors, 27 percent of July 2019 levels. By July 2022, Palau experienced a 13 percent recovery for the second quarter. Interest was strong for the late 2022 dive season in Palau, but evidence indicated that expensive and infrequent flights constrained demand.b The Pacific Asia Travel Association forecasts for selected PICs indicate that arrival volumes will recover fully by 2023 under an optimistic scenario and to 80 to 90 percent by 2024 under a conservative scenario (PATA 2022). a. T  he rate of vaccine rollout was slower in some countries than others. Vaccination targets were cited as a reopening criterion for Fiji, Kiribati, Samoa, Tonga, and Vanuatu. Visitor entry conditions for reopening borders have varied from country to country and over time, but have included requirements for traveler vaccination, pre- and post-travel testing, restricted movement, use of contact tracing systems, and mask wearing. b.  As reported to the Palau Visitors Authority at the Scuba Show in the United States in May 2022. 26 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Contribution of Growing Tourism countries grew faster and started from a higher base. Most notably, Fiji accounted for more than half of total receipts Receipts to GDP in 2019, reflecting its dominance in the region (Figure 6). Tourism revenues for PICs were growing at more than 5 This performance can be linked to an advantageous location percent per annum before the pandemic. At the regional and a history of substantial government support of tourism level, the value of tourism receipt – expenditures of through policy reforms, early establishment of a national international inbound visitors19—rose from USD 1.5 billion in 2010 to USD 2.4 billion in 2019 (PNG TPA 2022; SPTO 2020; tourism organization (NTO), investment incentives, and UNWTO 2022b).20 This growth represented a compound public investment since the end of World War II. Before annual growth rate (CAGR) of 5.2 percent between 2010 COVID, Palau, PNG, Samoa, and Vanuatu, which together and 2019, although growth was uneven because some shared more than one-third of receipts, followed Fiji. Figure 6. Tourism Receipts in Pacific Island Countries, 2010, 2019, 2020 Source:  PNG TPA 2022; SPTO 2020; UNWTO 2022b. Before the pandemic, tourism receipts accounted for a The economic value of tourism extends beyond considerable share of GDP in many PICs, demonstrating direct receipts because many economic activities are the sector’s weight in the economy. As international indirectly associated with tourism and travel. Tourism tourist arrivals grew across the region, so did tourism stimulates economic activity in several linked sectors, receipts expressed as a share of GDP, although the benefits such as construction, agriculture, manufacturing, the arts, have been uneven across the studied countries (Table 2). and cultural industries. World Travel and Tourism Council estimates suggest that the total contribution of travel and Throughout the 2010s, tourism receipts grew faster than tourism to GDP in some PICs (e.g., Fiji, Vanuatu) is well above GDP in five of the eleven PICs and slightly slower than GDP in the world average (Figure 8),22 although they also show that it the others. Before the pandemic, they exceeded 10 percent is lower than the averages for SIDS in the Atlantic, Caribbean, of GDP for seven of the 11 studied countries (Figure 7). and Indian oceans.23 Supply linkages with agriculture and Some PICs are among the most tourism-dependent fisheries, which are among the main channels to broaden countries in the world; Fiji, Palau, Samoa, and Vanuatu tourism’s economic impact in other sectors and to generate had the highest receipts relative to GDP, at around 25 to 35 income for lower-income households, have grown in some percent in 2019 (Figure 8),21 but other countries in the region PICs, as recent studies have shown, and could be developed (e.g., PNG and Kiribati) were considerably less dependent on further (Box 5). Beyond supply linkages, tourism can generate the sector. In PNG, this is particularly because of the large productivity spillovers in other economic sectors (Box 6), natural resources and mining sectors. but research is yet to be conducted on this in the Pacific. 19 In addition to expenditures in the destination country, they include payments to national carriers for international transport and any other prepayments for goods or services received in the destination country. Receipts are lower for countries without national carriers. 20 PNG data reported in PNG Kina converted to USD. In Tonga’s case, the relatively low contribution of tourism receipts to GDP (11.1 percent) is because of the high value of remittances. 21 22 The World Travel and Tourism Council estimates the total (direct, indirect, and induced) contribution that travel and tourism have made to GDP in six  PICs. They attempt to capture the sector’s value added plus indirect (domestic) supply chain purchases plus induced effects through the spending of workers directly and indirectly employed in the sector. This approach complements data on receipts only. 23 Unweighted averages. Countries included for the Caribbean average are Antigua and Barbuda, the Bahamas, Barbados, Dominica, the Dominican  Republic, Grenada, Jamaica, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines. Countries included for the Atlantic and Indian Ocean averages are Cabo Verde, the Maldives, Mauritius, Sao Tome and Principe, and the Seychelles. THE FUTURE OF PACIFIC TOURISM MARCH 2023 27 Table 2. Profile of Pacific Island Economies and Tourism Sectors, 2010-2020 (USD Million) Gross domestic producta Tourism receiptsb Country 2010 2019 2020 2010 2019 2020 Federated States 297 412 408 24 44 - of Micronesia Fiji 3,141 5,496 4,574 825 1,345 236 Kiribati 155 178 181 4 3 0 Palau 186 274 258 69 96 17 Papua New Guinea 14,251 24,751 24,667 141 211 45 Republic of the 160 239 244 4 21 - Marshall Islands Samoa 663 852 807 124 206 23 Solomon Islands 847 1,570 1,546 51 82 7 Tonga 367 512 489 17 57 48 Tuvalu 32 54 55 2 9 - Vanuatu 671 937 897 242 295 67 Regional 20,769 35,277 34,126 1,504 2,370 443 Sources:  World Development Indicators (database). World Bank, Washington, DC (accessed November 2022), a.  https://databank.worldbank.org/source/world-development-indicators. Data for 2019 and 2020 in current USD. b. PNG TPA 2022; PVA 2021; SPTO 2020; UNWTO 2022b. Figure 7. Evolution of Tourism Receipts Figure 8. Total Contribution of Travel and Tourism as a Share of Gross Domestic Product (GDP) to Gross Domestic Product (GDP) in Select Pacific Island in Pacific Island Countries Countries (PICs) and Comparators, 2019 Source: WTTC 2020. Source:  PNG TPA 2022; PVA 2021; SPTO 2020; UNWTO 2022b; World Development Indicators (database). Note: Benchmark data are averages. World Bank, Washington, DC (accessed November 2022), https://databank.worldbank.org/source/world-development- indicators. Note: Federated States of Micronesia, Republic of the Marshall Islands, and Tuvalu did not have data for 2020. 28 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Accommodation providers in the PICs offer a range of in source market countries to provide tour packages that services, including food and beverage,24 but most do not contract, book, and deliver various components of a holiday function on an all-inclusive model like many Caribbean (such as hotel, in-destination transportation, and flights).25 resorts. Those that are all-inclusive tend to be luxury They also provide on the ground services to visitors once in resorts located in remote areas that have limited or no destination, mostly focusing on activity organization (e.g., external options for food and beverage services nearby. tours, site visits, entertainment) and local transportation. However, many guests still tend to concentrate a large This is a major source of revenue for operators and provides portion of their spending within the hotel. Inbound tour a link between visitors and local activity providers, who operators and airlines work with outbound tour operators might not otherwise be able to access the market. Box 5. Tourism Businesses’ Food Procurement in Pacific Island Countries (PICs) Demand for fresh food from accommodation providers and restaurants is an important opportunity for local producers of these products in the Pacific and can support typically lower-income farming households. Evidence from studies in several PICs suggests that local production accounts for about half of this demand, imports meeting the rest. Fiji: Of the 74.4 million Fijian dollars (USD 36.4 million) that hotels and resorts in Fiji’s main tourism areas spent -  on fresh produce in 2017, 48 percent was procured locally, and 52 percent was imported (down from 70-80 percent 10 years earlier) (FAO 2011; IFC 2018a). - Palau: A 2020 survey of hotels and restaurants in Palau found that almost all fish and root vegetables used were sourced locally but only 65 percent of fruits and 50 percent of other vegetables.a Vanuatu: Of the 1.5 billion vatu (USD 15.6 million) that hotels and restaurants in the capital Port Vila spent on -  fresh produce in 2014, 46 percent was spent on local produce (IFC 2015). Several constraints must be addressed to maximize local supply linkages of fresh produce in PICs. Accommodation providers and restaurants in the region have long expressed a willingness to reduce reliance on imported fresh foods, but key barriers to doing so include lack of networking between key decision makers in hotels and local producers and suppliers; inconsistency of local supply, particularly for fruits, vegetables, seafood, and dairy products; seasonality of produce available locally (particularly fruits and vegetables); poor quality of some local products (particularly meat, seafood, and dairy products); and lack of food safety standards for meat and seafood (IFC 2018a). a. Source:  unpublished survey of hotels and restaurants by Sustainable Travel International. Box 6. Tourism, Productivity Spillovers, and Growth There is strong theoretical and empirical evidence that productivity is a key driver of economic growth. In addition to its direct contribution to value addition, productive sectors and firms can foster overall economic growth if they develop innovative, efficient production techniques (including using more-skilled workers) that spill over to other sectors and firms, making them more productive. In tourism, such spillover effects may occur through supply chain linkages (e.g., suppliers to a foreign-owned hotel learn new management techniques, tourism growth increases local firms’ access to productivity-enhancing business services), movement of workers (e.g., workers apply skills learned as tourism employees when they move to other sectors), or linkages with foreign markets (e.g., links with particular tourism markets facilitate establishment of export relationships with these markets for local merchandise producers). Identifying potential productivity spillovers to other sectors can help reveal tourism’s overall economic impact and justify more-targeted support for this sector, but empirical evidence of productivity spillovers from tourism is limited. One study that has been conducted to fill this knowledge gap (Faber and Gaubert 2019) focused on Mexico and found that tourism has a strong, significant positive effect on local economic activity, with a 10 percent increase in local tourism revenues leading to a 2.5 percent increase in employment and a 4 percent increase in municipality gross domestic product. Sizable local multiplier effects on production of manufacturing, including for sectors that are not intensively used as inputs in the tourism supply chain, drive these effects in part. At the aggregate level, the positive effects of tourism are partially offset by reductions in manufacturing scale and productivity. Overall, however, the study estimates that tourism provides benefits to the average household of the order of 5 percent of household consumption. 24  Breakfast or half-board is often included in the price. 25 Some tour operators are considered land only operators and focus on the aspects of the package once tourists are in destination.  THE FUTURE OF PACIFIC TOURISM MARCH 2023 29 Assessing the extent of local value retention in Pacific With the onset of the pandemic and the subsequent tourism requires a nuanced approach. Like in other collapse of arrivals, tourism receipts in PICs were 81 countries and regions, there have been frequent debates in percent lower in 2020 than in 2019. Receipts for the group the region about the respective shares of tourism income dropped from USD 2.4 billion in 2019 to USD 443 million in staying in PICs and “leaking” abroad. Economic leakage can 2020 (Table 2). Fiji, which accounted for more than half occur at various stages of the tourism supply chain, starting of aggregate receipts in 2019, faced the largest losses in with the booking process, during which overseas travel absolute terms, although the losses were also significant intermediaries and online travel agents retain a portion of for the smaller economies (PNG TPA 2022; PVA 2021; visitor spending through commissions or fees.26 Although SPTO 2020; UNWTO 2022b; World Bank 2022c.).31 these can account for 15 to 30 percent of the price of the At the time of writing, annual regional receipts data are product, consolidators also provide value to local tourism not available for 2021, but it is anticipated that revenues businesses that do not have the resources to manage will have been considerably lower than for 2020, based this essential business function themselves. Leakages also on the 83 percent drop in arrivals between 2020 and occur when tourism revenue is spent on imported goods 2021.32 Expressed as a share of GDP, tourism receipts in and services. This is often unavoidable in PICs where PICs also fell substantially during the pandemic, particularly certain inputs are not available locally and where it is not in the most tourism-reliant countries, declining by as efficient to produce these products locally.27 However, much as 29 percent for Palau, 24 percent for Vanuatu, as previously discussed, there is potential to further develop 21 percent for Samoa, and 19 percent for Fiji. The decline supply linkages. varied for the other less-tourism-dependent PICs but was Debates about leakages often focus on repatriation of nonetheless substantial. profits by foreign-owned tourism businesses or hotels managed by international brands. Although holistic data Tourism as a Major Source do not exist on hotel ownership, corporations (domestic of Public Revenue and foreign) and national provident funds typically own In addition to private income that is directly and large and medium-sized hotels, or they have strata title indirectly generated, tourism has become an increasingly ownership structures. Property development companies or essential source of tax revenue for PIC governments. In high-net-worth individuals and some domestic corporations Fiji, tourism was among the largest source of revenue for generally own small to medium-sized, high-end resorts. the state before the pandemic, generating about FJD 1 billion There are also small resort properties that are lifestyle (USD 452 million) annually (Government of Fiji 2021), about investments that expatriates and returned diaspora own. 28 percent of the total in 2019/20, and in PNG it contributed Of the 42 internationally branded hotels in PICs,28 60 percent 122 million kina (USD 34 million) (PNG TPA 2022). Although are locally or regionally owned,29 19 percent have mixed lower in absolute terms, tourism makes significant local and foreign ownership (including strata titles), and contributions to public budgets in other PICs. The most 21 percent are wholly foreign owned.30 Although such common form of direct tourism tax is an airport departure leakage happens to some extent in all sectors with foreign tax (factored into airline tickets for visitors and residents), direct investment, it must be weighed against the benefits of the foreign direct investment in developing tourism. although arrival fees (including for visitor visas), turnover Foreign-owned hotels provide much-needed jobs, and bed taxes, site user fees, and special environmental knowhow, and investment capital in the region, including taxes33 have been used in some countries (PSDI 2021a).34 in infrastructure that benefits local communities. They also, In Fiji’s case, the FJD 200 per passenger departure tax would especially those with international brands, typically invest have collected around FJD 179 million (USD 80 million) in marketing that promotes the destination to target based on international visitor numbers in 2019. Value-added markets and provides skills development through in-house taxes, service turnover taxes, and goods and services taxes training programs. (GSTs) also generate significant revenues from international 26  etailed data are not available for PICs, but accommodation providers typically must factor up to 30 percent into their rate structure to cover D booking administration and marketing costs that distribution partners incur (e.g., market-based travel wholesalers and agents). 27 F  or example, in the case of Fiji, the IFC study on local agricultural linkages found that locally grown carrots and onions could not compete on price and quality with imports. 28  ost internationally and regionally branded resorts are in Fiji, Samoa, and Vanuatu. Development of brand hotels in PNG was initiated when M the country became host of the Asia-Pacific Economic Cooperation Ministerial Meeting in 2018. 29 Including only owners from other PICs. 30 Data on accommodation ownership based on research by authors. 31 Estimate of Direct Contribution in USD million.  32  No 2020 data were available for FSM. 33  iji’s Environmental Climate Change Adaptation Levy, introduced in 2018, was collected through different businesses, including accommodation F providers, tour operators, and restaurants. Generating an estimated FJD 270.2 million in 2019, Environmental Climate Change Adaptation Levy collection was suspended in 2022 as a relief measure for businesses. In Palau, the USD 100 Pristine Paradise Environmental Fee applies to arriving visitors. Based on 2019 arrivals, it would have earned USD 95.5 million. 34  ome countries also have departure taxes for cruise and yacht passengers, and visitor visa fees apply in some instances, although holiday arrivals from S key source markets are typically exempt. 30 THE FUTURE OF PACIFIC TOURISM MARCH 2023 visitors and tourism businesses. Although some taxes, the suspension of tourism travel. In PNG, there was an such as environmental levies in Fiji and Palau, have been estimated 81 percent (USD 26 million decrease in tourism- earmarked for environmental conservation projects, related tax revenues in 2020 from 2019 (IMF 2022). GSTs most tax revenue that the tourism sector generates has in almost all of the studied countries were lower in 2020 been used to finance public policy priorities through the than 2019 (Figure 9). GST revenues were affected most general public budget. dramatically in three of the most tourism-dependent Tourism’s importance as a source of public revenue has economies, declining by USD 165 million in Fiji (39 percent), also increased PICs’ budget exposure to shocks affecting USD 2 million in Vanuatu (23 percent), and USD 2.3 million the sector. For example, the decrease in visitors in 2020 in Palau (16 percent). Although this shortfall cannot be and 2021 translated to forfeited departure tax income of approximately USD 321.82 million in Fiji and USD 8.32 million attributed solely to tourism’s decline, the high ratio of in Palau.35 In Vanuatu, government revenue was about tourists to population in these countries suggests that their 14 percent lower in 2020 than in 2019, partially as a result of contribution to GSTs before 2019 was considerable. Figure 9. Relationship Between Decreases in Arrivals and Goods and Services Tax Receipts in Selected Pacific Island Countries, 2019/20 Sources:  International Financial Statistics (database). IMF, Washington, DC (accessed Jun 2022), https://data.imf.org/?sk=4c514d48-b6ba-49ed-8ab9-52b0c1a0179b; Schedules Analyzer (unpublished database). OAG, Luton, England (accessed Jun 2022), https://analytics.oag.com/analyser-client/home. Tourism’s Contribution to In Palau, formal tourism employment in accommodations and food service was considerably higher, accounting for Employment: Reducing Poverty about 26 percent of national employment. On the low end, and Providing Employment available data suggest that tourism accounted for only 0.8 percent of formal employment in PNG because of its Opportunities for Women large natural resource sector. Compared to other tourism Before the pandemic, tourism directly employed dependent SIDS regions, tourism contributes a lower share approximately 71,000 people in formal jobs across PICs. to overall tourism employment (Figure 11). Like most tourism In Fiji, Samoa, Tonga, and Vanuatu, such formal jobs directly data in the Pacific, detailed employment data are scarce, and accounted for eight to 11 percent of employment (Figure 10).36 there are sometimes large discrepancies between sources.37 35  ased on a conservative assumption that 2019 departure tax revenues would have been replicated in 2020 and 2021 had borders not closed. B These figures reflect the difference between this assumption and actual receipts for the two years combined; losses for Fiji were even higher because the departure tax was halved in mid-2020. 36  ased on country data available between 2014 and 2019 in the Pacific Tourism Organization Annual Review 2019. Data are from employment B surveys or censuses that national statistics offices publish using the same or closest available year. This roughly corresponds to the total number of persons employed, although for Fiji, it is the number of wage and salary earners. Employment data were compared workforce data from national statistics authorities. 37 N  ational statistics offices report data not on tourism jobs per se but on jobs in accommodations and food services, although this is narrowly defined and does not differentiate between those that serve international tourists and domestic markets. THE FUTURE OF PACIFIC TOURISM MARCH 2023 31 Figure 10. Tourism Jobs and Share in Formal Figure 11. Total Contribution of Travel and Tourism Employment in Pacific Island Countries before COVID-19 to Employment in Select Pacific Island Countries (PICs) and Comparators, 2019 Source:  FBOS 2022; SPTO 2020; STA 2022. Note: The Pacific Tourism Organisation did not obtain data for Source:  WTTC 2020 the Federated States of Micronesia (FSM) (2018), Republic of the Marshall Islands (2015), Tuvalu (2016), and Vanuatu (2018). Alternative sources were used. Beyond formal direct jobs, the true impact of tourism formal and informal jobs – was much higher than before on employment extends to a large number of informal the pandemic. In addition, tourism indirectly supports many direct jobs and indirect jobs that the sector supports. jobs, including providers of goods and services in tourism Although there are no official data on informal tourism businesses’ supply chains (e.g., construction services, retail employment for the studied countries, the sector provides outlets, farm products). Although data are limited, these a large number of direct informal jobs, such as independent direct and indirect channels provide substantial earnings for tour guides, cultural performers, and souvenir sellers. local populations. The evidence suggests that jobs created Given the size of tourism in PICs and the fact that informal through tourism growth reduced poverty in the region workers account for a large share of total employment before 2020 (Box 7), although the pandemic’s impact on in these countries (estimated at 78 percent in Tonga, the sector pushed many back into poverty in 2020, when 37 percent in Fiji, and 33 percent in Samoa) (ILO 2020a), it tourism employment was reduced by up to 50 percent in is likely that total direct tourism employment – including some countries.38 Box 7. Measuring Tourism’s Poverty Impacts Although there is a need for additional study to determine the contribution of tourism to poverty reduction, recent simulations suggest that the sector reduced poverty in the years preceding the pandemic. A simple elasticity analysis suggested that a 1 percent increase in tourism sector gross domestic product during this period was associated with reductions in poverty of 0.68 percent in Fiji, 0.074 percent in Vanuatu, and 0.078 percent in Kiribati (based on the upper-middle-income poverty line of USD 5.5 per capita per day in 2011 purchasing power parity terms). When assessing tourism’s poverty impacts at the USD 3.20 poverty line, lower impacts were found in all three countries. Although the limited data make it difficult to draw firm conclusions, especially over a long period of time, this may imply that tourism offers greater economic mobility once above the lower threshold of poverty—that is, from vulnerability to economic security. A microsimulation analysis of the distributional impacts of the COVID-19 shock on household welfare and poverty in 2020, when border closures affected tourism employment, supports these findings. 38  regional business survey that the Pacific Tourism Organisation conducted in March 2021 found that tourism employment was A 51.5 percent lower than in March 2020 (before travel restrictions) (SPTO 2021b). 32 THE FUTURE OF PACIFIC TOURISM MARCH 2023 COVID-19 has severely affected livelihoods and increased poverty in Pacific Island countries (PICs), notably because of its impacts on tourism. The sudden collapse of international travel had dramatic economic and social impacts on firms and workers that relied on tourism, which relief measures that some PIC governments adopted only partially offset (Connell 2021). The crisis has pushed many into poverty, particularly in the most tourism- reliant countries, such as Fiji and Vanuatu (Gounder 2020, World Bank 2020b). Anecdotal evidence of increasing poverty linked to loss of tourism jobs has been the subject of media reports throughout the crisis, including in Fiji (Baleinakorodawa and Vaai 2021), Palau, Samoa (Tahana 2020), Tonga, and Vanuatu. For this study, a macro-micro simulation analysis was conducted in three PICs for which reliable data are available: Fiji, Kiribati, and Vanuatu (Montanes and Nakamura 2022). Translating aggregate output and employment data to individual and household income for 2019 and 2020, it found that adverse developments in the tourism sector accounted for one-quarter to half of the poverty increase. Specifically, the decline in tourism accounted for poverty increases of some 2.5 percentage points in Fiji, 1.5 percentage points in Vanuatu, and 0.9 percentage points in Kiribati based on the upper-middle-income poverty line of USD 5.5 per capita per day in 2011 purchasing power parity terms. Given tourism’s relatively small employment shares in these countries—about 11 percent in Vanuatu, 10 percent in Fiji, and 1.6 percent in Kiribati—its contribution to the recent poverty growth is sizeable. These results confirm previous studies that have found similar poverty-reducing impacts of growth in tourism and tourism-related employment. A 2015 study of several small island developing states (American Samoa, Aruba, Fiji, Jamaica, the Maldives, Mauritius, the Seychelles) using input-output analysis, linkage analysis, and a computable general equilibrium model found that tourism had a positive effect on economic and poverty indicators (Pratt 2015). It found that, for Fiji, a 10 percent increase in international tourism expenditures led to a 3.06 percent increase in household consumption (the highest rate in the sample group) and a 2.16 percent increase in welfare (second only to the Maldives). The study also identified a positive relationship between the size of the economy and the size of the tourism multipliers, as evident in Fiji and Jamaica, which are larger economies. A 2011 study conducted in 49 small island developing states—including Fiji, Papua New Guinea, Samoa, Solomon Islands, Tonga, and Vanuatu—also found that tourism had a positive impact on the poor (Jiang et al. 2011). The quality of local tourism jobs varies within hospitality represents a larger share of women’s than men’s countries, with wages and other benefits depending employment, and in Fiji, FSM, Solomon Islands, and Tonga, on the size and sophistication of the employer. Tourism women working in hospitality outnumber men nearly two to has been one of the few sectors to offer formal employment one.39 As such, tourism tends to be more inclusive than other opportunities and associated benefits to low- and medium- sectors in a region where women’s labor force participation skilled workers. Although detailed data is lacking, tourism remains, on average, 22 percentage points lower than men’s wages in the Pacific are reportedly above the minimum (ILO 2020a). Tourism has been particularly important for wage for most roles and relatively high for skilled jobs. women and rural workers in the Pacific, who still face more- However, wages and other benefits can vary between limited opportunities than men in urban areas, especially for larger and smaller businesses (Scheyvens & Russell, 2012). paid employment and entrepreneurship. In Fiji, most rural Larger tourism firms more often provide job security to men’s and women’s direct tourism employment consists of their employees through formal contracts that also typically wage jobs. Nearly 70 percent of rural women’s retail work contain more generous compensation packages. (and 40 percent of men’s) consists of self-employment and is concentrated in the sale of traditional handicrafts and The tourism sector employs a significant share of textiles, partially to the tourism sector.40 female and low-skilled workers, with implications for the sector’s potential to bridge gender gaps in employment and reduce poverty in vulnerable groups. 1.2. Differentiating PICs Persistently low female labor force participation and a as Tourism Destinations large gender gap in employment rates characterize PIC PICs are at very different levels of tourism maturity economies. The average female labor force participation for because they have different characteristics, en- PIC economies is 45.8 percent, compared with 58.8 percent dowments, and levels of government support. overall in the East Asia and Pacific region (ILO n.d.). Across Although the PICs share traits that have influenced how the Pacific, the tourism sector tends to employ men and they have emerged as tourism destinations, critical country- women in similar proportions, with the hospitality and retail specific factors have also influenced the nature and scale of sectors being a key source of income for women. In all PICs, the sector, including: 39 Based on latest national survey estimates retrieved from ILOSTAT.  40  ased on analysis of the Fiji Bureau of Statistics Household Income and Expenditure Survey 2019/20. World Bank staff calculations as part of the B poverty analysis. THE FUTURE OF PACIFIC TOURISM MARCH 2023 33 Size: PICs vary widely in land mass, number of islands, •  assets, as has been done in some PICs. population, and other characteristics that influence their Other: Important determinants that vary according to •  endowments and ability to deliver sustainable tourism. PIC include government tourism policies, availability of  ocation and accessibility: These factors influence the • L supporting infrastructure, and recent history of internal scale of arrivals and major origin markets. PICs are widely shocks, including political unrest and natural disasters. dispersed across the Pacific. Although some countries Although each PIC has specific challenges and (including Fiji, the regional hub for air transport) are opportunities as a destination, they fall into broad relatively well connected, others are harder to reach. types that can be used to differentiate policy advice for Geography and long flight times also significantly affect this study. Identifying groups of countries facing similar regional tourism opportunities. challenges can provide a framework for delivering policy  istorical and strategic ties: Similar to labor migration, • H advice across this broad group of countries. This study, political and historical ties—such as the Compacts of Free therefore, uses a typology of Pacific tourism destinations Association linking FSM and the Republic of the Marshall to allow for generalizable comparisons in the following Islands (RMI) to the United States—and relations with chapters. It identifies four types based on several quantitative historically linked countries, such as the United Kingdom indicators (Table 3), including economic reliance on (Fiji, Tonga) and Australia (PNG), determine tourism flow tourism (proxied by receipts expressed as a share of GDP), patterns. volume of tourism arrivals, and development of leisure • Tourism assets: Most PICs are attractive for “sun and tourism markets (proxied by share of arrivals with leisure as sand” tourism and offer a wide range of marine and the main reason for traveling).41 The typology also considers nature-based activities, but these are not unique to PICs. destinations’ profiles in terms of the dominant leisure Tourism development depends on the destinations’ ability market segments and safety and security, both of which to continue to develop differentiated or unique natural are key determinants of tourism appeal and potential.42 This (e.g., volcanoes, bird watching), cultural (traditional typology is designed to help differentiate policy priorities performances), and historical (World War II dive sites) and investment needs.43 Table 3. Typology of Pacific Tourism Destinations Type 3 Type 4 Type 2 (Federated States of Type 1 (Papua New Factor (Palau, Samoa, Tonga, Micronesia, Kiribati, (Fiji) Guinea, Vanuatu) Republic of the Marshall Solomon Islands) Islands, Tuvalua) Economic reliance on tourism High (>20%) Medium to high (>10%) Medium to low (<10%) Low (<5%) (tourism receipts as % of GDP) Volume of international visitor Moderate High (>800,000) Low (<16,000) Varying arrivals (60,000–200,000) Share of leisure tourists Large (>55%) Medium to large (>30%) Medium to low (<55%) Low (<30%) Marine and Dominant leisure segment Couples and families Marine and adventure Marine adventure Profile as a safe, secure destination Yes Yes Yes No a. Tuvalu is an exception, with greater economic dependence on tourism but overall low arrivals, mostly because of the limitations of other industries. Type 1 and 2 countries are advanced tourism destinations, of the industry. Type 2 countries—Palau, Samoa, Tonga, although they differ in some regards. The only Type 1 Vanuatu—have also witnessed the emergence of a sizeable country, Fiji, emerged early on as the leading destination leisure segment in recent decades.44 These countries have in Pacific tourism because of the magnitude and quality of benefited from their larger size (aside from Palau)45 and its offerings. It hosts most of the internationally branded a relative proximity to their source markets (3- to 4-hour hotels and has a set of tour operators offering differentiated flight from the closest ports of departure). Business experiences based predominantly on the islands’ compelling environment barriers and limited public investment in nature and culture. It has also leveraged government infrastructure are common in these four countries, although involvement over the decades to improve the performance they have benefited from some government interventions. 41  eisure tourism refers to travel for the purpose of vacation or holidays, as opposed to other travel motivations such as business or visiting friends and L relatives. 42 C  ountries not considered to be safe, secure destinations are those on the World Bank’s fragile and conflict-affected situations country list and those that have experienced violent unrest in the past five years. 43 See Annex A for a more detailed description of these categories.  44 Tourism activities originated from those countries mainly by tourists visiting friends and relatives.  45  ountry size has also played a role in the scale of tourism in these countries, with all, but especially Vanuatu, having the geographic capacity to develop C a critical mass of supply. 34 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Image: Solomon Islands More notably, they have found it difficult to differentiate prospective travelers. While the countries each have unique themselves, although each has unique selling points (e.g., and differentiated offers for Leisure, Business, and Visiting Palau’s dive sites, Tonga’s whale watching, Vanuatu’s Friends and Relatives (VFR) segments have been more volcano). Despite these difficulties, the growth of tourism common drivers of travel. Yet growth in these segments is has made it a critical contributor to their economies. both naturally limited and more exogenous to the tourism industry’s own performance than leisure segments. Type 3 and 4 countries are less developed as tourism destinations. Countries categorized as Type 3 (FSM, The typology is not linear, because countries can Kiribati, RMI, Tuvalu) have never had vibrant tourism pursue different tourism development pathways. Type 1 sectors. Together, they accounted for only 2 percent of corresponds to the most mature market in the region and arrivals to the region in 2019, explaining tourism’s limited Type 3 to the least mature markets; political and safety economic weight. Large distances from source markets, concerns constrain Type 4 markets. This does not imply small land size and the threat of rising sea levels have limited that all PICs should strive to expand international arrivals tourism infrastructure and the product offer. In recent years, and receipts to Fiji’s level or that Fiji cannot enhance the however, the governments have recognized the potential developmental impact of the sector. Value per arrival of their marine assets, driving tourism development is an equally important success metric, and countries ambitions, although the countries continue to deal with must consider their carrying capacities, notably from stagnating tourism investment and arrivals. By contrast environmental and social perspectives. Countries may tourism development in Type 4 countries – PNG and the move between types nonlinearly as they pursue tourism Solomon Islands – has been inhibited by a different set development. For instance, PNG and Solomon Islands of constraints. These countries are not held back by the could leapfrog to Type 2 if they addressed safety, product, uniqueness of their offer, but rather by significant safety marketing, and domestic connectivity problems. To the and security issues. Over the past several decades, frequent extent possible, Chapter 2 uses this framework when episodes of violence and civil unrest have led to extended developing simulations, which attempt to quantify the travel advisory warnings in source markets, deterring effects of certain policy objectives. THE FUTURE OF PACIFIC TOURISM MARCH 2023 35 Box 8. Challenges of Connectivity and Air Transportation in the Pacific Region Geographic and demographic characteristics that hamper development of connectivity through air transportation characterize the Pacific region. With relatively small populations spread across thousands of islands, connectivity is challenging. Although governments subsidize some routes, directly or by cross- subsidization of domestic routes through international fares (IMF 2021b), many regional airlines are not able to attract sufficient demand. Of 22 million available seats, an estimated 15.5 million passengers flew to the Pacific from 2012 to 2019, representing a seasonally stable 71 percent load factor (OAG 2022), which is lower than passenger load factors in the overall Asia Pacific region (81.6 percent) in December 2019 (IATA 2019). This remoteness, geographic dispersion, and thin traffic levels result in financial losses and limit profitability for many Pacific airlines. Fiji Airways is the only airline that made consistent profits in the pre-pandemic years (IMF 2021b) (Figure 12). Governments have been committed to maintaining some routes as an essential public service and for national security even while recognizing their inefficiency. Without support from governments, some routes in the Pacific would be forced to shut down or significantly reduce operations (Cummins 2020). During COVID, most national airlines received financial support to sustain domestic services and retain basic capability to operate internationally while borders remained closed,46 but governments are conscious of the cost of maintaining them and seek ways to maintain and enhance connectivity at a minimum efficient scale. Growth of passenger demand from foreign arrivals will be necessary to enable the scale needed for operation of many routes. By leveraging growth in tourist passengers, many international and domestic routes may be able to improve basic connectivity for the local population. Most passengers to the Pacific, including high-value tourists from long-haul source markets, reach their final destination through mainline carriers operating short-haul connections.47 From 2012 to 2019, 85 percent of commercial flights to Pacific Island countries (PICs) (156,554), not including private flights, came from short-haul source markets, which include Australia, New Zealand, and other PICs, with the remaining 15 percent coming from long-haul markets such as Europe, Korea, and the United States. Mainline carriers dominate the market in both cases; in that period, they operated 89 percent of short-haul flights and 98 percent of long-haul flights. Low-cost carriers operated 11 percent of short-haul routes (Figure 13). Thus, passengers from long-haul markets rely on mainline carriers to travel to the final destination, first through the main flight to the region and then with an intraregional (from Australia, New Zealand, or a PIC) or domestic (after landing in their destination country) flight. From 2012 to 2019, 21 percent of scheduled flights coming from long-haul markets stopped for a domestic connection before arriving at the final destination (OAG 2022). Mainline carriers have historically been important for connectivity in PICs, and their capabilities will continue to be necessary for tapping into high-value markets. Such carriers typically offer a mix of ticket classes (business and economy) and have the ability to facilitate air route connections outside of the region (including with partner airlines). These enhanced service characteristics help in improving connectivity to high- value and long-haul markets. This is important because tourists coming from long-haul markets typically spend more in both transport and at the destination, as they stay for longer time periods than tourists from short-haul markets and, often, pay for more activities (Government of Fiji 2020).a As a result, attracting travelers from long- haul markets can increase length of stay and spending per trip. Recovering the number of long-haul flights from mainline carriers to pre-pandemic levels will therefore be important for ensuring connectivity, with more positive spillovers for the local economy. 46  perators of airport infrastructure face similar challenges, with revenue from international airports and government often subsidizing O the operations of rural and remote domestic airports. 47  hort-haul countries include American Samoa, Australia, Christmas Island, Cook Islands, Fiji, French Polynesia, Guam, Kiribati, Marshall S Islands, Micronesia, Nauru, New Caledonia, New Zealand, Niue, Norfolk Island, Northern Mariana Islands, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu, and Wallis and Futuna Islands 36 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Figure 13. Monthly Frequency of Low-Cost and Mainline Flights to Pacific Island Countries, 2012-19 Source: Schedules Analyzer (unpublished database). OAG, Luton, England (accessed Jun 2022), https://analytics.oag.com/analyser-client/home The low-cost carrier model being concentrated on basic services (transportation), with additional services subject to charges and generally discouraged, is more aligned with high-volume tourism markets. This model reduces operating costs while improving margins and passenger volumes from particular source markets (Schlumberger and Weisskopf 2014). The introduction of low-cost airlines in the early 2000s reduced airfares by as much as 30-40 percent for some non-stop routes linking Australia/New Zealand to certain Pacific destinations (ADB, 2007). However, since the low-cost carrier model generally operates by connecting two discreet nodes from secondary airports in source markets, long-haul connections are generally less viable through such low-cost carriers. Thus, although these carriers improve intraregional connectivity from limited geographies, they do not generally enhance interregional connectivity and access to high-value markets.b World Bank consumer research also found that higher-spending market segments were 11 to 26 percentage points less likely to use low-cost carriers (World Bank 2022b). As such, it is unlikely that growth in passenger arrivals from low-cost carriers would mean an increase in high-value markets.c To improve connectivity, the region needs enhanced frameworks to ensure growth in long-haul connections while ensuring that passenger volumes are maintained and seat capacity increases. Pro-competitive efforts to liberalize the aviation market, including free competition and coexistence of low- cost carriers, should be undertaken to enable growth of long-haul connections. This should be done in parallel with efforts to encourage mainline carriers to become financially sustainable, such as through joint ventures and partnerships. Such efforts to enhance connectivity and competitiveness were taken seriously in 2003 with the Pacific Islands Air Service Agreement, which was designed to establish a framework for gradual integration of aviation services, but these efforts stalled (ADB 2007). In 2021, the Pacific regional aviation ministers agreed to implement the Pacific Regional Aviation Strategy 2022-2032, which has four main goals: sustainable aviation, regional connectivity, aviation regionalism, aviation development (PASO 2022). Such efforts will be important for maintaining or increasing the efficiency benchmarks of servicing airlines while increasing passenger volumes from mainline carriers. a. A  detailed ticket class analysis shows that business class bookings are more common from long-haul markets than from within the region. From 2017 to 2022, business class bookings from Asia, Europe, Latin America, and North America to the Pacific accounted for 30 percent of total bookings (including business and economy); intraregional business bookings accounted for 9 percent. b. M  oreover, low-cost carriers typically do not focus on generating revenue from cargo (which is time intensive) and instead focus on maximizing passenger revenues through quick-turnaround times. This feature of the low-cost airline market limits positive externalities to merchandise trade. c.  he one exception is for long-stay tourists, particularly backpackers, who tend to spend less on flights and more on in-destination T purchases. Given their long lengths of stay and high concentration of spending in local businesses, they are considered a high-value market. THE FUTURE OF PACIFIC TOURISM MARCH 2023 37 Image: Solomon Islands Credit: Tom Perry 1.3. Strategic Tourism Market (RMI, Tuvalu and FSM) and Type 4 countries (Solomon Islands) earn over USD 2,450 per international arrival, likely Segmentation in PICs due to the high cost of travel to these countries and the Targeting higher-value market segments based on overall low arrival volumes. On the other hand, relatively PICs’ comparative advantages would increase the better-connected countries in the Type 1 and 2 categories economic value that tourism generates, support PICs’ – including Fiji, Samoa, Palau, and Tonga – have receipts development agendas, and reduce negative environ- ranging between USD 1,504 (Fiji) and USD 828 (Tonga) per mental and social externalities. Increasing the value, arrival. Vanuatu and PNG stand out as having particularly sustainability, and inclusivity of the tourism sector is high spend per arrivals at USD 2,438 and USD 2,224 a dominant theme across all PICs’ tourism strategies respectively, which is influenced by their adventure and and polices, with a focus on generating revenue from cultural tourism offers (UNWTO 2022).49 Within the Pacific, higher-spending tourism markets. High-value tourism is long-haul markets spend more than regional markets (Box defined in this report as market segments that are driven by destination and product uniqueness, actively engage 8). Information from available international visitors surveys in multiple experiences, and have higher levels of spending demonstrates that tourists from the United States, Europe per trip, thus contributing more to the economy per arrival and Asia are the highest spending markets, while tourists and promoting more-inclusive tourism. This type of tourism from Australia and New Zealand spend between about is also sometimes referred to as high yield, because a 15 and 60 percent less across the countries for which data higher share of tourist expenditures remains in the local is available.50 economy based on spending patterns and preferences. Visitor spend per arrival is higher in PICs on average On the other end of the spectrum is high-volume or mass tourism. Generally speaking, volume markets are driven than in the Caribbean (Figure 14) because of higher by price when selecting a destination, participate in fewer levels of air arrivals, longer stays, and more high-value activities and have low spend per trip, thus benefitting market visitors.51 In the Caribbean, cruise passengers the economy less on a per arrival basis. Although some make up nearly 59 percent of all visitors to the region but destinations are able to provide value and volume markets contribute less than 10 percent of total expenditure (USD simultaneously, focusing policies and strategies on high- 0.5 billion compared to USD 7 billion for other tourists) value tourism can result in higher aggregate tourism (UNWTO 2021a).52 This results in average spend per visitor of revenues (see section 1.4). less than USD 600. On the contrary, the majority of tourists arriving to the PICs do so by air; cruise access to most PICs Tourism Spending in PICs is limited by the geographic distance between Australia Current spending per arrival varies across the region, (the main cruise market).53 Furthermore, PICs benefit from influenced by connectivity, cost of travel, and market longer average stays than Caribbean destinations. In 2015, segment.48 Using receipts figures, the Type 3 countries the average length of stay in the Caribbean was 6.7 nights 48  isitor spend includes all expenditures from inbound arrivals in the destination country, which may include expenditures on accommodations, V activities, tours, food and beverages, and transportation; payments to national carriers for international transport; and other prepayments for goods and services received in the destination country. Spend per arrival is calculated as average expenditure (using receipts figures) per international visitor arrival (using overnight arrivals data). 49  isitor spend data is from multiple sources, including UNWTO, SPTO and NSOs, that have limited information on methodologies for calculation. V The lack of reliable data is a limitation for this country comparison. 50  ote that the spend per arrival determined via ‘receipts’ is sometimes different from IVS visitor spend conclusions, since these sometimes do not N include international airfare. 51  pend per arrival in Figure 14, comparisons are calculated using total arrivals (air and cruise) for consistency. Caribbean expenditure data include S cruise passenger spending, and Pacific sources are unclear on calculations. All other spend per-arrival data for the Pacific include only international overnight arrivals. 52  Expenditures include international receipts for travel items and exclude international transport. 53 For example, only less popular cruises of 12 days or more from Australia can reach Fiji.  38 THE FUTURE OF PACIFIC TOURISM MARCH 2023 (Mastercard 2016), whereas in 2019, the PIC average was United States. Finally, PICs have a higher proportion of around 9.6 nights in Fiji and Solomon Islands and 8.5 nights high-value markets than Caribbean countries, especially in in Samoa (Government of Fiji 2020; NZTRI 2020a; 2020b). Type 1, 2, and 4 countries, with 24 percent of total arrivals in Longer trips can be attributed to trends in the dominant Fiji (Government of Fiji 2020), 51 percent in Vanuatu (World source markets of Australia and New Zealand and distance Bank 2020d), and 56 percent of holiday arrivals in PNG being from long-haul source markets such as Europe and the from high-value niche markets (PNG TPA 2019). Figure 14. Tourism Spend per Arrival, Caribbean and Pacific, 2009-2018 Source:  PNG TPA 2022; PVA 2021; SPTO 2020; UNWTO 2022b. Note: Travel spending divided by total arrivals (air and cruise). Caribbean includes Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Dominican Republic, Grenada, Jamaica, Sint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, and Trinidad and Tobago. Pacific includes Fiji, Kiribati, Marshall Islands, Federated States of Micronesia, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu. Market Segments and Drivers PICs can be competitive in generating higher value and are of Spend in the Pacific more inclusive than others (Box 9). For example, consumers who are motivated to travel to the Pacific to engage in Attracting high-value tourists requires an understanding niche market activities, such as diving and adventure and of market segments and drivers of spend including cultural tourism, typically spend more than traditional sun- engaging in niche activities and prioritizing destination and-sand, family, and cruise tourists. Although prepaid sustainability and resilience. Although tourism statistics often generalize demand in terms of source countries, spending (especially on airfare, since long-haul tourists this is a simplified categorization based on easily available are disproportionately represented) drives some of this, statistics. To better differentiate between the qualities of evidence from PNG suggests that niche market travelers consumer demand that make a functional difference for spend similarly regardless of where they come from in-country spending, it is important to develop consumer (PNG TPA 2019). Drivers of visitor spend are nuanced, and segmentation that explains what drives visitor spending and consumer segmentation can provide insights to help predict choices. Within this framework, some market segments in and increase visitor spend. THE FUTURE OF PACIFIC TOURISM MARCH 2023 39 Box 9. Tourism Market Segmentation and Drivers of Spend in the Pacific Volume markets in Pacific Island countries (PICs) center on the sun-and-sand and family markets. A need for relaxation, rejuvenation, and spending time with family motivates travelers, who are typically price sensitive. Fiji, Palau, and Vanuatu are the only PICs with sizable arrivals from these volume markets. Samoa and Tonga also receive sun-and-sand visitors but at lower volumes given air access constraints and more-targeted marketing and experiences. Key competing destinations for PICs include Bali and Phuket, which offer low-cost, high-quality beach holidays. Sun-and-sea visitors are motivated to travel for relaxation and rejuvenation or to spend time with family. •  World Bank research found that this segment comprises about 34 percent of European outbound markets surveyed and spends 20 percent less than other segments. This market segment typically engages in fewer activities once on the ground and is price sensitive (World Bank 2022b). In the Pacific, these visitors will often book flights, hotels, and some transportation together in a package deal, prepaying to cover these costs out of their set budget before travel. High-quality, comfortable accommodations, good destination infrastructure (e.g., water, roads, electricity), and safety are important. Given their more-limited engagement in activities and entertainment, price-sensitive nature, and tendency to concentrate spending within the accommodation, they are often the lowest-spending markets in a destination and provide less local economic benefit. • Globally, cruise tourism was growing rapidly before the pandemic, with 29.7 million passengers in 2019; since the pandemic, the Cruise Lines International Association anticipated that passenger volumes would reach 78 percent of 2019 levels by the end of 2022 (in the worst-case scenario) (CLIA 2022). Cruises were increasing in popularity for Australians before the pandemic, with 5.8 percent of the population taking a cruise in 2018 (higher than the United States (4 percent) and United Kingdom (3 percent)) (CLIA 2019). Timing (dates and duration), departure and return ports, seasonality, and price of itineraries and services on the ship drive cruise visitors in the Pacific. The IFC found that satisfaction with variety of things to see, do, and purchase and length of time spent in port drive spend by cruise passengers. Economic impact of cruise tourism depends on number of ships per year and ports of call per ship, along with individual passenger spending. Although cruises directly contributed only USD 4.3 million to PNG’s economy and USD 0.4 million to Solomon Islands’ in 2015, they directly contributed USD 25 million to Vanuatu’s economy in 2014 and USD 21.4 million to Fiji’s in 2018/19 (IFC 2019b). Although most cruises are high volume and low value, small expedition cruises that allow visitors to access remote areas are often high value and important for destinations like PNG with poor transportation infrastructure. High-value markets in PICs include luxury tourism (couples, honeymooners, weddings, wellness markets), long-stay tourism, and experiential or niche tourism, including adventure tourism (soft and hard), diving, and cultural tourism. These markets, driven by destination branding and unique experiences, have been growing rapidly over the past 20 years. Although they vary, industry market analyses estimate that luxury travel will grow between 6 and •  15 percent CAGR over the next 10 years, with the global luxury hotel market valued at more than USD 93 billion in 2020 (Adroit Market Research 2022; Fortune Business Insights 2021; ReportLinker 2022). Within luxury tourism, wellness tourism, with a global market share of 6.5 percent of global leisure trips and 16 percent of expenditures in 2020, holds potential for PICs (Global Wellness Institute 2021). • The romance market in the Pacific is well established, with the Pacific Tourism Organisation estimating that, in 2015, approximately 15 to 20 percent of all leisure arrivals to the region were traveling as part of a honeymoon couple or wedding party (SPTO 2015). Uniqueness of the destination, quality accommodation offerings, advice from experts (travel agents) and word of mouth, and social media inform destination selection. Traditionally, this market did not deeply engage in local experiences, but global trends indicate that participating in local activities is increasing in this market. For countries with limited luxury offerings, high-value adventure and cultural tourism offers potential. •  Adventure tourism accounts for approximately 30 percent of global tourism (ATTA 2020), with top activities including cycling, hiking safaris and wildlife viewing, and culinary. The Adventure Travel Trade Association’s Adventure Travel Industry Snapshot May 2022, which surveys adventure tour operators, found that 70 percent of the total trip price is spent with local suppliers (ATTA 2022). Similarly, compared with the 14 percent of 40 THE FUTURE OF PACIFIC TOURISM MARCH 2023 revenues that remain in the local economy from mass tourism, adventure tourism leaves 65 percent of revenues in the local economy and creates 2.6 local jobs per USD 100,000 in revenue (compared with 1.5 jobs for similar mass tourism spending) (ATTA 2020). There are subsegments within adventure and cultural tourism that are important for certain PICs, such as diving and sport fishing, especially for Type 3 PICs. Long-stay tourists also offer potential for PICs to tap into emerging high-value markets. Although little •  information is available, there are an estimated 35 million global digital nomads, with 83 percent being self- employed and 17 percent remote workers (A Brother Abroad 2022). In addition, although the exact number of overseas retirees is unknown, the U.S. government estimates that 8.7 million citizens live abroad, with more than half a million of them drawing social security payments. Although they account for just 6 percent of Americans living abroad, the number of people receiving these payments increased by 40 percent between 2007 and 2017 (USGAO 2018; Walker 2016). The aging global population is fueling this growth, with the proportion of the population aged 65 and older expected to rise from 9 percent in 2019 to nearly 17 percent by 2050. Closer to the Pacific, sources estimate that approximately 90,000 Australian retirees were living overseas in 2016, with COVID-19 only temporarily slowing strong growth (SuperGuide 2022). A positive regulatory environment for visas, taxation, and land; information and communications technology and health care infrastructure; and the presence of a likeminded community motivate long-stay tourists. PICs have accessed high-value markets to varying degrees of success. Type 3 and 4 PICs rely on highly motivated niche markets for their relatively small leisure arrivals, whereas Type 2 countries have all engaged in some product development or marketing activities to attract these markets. Fiji has been successful at tapping into volume markets in Australia and New Zealand and high-value markets in Europe and North America through separate destination positionings in each source market, although it has had limited success in increasing high-value arrivals from regional markets. Vanuatu is the only PIC with a dedicated long-stay tourism strategy, but long-stay tourism is now being considered as a potential market in other PICs. All PICs have stated goals of increasing arrivals from high-value markets, but competition is strong for these high-value markets with regional destinations such as Hawaii, Maldives, and Singapore and global destinations such as Costa Rica, Dominica, and Mauritius. PICs have the opportunity to leverage trends in high-value, experiential tourism to increase revenues from tourism arrivals. A 2019 market research study conducted for Fiji, Vanuatu, PNG, and Solomon Islands on Australian and United States travelers identified three segments of travelers with high potential to travel internationally for entertainment purposes: ‘Adventure Intensives, ‘Experience Samplers, and ‘Cultural Explorers (IFC 2019a). Together these account for almost 20 percent of Australian and 29 percent of U.S. online, travel consumers, and notwithstanding different experience preferences and levels of engagement, they are motivated to travel for specific interests. PICs can develop a competitive edge by targeting these interest groups through destination marketing and development of underlying assets, which allows for product and destination differentiation. If successful, such differentiation allows destinations to have more targeted marketing, which becomes a more cost-effective way of connecting with consumers. New consumer trends sparked by COVID-19 have increased the rationale for PICs to target high-value tourism markets. Recent World Bank research on three European outbound markets (Germany, Sweden, United Kingdom) identified five market segments (World Bank 2022b). Three of these segments, which included 66 percent of respondents, have a core focus on nature-based and sustainable tourism and are the highest-spending of all traveler types. These travelers tend to participate in more activities, are more likely to purchase local goods and services, and have more interest in nature-based experiences. Although the research was conducted in Europe, it is likely that the market segments are applicable across a range of source markets. Tapping into these markets will require changing PICs’ marketing strategy by updating and expanding distribution channels; increasing the supply of active, nature-based experiences; and enhancing communication. Both research studies revealed that market segments that engage with a range of service providers in country can drive high-value tourism. In both studies, market segments were developed based on psychographic models that consider motivations for travel, personality traits, and travel behaviors. They revealed that high-spending markets are also those with travelers who seek unique experiences, desire connections with local communities and businesses, engage in travel as a way to learn, and engage in sustainable practices. This highlights an important difference between high-value tourism and high-end or luxury tourism, which may have more-limited benefits for local economies. THE FUTURE OF PACIFIC TOURISM MARCH 2023 41 The urgent dialogue on climate change, impacts of the As PICs seek to increase value from tourism, under- pandemic, and the rise of the Generation Z54 traveler standing current positioning and how to balance policy have catalyzed shifts in tourism demand that must be reforms and investments to expand specific markets considered in destination positioning. At the global level, will be critical. In a global context, all PICs except Fiji would an extended period of travel restrictions and uncertainty be considered low-volume destinations, but that does not about the future have led travelers to reconsider their necessarily equate to high-value positioning. Kiribati, Palau, priorities, intentions for travel, and expectations from Samoa, and Tonga struggle to gain value from arrivals, whereas destinations. In particular, COVID-19 has pushed more PNG, Solomon Islands, and Vanuatu56 are more successful in travelers toward shorter booking lead times, more direct encouraging spend per arrival, particularly because of their booking, and more in-destination booking, as travelers seek niche market strategies (Figure 15). Most Type 3 countries flexibility in travel planning (World Bank 2022a). This creates (FSM, RMI, Tuvalu) are able to capture higher spend levels uncertainty in demand, which may affect airline decisions per arrival, but this is mostly because of high transport costs on route relaunching and will affect MSMEs that have associated with the destinations. For countries with lower fewer resources for direct marketing, struggle to accept spend per arrival, increasing focus on quality tourism product e-payments, and have less flexibility overall. COVID-19 has supply and targeted marketing can increase value, although also increased the focus on health and safety (Amadeus countries with high spending and low volumes must address 2021). PICs must maintain enhanced health, hygiene, and connectivity challenges and increase destination awareness safety protocols in the post-pandemic context. Similarly, and market penetration. That said, investments that target the climate crisis has increased the focus on sustainability one segment may do so at the expense of other segments, in the industry (Booking.com 2021) and interest in nature- so it is important to understand the difference between such based tourism (World Bank 2022a). The travel industry in segments, their potential for growth, and the implications PICs must consider these trends as it prioritizes investments this has for growth and development. Chapter 3 discusses the in assets and new products. Finally, as a new generation of policy levers needed to stimulate and cater to demand from travelers enters into adulthood, destinations and businesses the high-volume and high-value segments and identifies will face pressures to compete digitally and offer new levels which policy reforms cut across segments and could be of personalization. prioritized for growth. Destination Positioning to Attract Coordinated Marketing and Product High-Value Markets Development Approaches Each market segment requires different destination Strategic, coordinated destination-level marketing positioning, including appropriate tourism supply and is critical to tourism recovery and development and effective marketing, to reach and attract travelers. market diversification. Under a tourism development Destination positioning is the process of creating and policy, destination-level marketing focuses on identifying delivering on a specific impression of the country’s target markets; developing a destination brand that aligns tourism offering in the minds of consumers, especially with national objectives; and engaging in promotional in relation to competitor destinations.55 Psychographic tactics, public relations, and media activities to connect characteristics (behaviors and beliefs) often drive underlying with potential tourists throughout the customer journey. market segment characteristics more than demographic In PICs, NTOs or marketing agencies with joint public- characteristics (e.g., location, age, sex). Reaching high-value private leadership and core public sector funding have segments requires using targeted marketing approaches traditionally led marketing. In Type 1 and 2 countries, NTOs to create an image of the destination that responds to and marketing agencies have also, to some extent, led the psychographic needs and motivations of travelers. cooperative marketing campaigns that coordinate with the This includes developing appropriate distribution channels private sector to deliver the same message and leverage depending on the sophistication of supply and complexity private sector funding. This coordination between the public of travel in the destination and creating specific experiences and private sectors is essential to ensure that a consistent that can be delivered at the right quality. Delivering on destination brand and position is being put forth. this positioning requires coordinated efforts between the public sector, as the leader of destination policies, strategies, Public sector leadership and investment in destination- and marketing, and the private sector, as the provider of level marketing is often critical to success. Public sector tourism experiences. This coordination should extend across funding for marketing can be considered a public good marketing because the private sector has an important that promotes the overall destination, benefitting all parallel role to play in destination marketing to ensure tourism businesses and stakeholders. Insufficient or poor that the destination position, brand, and value offering are marketing can be detrimental to a destination’s success communicated consistently. (Box 10). Research has shown that public sector support 54 Generation Z refers to the generation of people born in the late 1990s and early 2000s. 55 Destination positioning relies on all elements of marketing, including prices, product (the entire tourism experience), distribution channels,  and promotional activities such as branding and advertising. 56 PNG arrivals in the figure include all arrivals, with only 19 percent being holiday visitors. Thus, PNG would be considered a low-volume destination.  42 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Figure 15. Pacific Island Country Tourism Positioning: International Arrivals versus Spend per Arrival 2019 Source:  FSM Statistics 2022; PNG TPA 2022; PVA 2021; Solomon Islands NSO 2022; SPTO 2020; STA 2022; Tonga Statistics Department 2022; UNWTO 2022b. for marketing can address gaps in information asymmetry, firms that could lead marketing on their own. In these coordination, and concentration of market power that cases, marketing may benefit only the lead firms and risks tourism market failures have caused. Coordination failures excluding other geographies, experiences, and services not are generated by a fragmented industry that benefits widely aligned with the lead firm’s goals. Public marketing also from destination-level marketing and contributes to overall decreases transaction costs, reduces firm-level risk, and economic impact but includes firms that may not consider supports growth-stimulating effects across the destination themselves as part of the tourism industry and therefore (Dwyer 1992; Smeral 2006). Given the predominance of would not be likely to contribute to private sector-led MSMEs in the tourism supply in the Pacific, transaction marketing (e.g., supermarkets, garment manufacturing). costs for coordinated marketing would be high, with Concentration of market power is also an important limited financial resources to support destination marketing constraint in the Pacific, where there are few large, anchor efforts. Box 10. Colorado Tourism: What Happens When Public Funding for Marketing Is Cut? The tourism literature has analyzed several examples of the consequences of cutting government tourism marketing and promotion budgets. The most often cited and vivid case is that of the state of Colorado in the United States. In 1993, Colorado cut all of the states’ USD 12 million tourism promotion budget. By 1997, Colorado’s share of the U.S. domestic leisure market had dropped by 30 percent, an estimated USD 2 billion in annual visitor spending was being forfeited, USD 134 million in tax receipts had been lost, and the state’s rank in summer resort destination category dropped from first to seventeenth place. The state reinstated the Colorado Tourism Office the early 2000s and increased the budget to USD 19 million in 2006, noting a return on investment of 10 to 1 (Siegel 2021; U.S. Travel Association 2017). Although product development is largely a private statistics and data. NTOs have a role to play in private sector sector activity, public sector leadership in addressing consultations and coordination to inform strategies, sharing core market failures is required to ensure that tourism market intelligence to inform product development, and products and services are available to attract and strategically using incentives to align private investment in cater to high-value markets. Information asymmetry product development with policy goals. Equally important is a critical market failure for successful tourism product is the government’s role in managing, maintaining, and development, especially because governments and NTOs developing the public goods on which tourism is based, set the policy and strategy agenda that informs accessible such as natural or protected areas, cultural heritage, markets (e.g., through immigration and aviation policy and transportation, and essential service infrastructure. In these destination marketing) and collect and analyze tourism cases, the assets are either of national importance or are THE FUTURE OF PACIFIC TOURISM MARCH 2023 43 non-excludable, thus making private ownership impractical influence the market positioning of destinations. (Blake 2003). However, established concession, Public Despite strategies emphasizing value, NTOs in PICs have Private Partnerships (PPP) and joint venture frameworks often focused marketing efforts and key performance that adequately incentivize private sector management indicators on increasing arrivals and visitor spend through of public goods usually result in higher quality and more mass distribution channels and provided incentives for mass financial sustainable tourism products than publicly tourism investments. Such volume-led (rather than value- managed assets. led) strategies can weaken brand positioning in target markets and create a disconnect with the product offering. Destination positioning among price-conscious consumers 1.4. Potential Benefits of would be reinforced as the country became known as a Targeting High-Value Markets budget destination. Moreover, high-volume tourism can degrade assets, making it difficult to offer high-quality for PICs experiences for higher-spending travelers. Over time, it will Could value-led tourism growth provide equal or become increasingly difficult to transition to value-driven greater economic benefits than a volume-led model markets and increase tourism yield. while minimizing negative environmental and social Welcoming fewer, higher-value tourists could yield higher externalities? As discussed in the following section, focusing total revenue in PICs over time, with fewer negative marketing and product development efforts to target externalities from tourism. A simple numerical simulation higher-value tourism markets is a broadly shared objective was developed to illustrate the potential impacts of value- of tourism policy makers and businesses in PICs, but led and volume-led strategies in the medium to long term, evidence of potential tradeoffs compared with a volume- with results suggesting that Fiji, PNG, and Vanuatu could led strategy focusing on increasing arrivals is limited. To welcome fewer tourists while generating higher aggregate inform policy debates on this topic, this section discusses tourism spend (Box 11). Although the economic gains could the potential interplay of value and volume in Pacific be significant, attracting higher-value markets would also tourism.57 It sets the scene for analysis of the constraints align with other policy objectives of PIC governments, and opportunities for PICs to expand their presence in notably regarding minimizing tourism growth’s impacts high-value market segments (Chapter 2) and related policy on the local environment and communities, which is not implications (Chapter 3). modeled here. Such a strategy would require commitment Focus and success metrics of national tourism from industry and government and willingness to sacrifice development policies that governments adopt can some arrivals in the short term. Box 11. Simulation of High-Value and High-Volume Tourism Growth Trajectories in Pacific Island Countries (PICs) This simulation assesses the impacts of targeted marketing approaches on overall revenue in a country over the medium to long term. It assumes that, as prices in the destination increase over time, the overall number of visitor arrivals will decrease slightly and that, as a destination focuses marketing and tourism supply efforts on value-led market segments, the proportion of high-value arrivals will increase and the proportion of lower-value arrivals will decrease.a It estimates revenue impacts over 30 years by summing expenditures of all high-value and low-value arrivals in the destination using different parameter values for price variations and price elasticities to test the sensitivity of the results. The simulation was applied to three countries based on data availability: Fiji (Type 1), Vanuatu (Type 2), and Papua New Guinea (Type 4). Information was collected on key variables such as growth rate forecasts, current composition of total arrivals into higher-value and lower-value segments, and spend per higher- and lower-value arrival per trip. Value-led marketing could result in fewer tourist arrivals. Table 4 shows total estimated visitor arrivals in 2042 at each combination of price increase and price elasticity for the value-led scenario. Unsurprisingly, for all countries, the simulation finds the largest arrival numbers when price increase and price elasticity are at their minimum. Conversely, the largest growth in high-value markets results in the fewest arrivals. These results alone are not a sufficient indication of the outcome of value-led marketing strategies, because it is possible for fewer arrivals to produce higher overall revenues. 57 As previously argued, this is not to say that PICs should not aim to maintain or even increase arrivals, particularly in less-developed destinations.  The two strategies can be pursued in parallel, with different emphasis depending on each country’s context. 44 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Table 4. International Visitor Arrivals by 2042 Under Value-Led Marketing Scenario Price increase Country Price elasticity Lower bound (5%) Mid-point (10%) Upper bound (15%) Lower bound (0.36%) 1,404,150 1,379,067 1,354,411 Fiji Mid-point (0.55%) 1,390,858 1,353,054 1,316,227 Upper bound (1.24%) 1,343,588 1,262,450 1,185,980 Lower bound (0.36%) 286,771 281,648 276,613 Vanuatu Mid-point (0.55%) 284,056 276,335 268,814 Upper bound (1.24%) 274,402 257,831 242,214 Lower bound (0.36%) 303,329 297,911 292,585 Papua New Guinea Mid-point (0.55%) 300,458 292,291 284,336 Upper bound (1.24%) 290,246 272,719 256,199 Note:  bolded numbers represent the highest number of overall arrivals for each country, when price increase and price elasticity are at their minimum. Despite decreasing arrivals, shifting to higher-value markets could increase revenue from tourism. The volume-led scenario refers to a situation in which the destination does not implement a value-led product development and marketing strategy but continues as usual with mass-market, high-volume tourism. In this case, the price does not increase, the number of arrivals continues to grow at a rate similar to pre-COVID-19 rates, and spending per arrival remains the same. For all three countries, the simulation finds that total tourism revenue in the value-led case (i.e., growing share of high value tourists) would be higher than in the volume-led case (Table 5). As expected, the higher the growth in high value markets as a portion of all arrivals, the more tourism revenue is earned by the country. However, even lower-bound and mid-range estimates for this growth also saw revenue in the value-led scenario exceed that of the volume-led scenario by over 5 percent. In Fiji, the mid-range and upper bracket market proportions yielded revenues 21 percent and 33 percent higher than that of the volume- led scenario, respectively. Table 5. Total Tourism Revenue in 2042 Total tourism revenue (USD milllion) according to growth scenario for high-value arrivals Country Marketing strategy Lower bound Mid-range Upper bound Value led 2,174.6 2,425.1 2,675.6 Fiji Volume led 2,005.9 Value led 572.7 580.2 587.7 Vanuatu Volume led 544.7 Value led 738.0 742.0 752.0 Papua New Guinea Volume led 701.7 Note:  With mid-point price elasticity and price increase. Cells shaded orange indicate revenue more than 5 percent higher than the price-led scenario; cells shaded green indicate revenue more than 20 percent higher than the volume-led scenario. a.  For details about the simulation, refer to Annex B.1. The potential of high-value strategies differs for value-led supply and marketing. This opportunity would be countries of the different destination types used in this similar for countries such as Samoa and Tonga, which could report. For countries with a larger share of high-value focus marketing, supply development, and air connectivity tourists, such as PNG and Vanuatu, the challenge is less on high-value markets to increase long-term revenues. to increase this share than to develop the supply diversity For Type 3 countries with lower market penetration in high- and quality to boost overall spend per high-value arrival. and low-value markets, developing supply and marketing For countries with a higher proportion of low-value tourists, that shape a strong, value-led brand reputation will be such as Fiji, significant benefits could be expected from important, although increasing lower-value arrivals can also increasing the share of high-value tourists by investing in be a sensible objective in the short term. THE FUTURE OF PACIFIC TOURISM MARCH 2023 45 Image: Samoa Credit: Elliot Wright 46 THE FUTURE OF PACIFIC TOURISM MARCH 2023 2. Obstacles to Expanding Pacific Destinations’ Presence in High-Value Markets This chapter focuses on factors undermining PICs’ of continued support for MSME development in the sector. capacity to attract more tourists from high-value Equally important to high-value tourism is availability markets, including uncoordinated tourism governance, of a workforce possessing the hard and soft skills necessary policy and management; a lack of diverse tourism offerings to provide quality services. The third section therefore and a weak ecosystem of tourism service providers, discusses how current skills constraints on Pacific tourism including MSMEs; limited availability of skills needed in are affecting growth of high-value tourism. In addition high-value markets; limited adoption of resource-efficient, to supporting the industry’s competitiveness, supporting environmentally friendly practices by tourism businesses; tourism governance, MSMEs, and workers would broaden and vulnerability of tourism businesses to natural disasters. tourism benefits in PICs and increase sector inclusivity. The following sections summarize the nature of each of these factors and the extent to which COVID-19 and climate The fourth and fifth sections assess the benefits of change affect them and provide a quantitative analysis of investing in greener, more-resilient tourism. High-value potential benefits of adopting targeted measures to address tourism markets put a premium on sustainability, with them. These simulations are only simple illustrations meant tourists willing to pay more for sustainability, including at not as precise diagnostics to guide policy but as tools to their accommodations. For PICs to attract these higher- explore these factors and stimulate policy dialogue, paving value, more-discerning markets, hotels, and resorts must the way for more in-depth analysis at the country or identify opportunities for investing in resource efficiency in destination level.58 Based on research and consultations with parallel with broader environmental preservation efforts. tourism stakeholders in PICs, these factors were selected as The fourth section investigates the potential return on such particularly relevant for the objective of targeting high-value investments. Similarly, their vulnerability to external shocks markets. As mentioned in the introduction to this report, from the pandemic and from natural disasters, which are they do not cover several structural challenges undermining expected to increase in severity with climate change, tourism development in the Pacific (e.g., connectivity, land undermines PICs’ capacity to attract and cater to high-value rights, security, health, preservation of ecosystems), which foreign tourists. This highlights the need for more-resilient are analyzed elsewhere or require country-specific analysis businesses and infrastructure and is important not just from outside the scope of this regional report. an economic standpoint, but also from a tourist safety and The first three sections examine key elements of a high- security perspective. This last section therefore estimates value tourism industry: a coordinated industry with returns on investing in more-resilient tourism infrastructure. strong governance, a broad supply of local MSMEs, and a skilled workforce. Given the cross-cutting nature of 2.1 Uncoordinated Tourism the tourism sector, coordinated tourism policy setting and strong implementation is required, especially to enact the Development Efforts reforms and initiate the programs required to attract high- All PIC governments have adopted tourism develop- value markets. The first section thus discusses existing ment strategies to capitalize on the sector’s recent challenges within tourism governance and management. growth and address its vulnerabilities, with a focus on Global evidence shows that the range of activities and inclusiveness and increasing the value of tourism. As of services available locally determine tourist satisfaction mid-2022, nine of the 11 PICs had a medium- to long-term to a significant extent, which in turn determines tourist tourism policy or plan that expresses goals and conditions expenditures (Alegre, Cladera, and Sard 2011). Since Pacific for sector development.59 Six of those plans were released tourism industries largely consist of MSMEs, a robust, in 2021/22 and take COVID-19’s impacts into account, with healthy MSME ecosystem is needed to provide such services. Fiji’s new national sustainable tourism framework under The second section therefore discusses the business development.60 The extent of evidence-based planning landscape in PICs’ tourism sectors. It estimates the potential and detail varies across the documents. Most plans have impacts of closures of small enterprises on satisfaction common, high-level goals focused on increasing the rates and tourism revenue, highlighting the importance economic contribution of tourism and the revenues and 58 Further information on the methodologies used for the scenarios can be found in Annex B.  59  ee Annex C for an overview. This excludes short-term, tactical planning (related, for example, to marketing or reopening borders) that changes S frequently. 60  iribati, Palau, PNG, RMI, Solomon Islands, Samoa, Tonga, Tuvalu, and Vanuatu have current medium- to long-term tourism development policies K or plans. THE FUTURE OF PACIFIC TOURISM MARCH 2023 47 employment that it generates while ensuring more- destinations only in the years just before COVID-19.61 inclusive growth. Arrivals, yield (revenue per arrival), and These themes have also become more common in the contribution to GDP are the most frequently used metrics. new tourism strategies that countries with less-developed The various national strategies also share several cross- tourism markets and destinations, such as Kiribati, RMI, and cutting priorities, including environmental sustainability Tuvalu, have developed since the crisis began. Environmental and resilience. Although this last theme rarely appeared in and social sustainability and increasing tourism yield and previous tourism development strategies, it dominates the contributions to GDP are now featured as high-level latest ones. However, the documents usually contain little goals in most PIC tourism strategies. The motivations to specific analysis of the potential costs and benefits of green change from a volume-led to a value-led model support and resilient investments. national-level policy objectives for increasing environmental Many PICs have struggled to make concrete progress sustainability and creating a more-productive and -inclusive toward the visions set in their tourism strategies. tourism industry. However, most tourism strategies still set Although they have been discussed throughout the targets for increases in visitor arrivals, rather than more- Pacific tourism community for the past decade or more, value-based metrics. Moreover, the data suggest that most sustainability, inclusiveness, and high-value tourism PICs have made little or no progress on increasing tourism emerged as policy themes in more-advanced PIC expenditures per arrival over the last decade (Figure 16). Figure 16. In-Country Receipts According to Tourist Arrivals Source:  FSM Statistics 2022; PNG TPA 2022; PVA 2021; Solomon Islands NSO 2022; SPTO 2020; STA 2022; Tonga Statistics Department 2022; UNWTO 2022b. Note: Computed as travel spending divided by international overnight arrivals. Marshall Islands data used only from 2017 Pacific Tourism Organisation data, because UNWTO data are inconsistent. 61  he government of Palau introduced a Responsible Sustainable Tourism Policy Framework as early as 2016 that emphasizes avoiding mass tourism T and focuses on developing tourism products that attract low-volume, high-yield tourism; maintain a sustainable carrying capacity; and are community driven. Vanuatu followed with a dedicated Sustainable Tourism Policy in 2019, and in 2021, the Pacific Tourism Organisation launched the regional Pacific Sustainable Tourism Framework, marking a regional commitment to sustainable tourism development. 48 THE FUTURE OF PACIFIC TOURISM MARCH 2023 PICs have varying tourism governance, development, USD 300,000. Product and skill development to improve and marketing structures, with government funding for the quality of visitor experiences is high on the agenda tourism often falling short of planned investment due to for all countries, although budgets for interventions in competing budget priorities. Across PICs, tourism policy, these areas are limited, and interventions are not always research, and development are primarily the responsibility effectively designed. There has been little to no effort to of ministries, and marketing is the responsibility of evaluate Pacific NTO performance or understand returns on destination marketing organizations.62 FSM’s and RMI’s investment in tourism development or marketing. tourism management is fully under a government office Overly ambitious strategies, regulatory purview or department63 and only Kiribati, PNG, and Samoa have integrated tourism authorities that oversee all functions.64 mismatch, lack of institutional capacity, poor program Such dedicated agencies provide integrated solutions design, and budget shortfalls have prevented PICs from to holistic destination development by linking together delivering on their visions for more-sustainable, high- policy, statistics, product development, and marketing. value tourism. Implementation of tourism strategies In all countries, these structures are considered NTOs, as through concrete reforms and investments has been they provide national leadership in tourism management difficult. Needed regulatory reforms are rarely discussed and marketing (Box 12) (UNWTO 2007). However, most explicitly or defined according to best practice, and when are poorly networked throughout the government, with they are, mismatches in regulatory purview often prevent little ability to influence policy. This can be driven by limited effective intervention.65 For example, tourism ministries financial and human resources. Most NTOs receive funding often do not have regulatory purview over zoning, licensing, through the annual government budget or a dedicated immigration, marine regulations (e.g., those related to bed tax. A 2018 assessment of NTO budgets by the Pacific mooring), and infrastructure,66 all of which can significantly Tourism Organisation found that most money was spent affect tourism’s competitiveness. Although some countries on marketing and promotion rather than planning, have adopted a whole-of-government approach in principle, research, or product development. Tourism Fiji’s budget it is often not put into practice. In other countries, tourism was exceptionally high (USD 21.3 million, about 1 percent ministries are not involved in critical decision making on of Fiji’s overall budget). Other PICs with developed tourism factors that affect the sector. Difficulty developing an sectors had NTO budgets between USD 2 million and integrated policy framework to implement sustainable, USD 4.6 million, whereas NTO budgets for PICs without inclusive tourism development strategies is not unique to substantial visitor arrivals were between USD 150,000 and the Pacific (Box 13). Box 12. Models for Destination Management Destination management can be defined as the “coordinated management of all the elements that make up a destination (attractions, amenities, accessibility, human resources, image, and price) … [Its role is] to lead and coordinate activities under a coherent strategy or plan, serving the interests of all stakeholders” (UNWTO 2007 10). Effective destination management ensures a balance between maximizing the tourism experience for visitors and maximizing tourism value for the local economy, businesses, and population. Different public and private sector organizations are typically involved in destination management. National governments and ministries of tourism set policy direction and prioritization, which departments of tourism and other regulatory bodies then implement. However, overall destination management also requires active private sector engagement. Therefore, many destinations have a national tourism authority or office or a destination management or marketing organization to implement the operational elements of national tourism strategies. A board of directors with public and private sector membership usually oversees these organizations, which receive direction and funding from the national government and have an execution-oriented role and some autonomy. In some destinations, destination management organizations can be run as private sector associations with more- limited involvement from the government. One key distinction between the two models is that national tourism authorities function at the national level, whereas destination management organizations can be subnational and focused on a specific destination within the country. Source: UNWTO 2007. 62  esignated marketing agencies include Tourism Fiji, Vanuatu Tourism Office, Palau Visitors Authority, Tonga Tourism Authority, and Tourism D Solomons. In FSM, each state promotes its islands via its tourism bureau. 63 ntegrated tourism authorities include Samoa Tourism Authority, Tourism Authority of Kiribati, and PNG Tourism Promotion Authority. In RMI, the I Office of Commerce, Industry, and Tourism manages destination promotion. In Tuvalu, the Ministry for Foreign Affairs, Trade, Tourism, Environment, and Labour manages tourism promotion. 64 S  ince 2021, the United Nations Economic and Social Commission for Asia and the Pacific–funded ‘Every Policy is Connected’ tool has been trialed with the Samoa Tourism Authority to ensure that tourism policies and indicators are integrated with national and sector frameworks. This exercise has highlighted the importance and complexity of cross-sectoral planning. 65  n terms of sustainability goals, many strategies can be idealistic, contain contradictory priorities, and lack measurement systems. This is a challenge I despite efforts to define tourism sustainability indicators and collect and process data. 66  ccountability for investment in public infrastructure lies outside tourism ministries, so most plans only allude to what is needed from other agencies A (rather than making a commitment). THE FUTURE OF PACIFIC TOURISM MARCH 2023 49 Box 13. Global Challenges in Sustainable Tourism Policy Implementation A recent review of the literature on sustainable tourism policies around the world found that tourism ministries often face obstacles to implementing such policies given the complexity of the sector, interaction with other policies, and need to align with national governance, which may not always promote sustainability. This analysis determined that, even in developed economy destinations, state-level interventions can limit the effectiveness of sustainability measures in tourism policies. This results in a “gap between policy development and implementation . . .[and] an inconsistency between the priorities of officials and the goals of sustainable tourism policies in national tourism strategies” (Guo, Jiang, and Li 2019 9). Sustainable tourism policies often include conflicting goals, even when policies and regulatory frameworks support sustainability at the highest level. In the Pacific, the research found that “legal provisions are ambiguous, many organizational responsibilities are repeated, and the definition of responsibility is not clear” (Guo, Jiang, and Li 2019 9). The literature on the topic concludes that shifting the focus from short-term economic growth to long-term sustainability will require stronger political will, empowerment of tourism leaders, and implementation of more-effective institutional arrangements that define responsibilities of and place accountability on government ministries and agencies at all levels. Source:  Guo, Jiang, and Li 2019. 2.2 MSMEs’ Fragility Threatens tour operators, airlines, cruise, and accommodation providers), which play a key role in bringing in tourists, Tourism Competitiveness and local providers of goods and services (e.g., food and and Diversity beverage, activities and entertainment, local transportation), which contribute to the quality and diversity of tourists’ Supply in the tourism sector consists of a wide range experiences. In the Pacific, most firms in both categories of products and services. The available data suggests that, would fit typical, global definitions of MSMEs, mostly prior to COVID-19, there was a relatively large number of because of the small market sizes,67 although lead firms tourism businesses in the PICs, unsurprisingly concentrated tend to be larger. The term “MSMEs” is used throughout this in the largest destinations (Table 6). At the broadest level, report to refer to small- and medium-sized local providers tourism businesses include lead firms (e.g., travel agents, of tourism services. Table 6. Tour Operators and Product and Accommodation Providers in Pacific Island Countries Pre-COVID in-bound flights Accommodation providers Country Tour operators Hotels (of which Country Flights/week international or Rooms connections regional brands) Fiji 160 19 142 423 (31) 12,888 Samoa 36 6 29 150 (3) 2,747 Vanuatu 200 6 38 473 (3) 3,700 Palau 43 6 18 118 (1) 2,409 Tonga 60 4 19 156 (1) 1,300 Federated States of 50 3 13 30 500 Micronesia Kiribati 6 6 10 47 500 Republic of the 20 4 11 12 281 Marshall Islands Tuvalu 0 2 4 10 60 Papua New Guinea 102 8 64 501 (3) 6,195 Solomon Islands 20 6 19 181 1,991 Regional total 697 70 366 2,101 32,571 Sources:  PSDI 2021b; STPO 2020; Schedules Analyzer (unpublished database). OAG, Luton, England (accessed Jun 2022), https://analytics.oag.com/analyser-client/home; World Development Indicators (database). World Bank, Washington, DC (accessed November 2022), https://databank.worldbank.org/source/world-development-indicators; various other sources. 67 M  ost of the region’s businesses are thought to be MSMEs (using a threshold of >100 employees for large firms), although lack of granular data makes it difficult to analyze the size and growth dynamics of tourism businesses in PICs. Only five PICs have an official definition of “micro,” “small,” “medium,” or “large” businesses (Fiji, PNG, Samoa, Solomon Islands, Vanuatu), all of which differ. Beyond such national definitions, stakeholders often refer to business size in a way that is more relevant to the local tourism industry (e.g., a hotel could be considered large (relative to others), although it is formally within the bounds of the official small and medium-sized enterprise definition. 50 THE FUTURE OF PACIFIC TOURISM MARCH 2023 The entry of new MSMEs, which made these in other regions and that 54 percent of them did not offer destinations more attractive, was the major source card payment at the time of booking (Kovena 2022). The of the growing diversity in tourism supply across cost, quality, and availability of financial services have been PICs before the pandemic. Research has shown that (i) among the main constraints that MSMEs in the Pacific have independent (non-chain) businesses enhance a destination’s reported, with many failing to obtain loans from financial appeal and competitiveness by increasing visitor satisfaction institutions because of inadequate collateral or financial (Liang 2021), (ii) tourists who are more satisfied with the records and limited capacity to prepare bankable proposals.69 diversity of tourist facilities and attractions spend more Financial system constraints include small markets with in a destination than those who are less satisfied with limited competition, lack of financial market infrastructure, these factors (Jurdana and Frleta 2016),68 and (iii) tourists and ongoing challenges in meeting anti-money laundering/ motivated by sun-and-sand basics are less likely to be in combating the financing of terrorism requirements. a high-spending segment than those motivated by good Development banks that have attempted interventions tourist facilities and cultural environments (Alegre, Cladera, in some PICs with financing products tailored to MSMEs’ and Sard 2011). World Bank research also found that diversity needs and capacities have had varying success. Beyond of attractions and activities available in a destination was financing, lack of managerial and specialized tourism skills a key driver of satisfaction and travel intention, especially has undermined the growth of tourism MSMEs in PICs (see in higher-spending market segments (World Bank 2022b). section 2.3). While large firms, such as hotels, act as anchor investments in destinations, providing employment and marketing The COVID-19 pandemic disproportionally affected inputs, most tourism activities are provided by small tourism MSMEs. Although firms suffered across sectors, local firms, which create diverse and authentic tourism the sudden, prolonged collapse in arrivals hurt tourism experiences that add value to destinations and spread the businesses most. Furthermore, survey evidence in Fiji economic benefit of tourism throughout the economy. shows that, although large tourism businesses lost twice MSMEs are typically more flexible and able to adapt to as much revenue as large businesses in other sectors, market trends and opportunities and more able to provide tourism MSMEs lost seven times as much as those in other the personalized service that high-value market segments sectors (IFC 2020a).70 Despite relief measures that several desire (Khokhobaia 2019). Furthermore, MSMEs are usually PIC governments adopted (e.g., tax relief, wage and other locally owned, use less foreign labor, and are more likely to subsidies, soft loans, loan repayment deferrals), the crisis be women-led (particularly micro and small enterprises), forced many tourism businesses to close or hibernate, with generating more direct economic and social impacts for small providers (e.g., niche visitor experience, local transport, countries. Some evidence suggests that MSMEs may also remote accommodations) experiencing higher closure rates have lower negative environmental and social externalities than larger providers.71 Although detailed data on business and be more aligned with local cultural norms (Aslan 2019). reopening rates in different countries are lacking, a regional Even before the pandemic, various supply-side survey of exporting firms suggested that, by the first constraints hampered small providers’ capacity to quarter of 2022, 6 percent of tourism firms had permanently develop new tourism products and grow. This includes closed, compared with 1 percent in manufacturing (PTI industry-specific challenges as well as general constraints 2022).72 Many firms that remained open or hibernated faced that undermine private sector development across sectors severe liquidity problems because they still had payment in PICs, such as cumbersome business regulations, and poor obligations (e.g. debt service, utilities, retained staff) and hard and soft infrastructure, including infrastructure related ongoing maintenance costs to avoid assets falling into even to digital payment systems (UNCDF 2021). A 2022 survey of costlier disrepair.73 With limited alternatives, there are many more than 130 hotels in the Pacific found that they paid 211 accounts of tourism MSMEs having had to sell off assets percent more for international transactions than their peers (e.g., vehicles, boats, furniture) to pay debts and survive. 68 B  ased on data from Croatia, this study finds that daily tourist expenditures per person are positively correlated with satisfaction with the diversity of tourism facilities, which encompasses sports facilities, entertainment opportunities, cultural events, facilities for children, excursion offerings, and shopping opportunities. This dimension is the only one of four satisfaction dimensions considered found to be statistically significant. 69  n a recent survey of exporting firms, 74 percent of respondents in tourism said obtaining financing was difficult, compared with 57 percent of those I in manufacturing (PTI 2022). The COVID-19 crisis has increased financial institutions’ perception of tourism as a risky sector. 70 Findings from an April 2020 survey that received responses from 3,596 businesses, including 620 in tourism. 71  ith the exception of a few large hotels and resorts that used the time to close for renovation. Information provided through consultations with W tourism leaders in Fiji, FSM, Kiribati, Palau, Samoa, Solomon Islands, Tonga, and Vanuatu in the first half of 2022. 72 B  ased on an online survey of 200 firms conducted in February-April 2022 in 14 PICs. In Fiji, the share of accommodation providers resuming operations was around 60 percent when borders first reopened in December 2021 and had reached about 90 percent by June 2022. Industry leaders were confident that most accommodations will be operating by the end of 2022. 73  urveys conducted early in the crisis in countries such as Fiji and Samoa confirmed the extent of liquidity shortages and risk of default among tourism S firms (IFC 2020a; Samoa Chamber of Commerce and Industry 2020). Although reports of tourism sector financial difficulties escalated across PICs in 2021 and 2022, there have been no comparable surveys since 2021. THE FUTURE OF PACIFIC TOURISM MARCH 2023 51 The financial position of many tourism MSMEs could financial footing and increasing their investment capacity remain fragile even after reopening. Although the return could harm the quality of offerings in Pacific destinations of tourists was long awaited, firms have generally faced over time. Moreover, although use of digital technologies additional costs to resume operations before earning has been an important driver of growth and productivity revenue (e.g., employ and [re]train staff, get assets in for the tourism industry globally and key to enhancing working condition, buy stock and consumables, renew resilience during the pandemic, the depth of digitization is licenses). This is especially true of small and medium-sized limited in Pacific tourism businesses despite recent progress enterprises, because large enterprises were better placed in terms of Internet connectivity in most PICs.75 Beyond to access funds upon reopening, and micro enterprises connectivity, common constraints across the region include typically have lower operating costs. Some businesses could limited digital literacy of firms and workers and weakness of face liquidity challenges for months or even years after the digital payment infrastructure. reopening, depending on the pace at which revenue returns and firms’ capacity to service outstanding debt and manage To maintain and increase tourism expenditures per cash flow as expenses resume. In turn, this could affect the arrival, it is essential that a diversity of tourism facilities quality of the experience provided to tourists and ultimately and services be provided. Numerical simulations suggest destinations’ reputation. Tourism stakeholders consulted in that seemingly small decreases in visitor satisfaction can several PICs for this study reported that financially strained lead to significant losses in tourism revenue over time, with firms were underinvesting in visitor services, leading to local MSMEs losing the most and therefore reducing the lower quality than what they were able to offer before sector’s inclusiveness (Box 14). Rebuilding, increasing, and COVID.74 diversifying, the services and facilities that MSMEs offered The ability of Pacific MSMEs to recover fully, invest in before the pandemic will be essential to maintaining high new and better services, and adapt to structural industry visitor satisfaction levels and accessing higher-value market trends, including digitization, will be key to competing in segments. To do so, governments must foster a positive higher-value markets. Difficulties of small and medium- enabling environment for MSMEs and support product sized local tourism service providers in regaining their development to add value to the tourism sector. Box 14. Potential Impacts of Declining Visitor Satisfaction on Expenditures Availability and quality of a broad range of tourism facilities, services, and attractions partly drives higher visitor satisfaction, which in turn results in higher spending by tourists. Although other broader country-level factors (e.g., state of infrastructure) also influence visitor satisfaction, a diverse, authentic experience is particularly important for high-value market segments. A simple simulation was prepared to illustrate the potential negative impacts that a gradual loss in the diversity and quality of tourism micro, small, and medium-sized enterprise (MSME) offerings in Pacific Island countries (PICs) could have on visitor expenditures by undermining visitor satisfaction. Using conservative annual declines with lower and upper bounds (0.3- to 1.1-percentage-point decrease per year) over 10 years results in sizeable decreases in tourism expenditures over time. Specifically, an annual decrease of 1.1 percentage points in visitor satisfaction could result in 0.5 percent lower local tourist expenditures for all countries from the main short-haul source market over 10 years (USD 10.5 million in Fiji, USD 2.4 million in Samoa, USD 0.3 million in Solomon Islands, USD 0.03 million in Federated States of Micronesia (FSM)), than under a business-as-usual scenario, without considering inflation. These are large numbers considering that they reflect only in-country spending from a single market in the PICs studied, which in 2019 represented 35 percent of total spending in Fiji, 49 percent in Samoa, 5 percent in Yap (FSM) (2015-18), and 39 percent in Solomon Islands. These estimates of potential losses in tourism revenue caused by declining satisfaction only are conservative. This simulation is based on results of an empirical study that assessed satisfaction with diversity of tourism facilities and spending at a moment in time. Another factor that could reduce tourism revenues if the quality and diversity of MSME service offerings declined is loss of visitors over time because of lack of tourist services, excursion offerings, and cultural diversity options, leading to negative reviews and generating poor word-of-mouth marketing. The decrease in diversity of facilities might also shorten length of stay, which would further limit overall expenditures and the flow of tourism spending into the local economy, because spending would become centralized within the accommodations. a. For details about the methodology, see Annex B.2. 74  lobally, the pandemic delayed tourism investment pipelines by an estimated one to two years, with firms restarting investment plans in late 2021 G (World Bank 2022a). 75  n (unpublished) business survey that the World Bank conducted on digital adoption in seven PICs (Fiji, Kiribati, PNG, Samoa, Solomon Islands, Tonga, A Vanuatu) between March and September 2020, collecting responses from 656 firms across sectors, revealed that, although most firms had access to the Internet and that approximately 80 percent used social media for business purposes, few had online sales, and fewer still were able to conduct end-to-end digital transactions including payment. 52 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Image: Samoa THE FUTURE OF PACIFIC TOURISM MARCH 2023 53 2.3 Inadequate Skills Inhibit other high-demand skills), was more problematic. Table 7 categorizes some examples for the degree of skill investment Tourism Value Creation in three levels: high, medium, and low.76 The rate of local Higher-value segments require more-specialized employment in high skilled roles has reportedly increased in skills that are often in short supply across the Pacific. recent years due to training efforts and local employment Employers in tourism generally reported few problems policies, but there are still gaps in labor supply. The industry in recruiting low-skilled, generalist workers before the has thus relied on foreign labor to fill its immediate needs, pandemic (e.g., housekeepers, waitstaff, drivers). However, although there are also challenges associated with this recruiting for positions requiring intensive training or highly strategy. These challenges include higher costs, higher rates specialized roles (e.g., SCUBA diving instructors, chefs, spa of turnovers based on two-to-three-year contracts and attendants) or highly-skilled managers for hotels, resorts, expatriate workers’ sometimes limited understanding of the and tour operators (particularly those with digital or Pacific tourism sector and cultures. Table 7. Types of Positions and Skill Requirements in the Pacific Tourism Sector Skill level Position Hard skills required Soft skills required Housekeeper, Fitness, dexterity groundskeeper, busser Punctuality, diligence, Low Waitstaff, driver, small boat teamwork Language facility, fitness, dexterity captain Receptionist, flight Language mastery, computer facility attendant, travel agent Problem solving, conflict Medium Language mastery, resolution, accountability, Concierge, tour guide destination knowledge communication Kitchen staff, chef assistant Culinary skills Management Industry experience Pilot; SCUBA instructor, Leadership, problem solving, High large boat captain Industry certifications, communication, human experience resource management Chef (sushi, pastry, executive), sommelier Several structural factors that existed before COVID-19 developed across the region, more students enrolled in can explain local skills shortages affecting Pacific tourism and hospitality management courses than in TVET tourism businesses, including restrictions on recruiting programs, with reports that they often graduated without expatriates, lack of basic and advanced education, and acquiring the practical skills that employers required or physical and occupational migration. Visa regulations failed to meet industry standards. Finally, short-term labor in some PICs are designed to encourage tourism firms to mobility programs with Australia and New Zealand may recruit locally, for instance high visa costs and restrictions have exacerbated skills shortages. Industry stakeholders in on lengths of contracts for foreign workers. This imposes Fiji noted that workers do not always return to their jobs, significant costs on businesses needing to recruit expatriate or do so with fewer skills than before, notably when they labor to make up for local unavailability of needed skills went abroad to work in different, less-qualified activities and may also constrain firms in other sectors.77 Local (e.g., fruit picking). shortages of highly skilled workers are also a function of COVID-19 has heightened skills constraints in the inadequate primary and secondary education.78 Technical Pacific tourism sector. At the onset of the pandemic, and Vocational Education and Training (TVET) in PICs and a large portion of tourism workers in the PICs left the neighboring countries is often cost prohibitive, particularly sector, many of whom returned to villages to work in the for more-reputable programs with a good track record of agricultural sector. Anecdotal evidence indicates that producing skills that industry needs.79 Lack of industry input many have been reluctant to return to tourism, because into curricula and absence of rigorous evaluations for local they perceive the sector to be vulnerable to downturns. training programs in most PICs also raise questions about Since the reopening of international borders, stakeholders the quality of tourism-specific TVET courses, a challenge interviewed in Fiji, Samoa, and Vanuatu explained that this not limited to the Pacific. Moreover, as higher education has created significant challenges in recruiting qualified 76  diversity of skills is required for delivery of tourism services, some of which are highly specialized (e.g., SCUBA diving instructors), whereas others A are more generalist (e.g. housekeepers, managers), although those generalist roles are not necessarily low skill; some generalist positions require high levels of investment in training to become proficient. 77  For example, visa limits on contract length result in turnover of contracted expatriates that is detrimental to product quality and productivity. 78  ICs rank poorly on the World Bank’s Human Capital Index, and workers in PICs are estimated to be between 42 and 59 percent as productive as they P would have been had they received satisfactory education and health services during childhood. 79 M  ajor providers include the College of Business, Hospitality, and Tourism Studies at the Fiji National University and Blue Mountains International Hotel Management School in Australia. 54 THE FUTURE OF PACIFIC TOURISM MARCH 2023 local workers for skilled and unskilled positions in tourism.80 violence (including sexual harassment),83 inequitable social For instance, the Fiji National Provident Fund, which owns norms limiting employment choices (e.g. childcare duties), and operates several hotels in the country, reported that, and barriers to entrepreneurship (e.g., access to finance and as of mid-2022, it had been unable to fill approximately information, business and financial literacy).84 The economic 30 percent of available positions with qualified, experienced impacts of the pandemic exposed and were exacerbated by workers. Major employers, such as Marriott, report that these entrenched gender inequalities, leaving women and recent recruitment drives have attracted an overwhelming the industry worse off. number of applicants from various backgrounds but few with experience in tourism. 2.4 Limited Progress Skills shortages limit the opportunity to develop competitive high-value tourism destinations and can Toward Environmentally increase the cost of tourism services. For PICs to increase Sustainable Tourism value in the tourism sector, they must develop the skill Minimizing tourism’s environmental impacts and base on which this higher-yielding industry can grow. As mainstreaming sustainable tourism can help PICs discussed, workers in high-value tourism markets need preserve their fragile ecosystems and gain a competitive hard and soft skills (e.g., customer service, timeliness, edge in high-value markets. Like in other regions of the ownership, accountability). An undersupply of skilled world, there are cases of poorly managed environmental workers undermines the quality of tourism services, which impacts of tourism in the Pacific.85 Growth of tourism reduces tourist satisfaction and spending and increases infrastructure across the islands in response to growing costs for tourism businesses because they must compete visitor numbers has raised concerns about associated to recruit employees with scarce skills or use foreign labor. clearing of land and impacts on coastline and the seabed. High costs of hiring skilled labor reduce profit margins for Some countries have responded to increased visitor arrivals tourism businesses and can inhibit private investment with rapid growth in accommodation supply. For example, in the sector. Finally, because skilled workers are more Vanuatu’s accommodation supply grew 16.2 percent productive, undersupply of skills reduces overall economic between 2017 and 2019, and estimates indicate that 50 productivity and suppresses economic growth. Accordingly, percent more rooms will be required by 2030 than in 2018 the extent to which tourism businesses can recruit skilled (World Bank 2020d). In Tonga, accommodation supply grew workers strongly affects the contribution of the tourism 7 percent between 1997 and 2010, almost twice the growth sector to employment, poverty reduction, and economic in overnight arrivals (TRIP Consultants 2013). Although development. regulations are in place across the region to prevent Tourism growth could play a larger role in addressing uncontrolled development, mainly through environmental gender inequalities in the labor market, provided impact assessment regulations, there are concerns about that plans and interventions in the sector target the their adequacy, policing, and compliance.86 Across the constraints that women face. As discussed in Chapter region, there are reports of untreated wastewater polluting 1, the tourism industry is a critical source of employment fresh water and saltwater sources and damaging coral opportunities for women in the Pacific, and the industry reefs. Weak solid waste management infrastructure, relies on women to deliver its services (ILO n.d.). Although services, and regulations contribute to marine litter. vertical segregation in the sector means that women’s In addition to harm to the environment, these impacts employment in tourism tends to be concentrated in erode PICs’ tourism offerings, particularly because outdoor medium- and low-skilled occupations, they are more likely nature-based activities have featured prominently in the to be in management positions in the tourism sector than list of experiences that international travelers seek after in non-tourism sectors.81 However, their full and equal COVID-19.87 In this context, PICs have an opportunity participation in the tourism workforce is constrained by skills to position themselves as low-impact, blue tourism mismatches,82 persistent vertical segregation, gender-based destinations centered on promotion of local communities 80 Expatriate workers have generally returned to work because many had contracts with businesses.  81 Based on World Bank analysis of Fiji 2019/20 Household Income and Expenditure Survey data (FBOS 2020). 82  atest national estimates (retrieved from ILOSTAT) show that in the majority of Pacific countries, female youth unemployment (15-24) is significantly L higher. 83  2016 study conducted by the Fiji Women’s Rights Movement showed that 35 percent of women working in the hospitality sector have experienced A sexual harassment, making it the sector with highest incidence of sexual harassment (Fiji Women’s Rights Movement, 2016). 84 See, for instance (ADB, 2018). 85  he World Bank’s ongoing Pacific Ocean Advisory Program will provide a detailed assessment of threats to the sustainability of ecosystems that support T tourism in PICs, including pollution, waste, resource overexploitation, biodiversity degradation, and climate change. 86 n 2018, resort developers in the Malolo Islands irreversibly damaged mangroves and coral in Fiji after disregarding environmental regulations and I numerous warnings. The investors were fined FJD 1 million (USD 460,000) in 2022 (ABC News 2022). 87  esearch that NielsenIQ conducted found that, for European outbound travelers, the effects of COVID-19 have increased interest in outdoor and R nature-based activities by 3 percentage points. The research demonstrated increased interested from these travelers in selecting destinations that offered sustainable, eco-, and nature-based experiences, along with cultural and wellness activities. World Bank research similarly found that nature-based activities dominated the list of experiences travelers were seeking in post-COVID-19 holidays. THE FUTURE OF PACIFIC TOURISM MARCH 2023 55 and conservation of natural resources in coastal and Furthermore, new marketing possibilities, such as online maritime areas, in line with the growing focus on the blue booking platforms that allow users to select sustainable economy in the region.88 destinations and resorts, are likely to increase the visibility and differentiating capacity of investments in resource Many Pacific tourism businesses rely on high-cost, high- efficiency. impact energy sources and water supply and waste management practices, often for lack of access to better Despite the potential benefits, businesses and alternatives. Geographic constraints, lack of economies of governments in PICs have struggled to invest sufficiently scale, and small and outdated power infrastructure have led in resource efficiency. Although valuable insights can to greater reliance on diesel imports for power generation, be derived from successful cases within and outside the high electricity tariffs (or costly subsidies),89 transmission Pacific (Box 15), these still represent a minority of businesses and distribution losses, and low electrification rates in and are mostly high-end resorts. This is notably due to a several PICs (ADB 2021). For many tourism businesses that set of technical, knowledge, financial and policy barriers. cannot be connected to the central electricity network, First, many tourism businesses lack awareness of available self-generation, usually using diesel-powered generators, resource efficiency options and technical capacity to is the only option.90 The relatively high cost of power implement them. Hotels, especially smaller, family-owned generated using diesel lowers the price competitiveness of ones in rural areas, also lack understanding of the return PIC destinations, accounting for up to 25 percent of hotels’ on investment in resource efficiency. A recent study in Fiji operating costs, compared with a global benchmark of 4 to highlighted this as a one of the main things preventing 8 percent (International Institute for Energy Conservation hotels from investing in solar systems (Global Green Growth 2015). Investments in energy efficiency can reduce a hotel’s Institute 2019). This assessment also found that most off- energy cost by 10 to 40 percent, depending on measures grid hotels lack information on their energy consumption taken (International Institute for Energy Conservation 2015). on which to base investment analyses. Green solutions that A slow increase in environmental sustainability may individual businesses could implement are often not readily affect PICs’ competitiveness, with certain high- available locally or even regionally. Even when solutions value, eco-friendly travelers willing to pay a premium are available, many tourism businesses lack the financial for sustainable tourism experiences. Recent consumer capacity to invest in small-scale resource efficiency projects, research that the World Bank conducted in Europe identified which can yield long-term returns but have high upfront that market segments with a core focus on nature-based capital costs. This is especially true for the predominant tourism, sustainability, and local products spend more small and medium-sized enterprise segment, which has (USD 5,742 per trip compared with USD 3,530 per trip) limited access to commercial financing and limited cash (World Bank 2022b). Likewise, Australian travelers most flow. In Fiji, financial constraints were among the main interested in nature-based experiences with a core focus barriers that more than one-third of hotels cited for not on supporting local communities are the highest-spending installing solar photovoltaic (52 percent of MSME hotels) Australian market segment (USD 2,641 per trip) (IFC 2019a). (Global Green Growth Institute 2019). Box 15. Examples of Successful Renewable Energy Projects Turtle Island Resort, Fiji: Located on Turtle Island, 50 miles northwest of Fiji’s main island, Turtle Island Resort has 14 cottages that are not connected to the national grid. The hotel installed a solar photovoltaic system in 2013 that provides 56 percent of the island’s annual power needs, making it the largest off-grid solar photovoltaic installation in the South Pacific for a resort at the time. The project had a capital investment of USD 1.1 million and a payback period of 8.6 years. Diesel consumption for electricity generation decreased by 77,405 liters per year, corresponding to annual savings of USD 124,000. Emissions avoided corresponded to 205 tons of carbon dioxide equivalent per year (IRENA 2014). Soneva Fushi, Maldives: Located on a remote island in the Baa Atoll in Maldives, Soneva Fushi is a prime example of a resort that has taken advantage of renewable energy without investing resources of its own. Before 2016, the resort had no access to the electric grid and relied on diesel generators. In that year, it partnered with the manufacturer Yingli Solar to install a 624 kWp solar photovoltaic system through a power purchase agreement. This partnership allowed Soneva Fushi to avoid a capital expenditure because Yingli provided the solar panels, and in return, the resort purchased the electricity from them at 60 percent of the price of diesel energy generation (Sustainable Hospitality Alliance and IFC 2020). 88 The blue economy is an approach to promote sustainable, integrated use of marine resources. 89 The average electricity price in the Pacific region is approximately USD 0.32 per kWh, compared with USD 0.12 to USD 0.14 per kWh in Australia and  the United States (ADB 2021; GlobalPetrolPrices.com 2021). 90 n Fiji, there are more than 90 off-grid hotels on islands that Energy Fiji Limited does not serve that rely on alternative energy sources, including I diesel generators (64 percent), hybrid diesel and solar photovoltaic systems (24 percent), and solar photovoltaic–only systems (10 percent) (Global Green Growth Institute 2019). 56 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Renewable Energy Project, Tonga: In May 2022, Tonga commissioned its first utility-scale battery energy storage system as part of the multilaterally funded Tonga Renewable Energy Project. Two systems—a short- and a 3.3-hour-duration system—were installed on Tongatapu, Tonga’s biggest island. Together with the completion of a 6MW solar photovoltaic power plant, the country doubled its use of renewable energy, taking it to 20 percent of the total energy use. The battery energy storage system required an approximately USD 16.7 million investment, with the wider Tonga Renewable Energy Project costing approximately USD 50 million (Colthorpe 2022). Renewable Energy Sector Project, Cook Islands: The multilaterally funded USD 43.65 million project installed on five small islands is benefiting rural communities. The installations have connected solar photovoltaic and battery storage systems as mini-grids on Atiu, Aitutaki, Mangaia, Mauke, and Mitiaro, allowing these islands to reduce electricity tariffs and oil imports. The project provides clean, affordable energy to 1,500 inhabitants (9 percent of the nation’s population), who are benefitting from the USD 6.9 billion in annual savings from reduced fossil consumption, a lower residential tariff (from USD 0.63 per kilowatt to USD 0.47), and indirect job creation (ADB 2017; 2021) There are opportunities for profitable investments For medium and smaller hotels in lower price categories, in energy, water, and material efficiency for different facilitating access to appropriate financing will be necessary, categories of Pacific tourism businesses. A simple especially in the aftermath of COVID-19, when many have numerical simulation developed using Excellence in Design lower risk appetites for borrowing and less-stable balance for Greater Efficiencies (EDGE), the International Finance sheets. For all hotels (regardless of size and category), Corporation (IFC) tool and certification system for green education and awareness of returns on investing and buildings, suggests that such investment could pay off quickly benefits of resource-efficient investments are required to and bring significant financial and environmental savings highlight the costs and benefits. Furthermore, governments (Box 16).91 To achieve these gains, critical barriers must be addressed with strong cross-government coordination. must partner with industry associations, universities, and For larger 4- and 5-star hotels with sufficient funds or other agencies to ensure that the proper technical expertise, credit to invest, ensuring that equipment is available at the resource efficiency, and circular economy firms and tools country or regional level and facilitating imports is essential. are available to support hotels in the transition. Box 16. Benefits of Resource Efficiency in Tourism Businesses The below simulation is based on a cost-benefit analysis to assess potential returns on investments in resource-efficient tourism operations in Pacific Island countries (PICs). It focuses on hotels in three countries based on data availability: Fiji, Samoa, and Vanuatu. Various energy-, water-, and material-efficiency measures were selected to reach at least 20 percent savings, the threshold for EDGE certification. For 1- to 3-star hotels, simple measures were selected such as roof insulation, efficient lighting, and upgrading to water-efficient faucets for public or private bathrooms. For 4- and 5-star hotels, larger investments were selected, such as onsite renewable energy and smart measures. These larger, higher-earning hotels have more accessible capital for investment in these resource-efficiency areas and can therefore gain higher energy savings in the medium run. Results suggest that the investments in resource efficiency considered for hotels in PICs would be paid back quickly, assuming pre-pandemic occupancy levels in peak season. Table 8 shows how much hotels would need to invest to implement the considered energy-, water-, and material-efficiency measures, as well as their respective payback periods. As expected, investment size generally increases with hotel category because of building dimensions and associated costs. In particular, the considered investment in renewable electricity generation, which brings much higher carbon dioxide and utility savings, explains the high cost of investment for 4- and 5-star hotels. Although the capital expenditures required to implement the measures would not be negligible, they would be more than paid back by savings within a year in most cases and sometimes sooner. A recent internal audit report on a 4-star hotel in Samoa revealed that, for a normal year of operation with a 78 percent occupancy rate, the incremental cost for the country and category selected would be approximately 6.5 percent of annual income (Table 8), whereas extrapolation of the annual income of a 2-star hotel in Fijia reveals that the investment required (which is a fortieth the size of the investment for a 4-star hotel in Fiji) accounts for approximately 2 percent of business annual income. 91 See Annex B.3 for more details about the methodology.  THE FUTURE OF PACIFIC TOURISM MARCH 2023 57 Table 8. Key Performance Indicators for Investments in Resource Efficiency Operational Incremental savings (tonnes Carbon dioxide Utility savings Hotel category Payback, years b cost (USD) a of carbon dioxide savings (% total) (USD/year) equivalent/year) Typology category 1 (Fiji) 1-star 2,601 0.1 47.0 20.61% 45,735 2-star 4,945 0.1 66.7 21.20% 65,206 3-star 3,500 0.0 82.8 20.50% 80,063 4-star 201,566 1.1 115.1 25.01% 181,188 5-star (small) 221,397 1.1 124.6 24.84% 197,352 5-star (large) 244,787 1.2 123.3 24.85% 209,261 Typology category 2 (Samoa, Vanuatu) 1-star 1,012 0.1 9.54 18.64% 7,098 2-star 1,666 0.0 90.48 23.34% 62,572 3-star 5,026 0.1 102.73 24.28% 71,332 4-star 225,110 1.2 160.61 23.39% 187,406  a. Cost of implementing selected efficiency measures in addition to baseline. Number of years to repay incremental cost compared with the cost savings of utilities. The method used is simple payback based on the b.  capital cost of the measure. Results were extrapolated at a national level based on World Bank estimations of available room supply (Table 9). For Fiji, individual Type 1 key performance indicators were used, whereas Samoa’s and Vanuatu’s calculations were based on Type 2 key performance indicators. Overall, the investment needed for Fiji is much higher because the market supply of hotels is much larger, especially those categorized as 1 to 3 stars. Samoa needs a larger investment than Vanuatu because of its offering of deluxe rooms, which were classified as being part of 4-star hotels. Samoa has the highest supply of 1-star hotels, which require a small investment but bring lower carbon dioxide savings. Table 9. Country-Level Investment Needs and Potential Results of Resource Efficiency Investment needed Emissions saved (tonnes of Country Payback, years (USD million) carbon dioxide equivalent/year) Fiji 7.2 0.11 38,096 Samoa 3.1 0.11 12,349 Vanuatu 1.8 0.09 15,901 Based on Booking.com room fares for a 2-star hotel in Nadi (Fiji) in December 2022 and March, June, and September 2023; real quarterly a.  occupancy data in Fiji; and expert insights. 58 THE FUTURE OF PACIFIC TOURISM MARCH 2023 2.5 Vulnerability to Climate directly by damaging their assets and indirectly by disrupting the services, supply chains, and public infrastructure on Change and Natural Disasters which they rely. Loss of income during repairs and market Although the Pacific tourism industry’s recovery downturns that usually follow the events compound these from COVID-19 is well underway, natural disasters, effects. In a recent survey, 38 percent of Pacific tourism made worse by climate change, will continue to affect firms affected by extreme weather over the previous year the sector and its competitiveness. Tropical cyclones, said this had a major impact on their operations, compared with 29 percent of manufacturing firms (PTI 2022). Many flooding, volcanic eruptions, tsunamis, and earthquakes tourism businesses are located in coastal areas, which are are common in the region. Despite significant uncertainty, at higher risk for some hazards. Disasters increase tourists’ extreme weather events are expected to increase in and investors’ risk perceptions of destinations, and arrivals intensity and frequency with climate change.92 Five of the can take years to recover after major events (Erman et PICs were among the world’s 15 countries most exposed and al. 2021; World Bank 2020e). Beyond disasters, rising sea vulnerable to disasters caused by extreme weather events in levels threaten fragile tourism assets and infrastructure in the 2021 WorldRiskIndex, including Solomon Islands, Tonga, PICs, and higher water temperatures affect the coral reefs and Vanuatu in the top three spots (Bündnis Entwicklung that underpin many marine activities. An early study found Hilft 2021).93 Since 2009, major disasters have caused more that the declining appeal of the Pacific as a destination due than USD 250 million in tourism-specific damage and loss, to climate change could result in 27 to 34 percent lower about 9 percent of total damage and loss to PICs during regional tourism revenues by the end of the century than this period (Figure 17).94 Disasters affect tourism businesses under a business-as-usual scenario (ADB 2013). Figure 17. Damage and Losses to Tourism from Recent Natural Disasters in Pacific Island Countries Sources:  Government of Fiji 2013; Government of Fiji 2016; Government of Samoa 2009; Government of Samoa 2013; Government of Tonga 2018; Government of Vanuatu 2015; Government of Vanuatu 2020. Note: TC, tropical cyclone. 92  ince 2000, cyclones have been the most frequent natural disaster (38 percent), followed by floods (21 percent), volcanic activity (10 percent), and S earthquakes (9.5 percent) (EM-DAT 2022). Although cyclones tend to be the most common source of damage in PICs, recovery from volcanic activity, earthquakes, and tsunamis tends to be more challenging. 93  new methodology, including absolute and relative figures of population at risk, resulted in many SIDS no longer topping the ranking in the A WorldRiskIndex 2022. For more details about the methodology, see https://weltrisikobericht.de/weltrisikobericht-2022-e. 94 B  ased on conservative estimates for major recent disasters for which post-disaster needs assessments were conducted, total damage and losses to tourism amounted to at least USD 92 million in Fiji, USD 89 million in Vanuatu, USD 53 million in Samoa, and USD 19 million in Tonga. A forthcoming assessment by the Asian Development Bank estimates that damage to the tourism private sector from the Hunga Tonga-Hunga Ha’apaii volcanic eruption and tsunami in December 2021/January 2022 was USD 20.5 million, but such estimates generally do not account for damage to land and marine natural assets that form a key part of PICs’ tourism offerings. THE FUTURE OF PACIFIC TOURISM MARCH 2023 59 Tourism MSMEs often lack the awareness, knowledge, that have made significant investments in systems and technical capacity, and financial resources to invest in infrastructure to strengthen climate resilience over the resilience and reduce their exposure to disaster and last decade, such as Fiji, significant residual vulnerability climate risks. Small- and medium-sized firms (SMEs) exists at the sector level, including in tourism (World Bank are particularly at risk since large firms generally have the 2022d). Investments in resilience are sometimes perceived capacity to invest in disaster risk reduction, and micro-firms as a gamble given uncertainty about timing and severity of have fewer fixed assets that can be damaged in disasters. future disasters, discouraging policy makers and investors Tourism SMEs often underinvest in disaster risk reduction with shorter time horizons from investing in it. Ex ante because they are less aware of options; they lack technical disaster risk reduction can yield significant co-benefits even knowhow; or the costs to prepare for uncertain events, for if a disaster does not happen for many years, including by instance by retrofitting buildings to comply with more- stimulating economic activity by reducing disaster risk and protective standards, is seen as prohibitive in the context generating development co-benefits through multipurpose of limited financial resources and competing business infrastructure design (Tanner 2015). concerns (Mahon, Becken, and Rennie 2013). Financing constraints often lead SMEs to underinvest in climate Lack of a strong evidence base for the potential long- adaptation (Collier and Ragin 2022; Crick et al. 2018). term benefits of investment in resilience has limited Although governments and donors have supported business public and private funding. There has been a lack of continuity planning in the aftermath of disasters, financing quantitative evidence that would enable public and private options to implement such plans are limited. Moreover, tourism stakeholders in SIDS to articulate the benefits of the evidence suggests that access to insurance for natural disaster risk reduction to unlock private investments and disasters is limited in the Pacific; in a survey conducted after efforts to create an enabling policy environment (Mahon, Tropical Cyclone Yasa, which hit Fiji in December 2020, only Becken, and Rennie 2013). In PICs, although cost-benefit 1 percent of 1,554 firms were covered against cyclones (IFC analyses of investing in resilient infrastructure, housing, and 2021). By contrast, in a recent survey of tourism businesses public buildings have been conducted, none have focused on in the Caribbean, 63 percent of firms reported having an tourism. Simple analyses can be conducted to assess the net insurance plan with disaster coverage (Erman et al. 2021). present value of potential short-term investments, including Failing to build resilience can have long-term consequences in more-resilient buildings and facilities, over a period of for firms’ capacity to provide competitive services, even in time and understand the factors that influence it. An initial the absence of a disaster, because high background risk can assessment for a few PICs found that such investments discourage them from making long-term investments and would have positive net present values in all example developing new products and services (Tanner 2015). cases (Box 17). These estimates are based on conservative Government investments in resilient tourism have not assumptions and do not capture the broader benefits of gone far enough because of uncertainty about future disaster risk reduction investments previously mentioned. events. Governments in PICs have various options to foster However, they can help anchor the policy dialogue about resilience and reduce vulnerability to disasters in tourism, the importance of investments, incentives, financing, and including measures to reduce exposure (e.g., investment standards for resilience and to lay the groundwork for more- in resilient infrastructure, land-use planning and zoning, in-depth country-specific analysis. Other tools are available, adoption, and enforcement of building codes), manage such as IFC’s Building Resilience Index, a web-based hazard residual risk (e.g., early-warning systems), and help firms mapping and resilience assessment framework for design, and workers recover quickly from shocks. Even in PICs construction, and retrofitting of buildings.95 Box 17. Benefits of Resilient Tourism Infrastructure The economic rationale for investing in more-resilient tourism infrastructure in Pacific Island countries was assessed using a simple simulation.a The simulation compares the cost of investing today in the retrofitting of tourism-related infrastructure and design upgrades for new buildings to the economic benefits from avoided damages and revenue losses due to expected TC impacts from 2022 to 2052, based on past exposure. The simulation focuses on cyclones, given their frequency in the Pacific, although investment in resilience against cyclones could also reduce vulnerability to other types of disasters.b The simulation was applied to four countries for which comparable information on the impacts of past cyclones is available (Fiji, Samoa, Tonga, Vanuatu). Investing in resilient tourism infrastructure in anticipation of natural disasters was found to have a positive net present value for all four countries (Table 10). Relative to their pre-pandemic gross domestic product and tourism revenues, the present value of the operation for Tonga is the highest of the four countries, followed by Vanuatu, Samoa, and Fiji. Although the return on investment for Fiji is smaller because of the large number of hotels in the country, policy makers should consider the benefits of resilience investment beyond savings from 95 See https://www.resilienceindex.org 60 THE FUTURE OF PACIFIC TOURISM MARCH 2023 cyclone impacts, including the expected reduction in losses from other natural hazards, the impact on people, and the positive effects for other sectors. In the case of Fiji, higher return on investment could potentially be achieved by focusing on areas in the country that are particularly prone to the impacts of cyclones, such as Vanua Levu and other outer islands. Even in the case of Vanuatu, damage from the 2015 cyclone impact may be underestimated because of lack of data from hotels. Table 10. Potential Return on Investment in Resilient Tourism Infrastructure Gross domestic product 2019 Tourism receipts 2019 Country  Net present value Benefit-cost ratio (2022 USD million) (2022 USD million) Fiji 164.65 2.75 5,496.0 1,345.0 Samoa 234.07 5.65 852.3 206.0 Tonga 272.29 7.51 512.4 57.1 Vanuatu 413.63 3.81 930.3 295.0 Long-term benefits from investments varied from country to country based on number of forecasted cyclones, estimated absolute impacts on the tourism sector and with respect to other sectors, and expected growth in accommodation supply. For instance, Vanuatu has the highest present value because Category 5 cyclones have hit it twice as often as Fiji, Samoa, and Tonga (World Bank 2016), increasing the savings over time of rebuilding tourism infrastructure. Fiji has the lowest benefit results because it has the lowest expected growth in supply and the highest investment costs relative to expected cyclone impact savings, the latter partially because of the large supply already in existence and therefore the high costs to refurbish it all to resilient standards. Samoa and Tonga have high expected returns on investment because of the estimated impacts of a cyclone in absolute terms and higher projected growth in accommodation supply, the latter mainly for Tonga. Although the results are estimates based on limited available data, the simulation can be helpful for understanding the variables that have the highest impact on the final outcome. Limitations of the data and modeling mean that the margins of error in the estimates give rise to significant confidence bands around the present benefits of the investment. Sensitivity analysis helps explain the parameters that might have a higher positive or negative impact on the investment justification process. Figure 18 shows the sensitivity of the countries’ net present value to relevant parameters in the model equation, which influence the results differently for each destination being analyzed. Figure 18. Results of Sensitivity Analysis on Resilient Tourism Buildings Simulation a. See Annex B.4 for more details about the methodology. For instance, there are some general similarities between engineering design for resilience against wind and earthquake (Taher 2010). b.  THE FUTURE OF PACIFIC TOURISM MARCH 2023 61 Image: Papua New Guinea 62 THE FUTURE OF PACIFIC TOURISM MARCH 2023 3. Policy Priorities for Competitive and Sustainable Pacific Tourism PICs have long strived for more-valuable tourism each policy category, this report’s recommendations are industries and can leverage recovery from the pandemic prioritized to focus on the most-effective measures for as an opportunity for reset. To do so, they must prioritize medium- to long-term sustainable growth and to refine the policies and investments that address underlying tourism recommendations outlined in Pacific Possible to address new sector market failures and structural challenges that market conditions and align with government priorities. COVID-19 has exacerbated. Even before the pandemic, These recommendations build on the analysis of tourism’s PICs struggled to implement strategies to enhance the development contribution across the region as outlined sector’s sustainability and attract higher-value markets. in Chapter 1 and focus on the sector’s binding constraints Now, with additional pressure to regain visitor numbers as laid out in Chapter 2. Considering these findings, policy and limited fiscal space, identifying and prioritizing the recommendations are organized around the following most effective policies and public sector investments is all core categories: (i) Improving tourism sector governance, the more critical. Moreover, to maximize tourism’s role as (ii) Refocusing destination development to support MSME a catalyst for development, stronger linkages between growth and market diversification, (iii) Enhancing skills and tourism development strategies, other national strategies training in the tourism workforce, and (iv) Mainstreaming (e.g., poverty reduction, resilience), and efforts to address resource efficiency and resilience in the sector. Although structural barriers to inclusive growth and economic most of these policy categories are included in national diversification in PICs will be needed. tourism strategies, experience in the Pacific shows that This chapter highlights four categories of policy countries struggle to achieve sectoral change because of a interventions needed to increase value addition in lack of specificity and weak implementation.97 Prioritization the tourism sector and create more-competitive, of these categories and specific policy actions can be -sustainable, -inclusive, -resilient Pacific destinations. informed by examining them according to market segments; Although short-term measures to solidify and broaden Figure 19 identifies policy categories and actions that will recovery from COVID-19 may still be required in PICs, support development across multiple market segments and recommendations on this have been covered extensively highlights the integrated approach to policy reform required in other publications and are not repeated here.96 Within to develop the most valuable markets. Image: Vanua Levu, Fiji Credit: World Bank 96 G  uidance focusing on crisis response and short-term recovery that the World Bank has published includes Rebuilding Tourism Competitiveness (World Bank 2020a), Tourism Recovery in the Pacific (World Bank and IFC 2020), and Expecting the Unexpected: Tools and Policy Considerations to Support the Recovery and Resilience of the Tourism Sector (World Bank 2022b). The last provides detailed short-term policy guidance to support firms and workers, reopen safely, and stimulate demand. The Asian Development Bank also published reopening policy guidance for PICs (PSDI 2022) and tourism-recovery policy priorities for Asia and the Pacific (ADB 2022). 97 Tools and guidance for implementation and monitoring of prioritized policy actions are provided in Annex D. THE FUTURE OF PACIFIC TOURISM MARCH 2023 63 Image: Aneityum, Vanuatu Credit: Jessie McComb Figure 19. Framework for Policy Intervention Prioritization Given the different maturities of their tourism sectors emerging tourism sectors should focus on building tourism and targeted market segments, policy priorities will vary intelligence, improving the business enabling environment, for PICs in different categories of this report’s destination supporting MSME development to create new products, typology. This regional report identifies broad intervention and building skills. All countries require more intensive areas and attempts to identify the most relevant actions for efforts on strengthening leadership and coordination, as various destination categories (Table 11). Structural barriers well as to build destination resilience, especially to address to growth, market potential, destination vulnerabilities, coordination failures across the sector. Importantly, and government strategies in each category informed fostering strong coordination between the public and prioritization of policy areas according to country type. Countries with more-mature tourism sectors that have private sectors is necessary, as they both have important had some success in targeting high-value markets should roles to play to rebuild tourism. With limited public fiscal focus on destination development by fostering MSME space and capacity, private sector investments, particularly growth to expand products, market diversification, and skills in product development, tourism asset upgrades, marketing, enhancement, as discussed in Chapter 2. Countries with and even essential services though PPPs, will be necessary. 64 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Table 11. Prioritization of Policy Areas According to Pacific Island Country Destination Category Category Policy Area Type 1 Type 2 Type 3 Type 4 Strengthen tourism policy, Very high Very high High Very high coordination, and management Tourism governance Build tourism data and intelligence Moderate Moderate Very high High Digital transformation High Moderate Moderate Moderate Improve the enabling environment Moderate High Very high High Micro, small, and medium-sized Destination enterprise growth and product Very high Very high High High development diversification Target marketing for diversification Very high High Moderate Moderate Enhancing skills Build tourism skills Moderate Very high Very high Very high and training Mainstreaming Improve resource efficiency High Moderate Moderate Moderate resource efficiency and resilience Build destination resilience High Very high High Very high Targeted policies to strengthen tourism should be Additional research using country-specific data and coordinated with efforts to address broader horizontal information will be required to determine more- constraints on growth that are particularly problematic specific policy action plans. Although this regional report in PICs. While the recommendations highlighted in this provides research and policy recommendations to guide chapter were selected for their direct relevance to the dialogue, further country-level analyses will be needed to objectives of increasing value addition, inclusiveness, determine concrete action plans for tourism investments. sustainability and resilience in tourism, several other These plans will depend on countries’ endowments, structural constraints still impede the sector’s development sectoral obstacles, and policy aspirations as expressed and broader private sector growth in the Pacific, with in national tourism strategies. Design and prioritization variations across countries. These are not discussed in detail of these investments must also consider the broader here, as they have been addressed through other reports and projects, but efforts to address them going forward will context of structural challenges not addressed in detail in partly determine the success of initiatives recommended this report. This exploration could be linked to preparation in this report. Key challenges include connectivity,98 and implementation of projects addressing key structural land rights,99 security,100 health,101 and preservation of constraints on development, for instance on skills and ecosystems.102 essential services.103 98 Several reports have studied air connectivity and national carriers in the Pacific (ADB 2007; Balasundharamet al., 2021; Movono 2022), and the  Bank’s ongoing analytical program “A Blue Transformation for Pacific Maritime Transport” will foster better understanding of regional maritime connectivity in the region, notably as it relates to tourism. 99 Analysis of the complex question of land rights in the Pacific and their impact on development can be found (AusAid 2008a; 2008b), with specific  implications for tourism (Safran 2015; Scheyvens and Russell 2011). 100 For general reviews of the links between safety, security, and tourism development, see Tarlow (2014) and UNWTO (2021b). For an application to  PNG, see Sumb (2017). 101 On the influence of actual and perceived health risks and health care systems on travel intentions, see Rasoolimaneshet al. (2021) and World Bank  (2022b). 102 Under the ongoing Pacific Ocean Advisory Program, the Bank supports new analytical work on threats to sustainability of ecosystems that support  fisheries and tourism in PICs, including pollution, waste, resource over-exploitation, biodiversity degradation, and climate change. 103 For instance, the Fiji Tourism Development Program in Vanua Levu will implement a series of investment projects over a 10-year period to foster  growth of high-value tourism on the country’s second largest island, spread tourism’s benefits more widely in communities, and address tourism’s environmental impacts. Tourism-specific and more-horizontal interventions include master planning and coordination, MSME development, skills training, access to finance, upgrade of key infrastructure (e.g., airports, roads), development of essential services (e.g., solid waste management, medical facilities, renewable energy), and investment in marine protected areas. THE FUTURE OF PACIFIC TOURISM MARCH 2023 65 Box 18. Targeting High-Value Markets in Latin America and the Caribbean Bermuda and Costa Rica have deep experience targeting high-value visitors, a strategy adopted 10 years ago in Bermuda and 20 years ago in Costa Rica. Costa Rica is a destination reliant on its natural assets, so sustainability has been at the core of the country’s policymaking since the late 1990s. In 1997, the Costa Rica Tourism Board developed the Certification for Sustainable Tourism, a guideline for tourism businesses in sustainable management – currently over 400 companies are certified. Costa Rica’s 2002 tourism strategy started the destination’s focus on high-value markets to increase tourism benefits with lower impacts on the natural environment. In targeting high-yield markets, Costa Rica focused on developing and differentiating products, improving the quality of the offering, and marketing to nature-based and wellness niche markets. As such, visitor spend per arrival increased from USD 1,284 in 2002 to USD 1,364 in 2019. Bermuda’s 2012 National Tourism Master Plan highlighted high-end market appeal as one of the destination’s top strengths to support achieving sustainable development. By 2014, the Bermuda Tourism Authority started research on visitor experience satisfaction; identified 74 experiences to receive marketing and capital support in the fields of sports, arts and culture, and natural resources; and conducted a product inventory and gap analysis to identify high-value experience opportunities. The 2019 National Tourism Plan continues to target high-value markets, using niche markets as a key strategy to reduce tourism’s seasonality. Between 2012 and 2019, Bermuda increased visitor spend per arrival from USD 1,931 to USD 2,234. Sources: Bermuda Tourism Authority 2012; 2019; Costa Rica Tourism Board 2002; 2022; UNWTO 2022b. 3.1 Improving Tourism Governance Table 12. Tourism Governance Priorities According to Country Type Policy area Type 1 Type 2 Type 3 Type 4 Strengthen tourism policy, coordination, and management Very high Very high High Very high Build tourism data and intelligence Moderate Moderate Very high High Digital transformation High Moderate Moderate Moderate Strengthening Tourism Policy, the government and between the government and the private sector. Addressing these challenges and improving Coordination, and Management tourism governance is necessary for sustainable growth To achieve meaningful change in the sector, tourism of all market segments but more pressing for high-value planning, policy, and regulations must be prioritized markets such as those seeking luxury and experiences and integrated across government and industry, with (e.g., adventure tourism) who seek out smoothly functioning all actors held accountable to sustainable tourism destinations. commitments. Although PICs have created useful tourism policies and strategies that set goals for sustainability Given the prominence of tourism in the PICs’ economies, and target high-value tourism markets, including at the tourism policies and strategies can no longer be regional level (SPTO 2021a), most have not been able to standalone documents with implementation left solely execute these strategies. The core challenge is a mismatch to tourism authorities and should rather be overseen between tourism authorities’ narrow mandates and the at a higher level. To develop high-value, sustainable, wide scope of policy areas that affect tourism firms and resilient tourism destinations in the Pacific, tourism activities. Underlying this are coordination failures within management and development must have dynamic 66 THE FUTURE OF PACIFIC TOURISM MARCH 2023 policy engagements that work across the government right type of human resources by widening recruitment and private sector to create an enabling environment bases and creating performance-based incentives and for businesses and investors that can provide high-value contracts. For policy-based roles, it is critical for leaders products that prioritize sustainability and inclusivity to have skills in stakeholder engagement, influence, and (Box 18). Public sector leadership is necessary to ensure communication in addition to technical skills in public that public assets are developed and maintained and to policy and governance. Similarly, for execution roles, staff guide high-value, sustainable, inclusive, resilient destination should have skills in technical areas and understanding development, spreading the benefit of tourism throughout of industry operations and high-value tourism markets. the economy and destination. Tourism sector leadership Governments can partially fill their expertise gaps must also be a coordinated effort between the public and through stronger, institutionalized partnerships with the private sector and by creating tourism boards that bring private sectors, drawing together funding, expertise, and public and private sector leadership together. knowledge to create sustainable, diverse destinations. This especially important since tourism has the potential • Capacity to engage and influence: A robust private to promote critical enabling conditions and policies that sector is necessary for dynamic growth of tourism, and benefit the whole economy, such as literacy development, industry representatives should have a role in sector women’s economic empowerment, entrepreneurship, leadership. To achieve this, the public and private and transferrable skills development. To resolve this, three sectors must lead destination management, marketing, areas need to be addressed across all categories of the PIC and development together. Although most PICs have destination typology: some level of private sector engagement in tourism leadership, it can be uncertain or tokenistic, with changes Defined destination management and execution •  to government leadership creating vulnerabilities in responsibilities: A strong whole-of-government the partnership. To address this, governments should approach (Box 19, 20) is needed to implement tourism institutionalize mechanisms for ongoing public-private development plans effectively and integrate the various dialogue and create multiple, permanent seats on policies affecting and influenced by tourism. This implies tourism committees or in NTO leadership for the private better-equipped tourism ministries and departments sector. It is important for industry to have a voice within in terms of quantity of qualified staff. Given tourism’s government, across the ministries and agencies affecting significant contributions to Pacific economies and public the sector. Similarly, the public sector needs an ongoing revenue, a strong role for ministries of finance and mechanism to facilitate engagement with the domestic economy is also warranted to coordinate reforms and and international private sector, investors, and local public investments in various areas linked to tourism but communities and landowners—essential stakeholders beyond the direct purview of tourism authorities. Cross- in tourism development. For Type 3 and 4 countries that ministerial tourism committees with private sector are still emerging destinations, working with the private representation, decision-making autonomy, and capacity sector is critical, because governments have limited fiscal to monitor implementation can also play a crucial role space to fund tourism governance. For these countries, in policy implementation and coordination.104 While the establishing strong NTOs that involve private sector ministries and committees will lead on policy actions and leadership and funding through cooperative marketing coordination, execution-oriented tasks (e.g. investment (e.g., via voluntary contributions or bed taxes) can help promotion, planning, marketing, product development) address the funding gap. should be led by national tourism organizations (NTOs) With stronger, more-empowered, more-influential that have the autonomy to implement strategies and act national tourism management, governments will on opportunities at an operational level and have core be able to support holistic destination management private sector leadership. This is critical for partnership and development. Through integrated planning development in marketing and promotion, which and coordination with local government, existing often needs quick action to take advantage of trends destinations can be improved, and new locations can and flexible partnership mechanisms to develop be opened to tourism. This is especially critical for Type cooperative marketing campaigns with industry or 1 and 2 countries that could benefit from spreading regional partners. the benefits of tourism throughout the country and Suitably equipped human resources: •  To achieve opening new market segments and for Type 3 and 4 the goals of policy- and execution-driven agencies, countries that required planning for current destinations governments must develop, encourage, and retain the to develop and stimulate initial demand. 104 K  ey roles for committees include reviewing existing policies and regulations that affect tourism to assess gaps and conflicts; mainstreaming sustainable tourism priorities into policies of other ministries, departments, and agencies; identifying regulatory reforms required to achieve sustainable tourism; and creating accountability systems for committee members. Cross-ministerial committees will also help destinations respond to COVID-19-related trends for better hygiene and sanitation. THE FUTURE OF PACIFIC TOURISM MARCH 2023 67 Box 19. Whole-of-Government Approach to Tourism Development: New Zealand Tourism in New Zealand is managed through the government, a national-level destination management organization (DMO) and regional tourism associations (RTOs). The Treasury – Te Tai Ōhanga sets overall prioritization of the sector in the national budget, provides ownership of state-owned enterprises (including Air New Zealand), and oversees performance of tourism-related public agencies. Importantly, they create a structure and environment for execution driven tourism management. Tourism policy and strategy are set by the Ministry of Tourism. Policy development and implementation and sector regulation are led by the Ministry of Business, Innovation and Employment (MBIE) that oversee all business-related activities in the economy, including many that are essential for tourism, such as building, competition, enterprise strategy and planning, digitalization, data and insights, immigration, and labor. MBIE’s tourism department supports tourism recovery, destination management, product development and tourism funding approaches (managing the tourism levy; tourism infrastructure fund; and, previously, a tourism grant facility). Tourism New Zealand (TNZ) is a crown entity that sits under and is funded through MBIE, with a core mandate for marketing. TNZ is governed by a board of directors that include both public and private sector members. Qualmark, New Zealand’s quality assessment and assurance standards, is owned by TNZ and has a core focus on sustainability criteria. MBIE’s wide, crosscutting mandate allows for a tourism strategy that can tie together critical elements of tourism regulation, but MBIE recognizes that the tourism ecosystem extends beyond Its mandate. Its current tourism strategy was developed in partnership with the Department of Conservation and follows a whole-of-government approach, with coordination across the government being the plan’s top priority. Through the strategy, MBIE and Tourism New Zealand coordinate with regional tourism associations. Although their roles vary, regional tourism associations focus on tourism promotion, economic development from tourism, product development, and capacity building. Sources: MBIE n.d.; MBIE and Department of Conservation 2019; Pearce 2015; Qualmark n.d.; Tourism New Zealand n.d. Box 20. Destination Management and Marketing in the Wake of Natural Disasters in Puerto Rico The Puerto Rico Tourism Company (PRTC) has been lauded for developing a robust tourism economy despite frequent natural disasters. The destination management organization, founded in 1970, is a public corporation under the Department for Economic Development and Commerce that has a mandate for “stimulating, promoting and regulating the development of Puerto Rico’s tourism industry”. It is governed by a board of directors that includes both public and private sector representatives and is overseen by an Executive Director appointed by the Governor (the state’s highest political position). It is supported by Discovered Puerto Rico, the non-profit destination marketing organization created by legislation in 2017. Together the Puerto Rico Tourism Company and Discover Puerto Rico joined forces to support tourism recovery in the aftermaths of Hurricanes Irma and Maria and a series of earthquakes. The Puerto Rico Tourism Company worked with the state government to rebuild infrastructure, provide investment incentives, and build capacity. Discover Puerto Rico initiated a new campaign “Have we Met Yet” to build new consumer confidence and introduce the destination to new markets. Other campaigns that built on destination-level branding and responded to the ongoing crisis of COVID-19 followed. This required coordination across the government, marketing agency, private sector, and investors, which the Puerto Rico Tourism Company led, and consistent communication to industry and travelers. In addition to marketing, the industry worked to build tourism product experiences to attract new markets in volunteer, community-based tourism; culinary and agrotourism; and lesbian, gay, bisexual, transgender tourism. Total this resulted in USD 480 million of local economic impact, 50 percent more demand over two years, and 10 percent higher room rates. Sources: PRTC n.d.; The Weekly Journal 2022; TravelAge West n.d. 68 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Building Tourism Data in Type 1, 2, and 4 countries, but only Fiji (2012) and PNG (2022) have Tourism Satellite Accounts, which provide and Intelligence robust analytical data but are expensive, time consuming, A core function of an NTO is generation of robust, and challenging to implement regularly, especially for small accurate data on tourism demand and supply to inform states. Collection of other data on demand and supply can policy making and business investment for more high- provide critical information for policy making in the absence value, sustainable, resilient, inclusive tourism. Over the of a tourism satellite account. Table 13 lists the types of data past decade, some PICs have substantially strengthened that would inform demand stimulation, supply development their statistics and measurement systems to determine the and monitoring, and economic statistics, along with the size, value, and trends of the tourism industry, particularly relevant data collection tools that could be used. Table 13. Tourism Data Required for Evidence-Based Policy Making Category Market Indicator Data collection tool Arrivals, source market, purpose of visit, average length of stay, locations Official immigration statistics, visited, spending according to category, activities, satisfaction rates, international visitor surveys, mobile demographic characteristics, travel party, travel motivations, repeat tracking data, credit card data, big Existing visitation, type of accommodation, net promotion score, planning and data scraping markets booking sources, influencing factors, mode of transport Domestic visitor surveys, hotel and Domestic tourism information (same as above) operator surveys, mobile tracking Demand data Both existing and new Mega trends, regional trends, market segmentation Competitor analysis, consumer markets research, trend reports, qualitative Demographic characteristics, psychographic characteristics, customer focus groups, big data scraping, New markets journey details, trip details, spend planning and booking sources, social media listening destination selection influences, image or campaign responses Inventory of tourism businesses and business data (number of employees, turnover, guests served, etc.), including accommodation according to size (rooms and beds), location, price, and segment; tour operators; activities and products Business licensing authority registrations, tax agency Firm revenues, consumption, gross value added, employee registrations, representative compensation, gross fixed capital formation firm survey Census and household survey Existing Employment data disaggregated according to occupation, status supply (self-employed, employee, full time, part time), skill level, sex, location, age Supply Occupancy, average daily rate; revenue per available room; average length Hotel survey, STR105 of stay for accommodation according to size, location, price, segment Key obstacles that firms face (e.g., business environment, finance, skills, exposure to shocks), extent of local procurement, Representative firm surveys, investment in key technologies (e.g., digital technologies, clean energy, investor surveys resilient building) Investment promotion agency, Pipeline Investment pipeline, including type, size, service, and location of business investor surveys, landowners, supply and size and timeframe for investment government Macroeconomic indicators of inbound tourism expenditures, outbound tourism expenditures, tourism balance, tourism Tourism satellite account openness, tourism coverage; inbound tourism expenditures compared with exports, current account, imports Indicators Public spending on tourism and linked sectors Government budgets for current measurement Other Data on negative environmental and social externalities of Environmental audits, tourism (e.g., waste, pollution, natural asset damage) community sentiment surveys Tourism’s contribution to poverty reduction (necessary to include appropriately specific tourism-related standard industry classification Census and household survey (SIC) codes) Future Impacts of natural disasters on tourism businesses (e.g., lost Post-disaster needs measurements revenue, damage, environmental considerations) assessment 105 STR is a global data provider on accommodation: www.str.com  THE FUTURE OF PACIFIC TOURISM MARCH 2023 69 Collecting data on new markets and competitor research on new market segments or source markets and destinations is equally as important as understanding to identify relevant global trends. All countries should use existing markets. While data on existing markets is essential global data, both qualitative and quantitative, to understand to inform overall economic information and to better serve their competitor set. Examining their competitive set against and address the needs of existing markets, NTOs also must look to external data for tourism growth. Type 1 and some key success factors and indicators, linked to the objectives of Type 2 countries have done so already with the support of tourism policies, can support strategic growth and a deeper donors and partners to conduct primary consumer market understanding of development pathways (Box 21). Box 21. Belize Tourism Data: Accessing Supply and Demand Data for Decision Making The Belize Tourism Board provides tourism statistics and insights on industry performance to stakeholders to facilitate decision making, strategy, and policy creation. The interactive dashboard is available on the board’s website and includes demand data on arrivals, including overnight and cruise; source markets; locations visited; and seasonality.a Importantly, they provide regional data for industry and policy makers to review their competitive set. On the supply side, the dashboard includes accommodation statistics such as occupancy, Average Daily Rate, Revenue per Available Room and available inventory and tour operator information including top tour sites and activities and tour guide and tour operator inventory by destination. a. See https://www.belizetourismboard.org/belize-tourism/statistics/. Improving the quality of tourism data will increase the supply-side data are also important for investors and accuracy of analysis of the sector’s contribution to the financial institutions to understand the market size for new economy, provide countries with better information products, such as insurance for natural disasters and firm- to face future industry shocks, and inform investment level circular economy services. Data on tourism supply strategies. Supply-side data are essential for countries to and employment should be sex disaggregated to track understand the size of the sector and the types of businesses concerns about and improvements in women’s economic and number of employees in the industry. In the event of future shocks, including natural disasters and demand-side empowerment and employment. For supply-side data, events such as pandemics, having a detailed understanding working across the government with licensing boards and of industry composition will help the government make regulatory agencies and with the private sector is essential informed decisions about assistance measures. Robust to ease the burden of data collection (Box 22). Box 22. France’s DATAtourisme: Compiling Information for Tourism Intelligence DATAtourismea is France’s national system led by the General Directorate of Enterprises, in partnership with ADN Tourisme (National Federation of Institutional Tourism Organizations). It facilitates access to public data for tourist information through a national Open Data platform. The system was developed in 2017 to respond to the extreme fragmentation of tourist information across local Tourist Information Systems in France, an obstacle to the wide and multi-channel dissemination of qualified and reliable information. The core of DATAtourisme is a data aggregation platform, capable of bringing together data from various local public databases. The approach standardizes data formats and aligns them with a specific DATAtourism ontology, making them available in the Open Data platform via a single access point. The dissemination at a single access point of all the tourist data distributed in the local databases required the creation of a common dissemination format. To achieve this, a ‘semantic profile’ was created: composed of a tourism ontology and a business knowledge base (thesaurus), making it possible to respond to the relevant challenges of interoperability. (World Bank 2022e). a. See https://www.datatourisme.gouv.fr/ PIC governments could increase the efficiency of their linked sectors, such as transport; public investment in support to tourism by collecting and publishing more infrastructure; and funding of tourism management bodies. data about fiscal transfers from and to the sector. Such data could be collected, consolidated, monitored, and Ensuring that public spending in the sector is justified and published with a view to providing an understanding of efficient is particularly important in current times of tight where public resources are spent, what impacts it can be fiscal space. Limited data are available about the contribution linked to, and what are the potential funding and resourcing of tourism to tax earnings and amount and efficacy of gaps (Box 23). This could take the form of a public expenditure public spending to support tourism in PICs. This includes review for tourism and should be linked to broader efforts to any incentives and subsidies for businesses in tourism and improve public financial management. 70 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Box 23. Financing of Hawaii Tourism Authority: Transparency of Tourism Budgeting Hawaii has a long history of evidence-based decision making founded on strong data collection and analysis. Hawaii’s stakeholders leverage high-quality data, studies, and research to make evidenced-based decisions to inform strategic tourism plans and investment planning. Leaders are equipped with the skills and knowledge to interpret data. After it gained statehood in 1959, Hawaii took a coordinated approach to tourism development, with focused research on market demand to develop investment-oriented destination plans. In the 1980s, the state launched holistic long-term planning based on demand studies, resident sentiment surveys, and investment in public spaces. The Tourism Accommodation Tax, launched in 1986, supported creation of the Hawaii Tourism Authority in 1998 and construction of the Hawaii Convention Center. The tax provides a dedicated source of funds for promotion and is easily levied with limited impact on residents. More importantly, the tax allows for clear, transparent fiscal transfer for public funding for tourism management, marketing, and development. Tourism accommodation tax revenue is distributed to counties (20 percent); the Tourism Special Fund, which the Hawaii Tourism Authority manages (16 percent); the Convention Center (5 percent); conservation programs (0.8 percent); and the General Fund (57 percent) (IFC 2019c). Data collection priorities are different for different From a destination perspective, strong leadership and a destination categories. clear strategy for digital transformation is an essential part of supporting digital adoption. From a market perspective, •  In Type 1, 2, and 4 countries, priorities are to maintain digital transformation is especially important for high-value funding for tourism statistics collection and analysis markets that tend to book direct more often and seek strong through research initiatives such as international pre- and post-trip communication with businesses through visitor surveys (IVS) and to focus on dissemination of customer engagement and personalization tools. knowledge created through these initiatives. Since Fiji is advanced in data collection and dissemination, it • Business case: NTOs, destination management should focus on institutionalizing these activities with organizations, and firms are often hesitant to invest in a permanent budget, deepening subnational tourism digital technologies, because they may not be convinced data to understand how to spread the benefit of tourism of the return on investment. When digital technologies throughout the country, and acquiring more global data are used, it is often at a basic level for front-end on high-value market trends. Type 2 countries could also business functions (e.g., using social media to advertise). benefit from stronger subnational tourism data. Few firms have the capacity to conduct end-to-end digital transactions including payment or use digital Type 2 and 4 countries should explore integration of •  tools for back-end functions (e.g., customer relations existing arrival and visitor survey data into accessible management, inventory, finance, and accounting). business intelligence platforms with insights and This means that firm lose out on potential productivity interpretation for industry to operationalize the findings. gains. By identifying and communicating the benefits • Type 3 countries should focus on improving basic tourism and of returns on digital investments, NTOs can foster statistics at the national and district levels (e.g., visitor productivity gains in the industry. arrivals according to category, product, and service • Capacity building: For NTOs to lead digital supply) and coordinate data collection and analysis across transformation across the tourism sector, they require the government. This will lay the statistical foundations in-house knowledge and skills on digitalization. This for deeper data engagement, such as launching an means creating specific jobs for digital leadership, bringing IVS or leveraging big data. For Type 3 and 4 countries, skilled people on board, and ensuring that knowledge limited budgets often limit data collection and analysis, transfers are occurring across the organization (World so working closely with regional organizations such as Bank 2022e). Technical support and training programs on the Pacific Tourism Organisation and Pacific Community digital technologies could also be implemented to build is necessary, especially to improve economic analysis the capacity of MSMEs. Such programs could be designed of data. Regional organizations could lead in analyzing to equip firms and employees not just with tourism- trends across markets and monitoring potential demand specific digital capabilities, but also with more broadly shocks that could affect the region. applicable skills that could be used in other activities in case of a tourism downturn. Digital Transformation Data equity and security: Large and multinational •  for Tourism businesses have access to a wide range of customer- Tourism planning and measurement require co- generated data, giving them a competitive edge. ordinated leadership on tourism sector digitalization. Destinations can create systems for equitable data To take advantage of direct booking trends and retain more sharing along the value chain so that MSMEs also have tourism dollars in the local economy, it will be important to access to powerful data-driven insights (Box 24). At the enhance digital adoption by governments, NTOs, and firms. same time, destinations are becoming more vulnerable THE FUTURE OF PACIFIC TOURISM MARCH 2023 71 when it comes to data security and personal data privacy. ICT infrastructure varies in quality and range across the Creating and implementing policies on personal data region. While these challenges are not covered in detail here mobility, interoperability, equitable access to data, and because they have been discussed elsewhere (World Bank transparency will be essential for all Pacific countries. 2019), they are a foundation for a modern, digitally enabled Information and communications technology (ICT) tourism sector. For Type 3 and 4 countries, ICT infrastructure infrastructure, combined with a competition framework is a binding constraint on business development and sector for the sector, underpins investments in digital growth, especially in rural destinations. For Type 1 and 2 transformation. Competition within the Pacific tourism destinations, expanding higher-speed Internet into rural sector is important as large online travel agents, online areas can reduce the cost of doing business and open these marketing platforms, and Pacific financing institutions have destinations for certain high-value markets, such as digital a concentration of market power, meaning that services can nomads and Gen Zers, who require a high-quality Internet be expensive and limited, especially for MSMEs. Furthermore, connection while traveling. Box 24. Turismo de Portugal Travel BI: Tourism Data Analytics for Destination Management and Growth Travel BIa is a knowledge management platform developed by Turismo de Portugal (Portugal’s DMO) that integrates visitor data produced by various information systems within DMO and from other national and international data sources. The platform was created to help both the DMO and the industry to make data- based strategic decisions for planning, marketing, and investing within the tourism sector. The platform has been developed in-house by Turismo de Portugal and co-financed by COMPETE 2020, the National Operational Program for Competitiveness and Internationalization and by the European Regional Development Fund, aligned with the principles of smart, sustainable and inclusive growth promoted by the Europe 2020 strategy. Travel BI integrates data across different sectors and generates business intelligence on 26 of the most important target markets for Portugal. The platform is also used by the DMO to monitor tourism flows through mobile data and identify travel spending patterns through transaction data. It acts as a central data hub integrating data from different sources that can be used to develop better market research and reporting for promotion campaigns, planning and investments. The platform also generates information on the sustainability of the industry, providing social, economic, and environmental indicators for each business sub-category. (World Bank 2022e). a. See https://travelbi.turismodeportugal.pt/pt-pt/Paginas/HomePage.aspx 3.2 Refocusing Destination more sustainable tourism industry, the pandemic has created a catalyst for a renewed focus on these efforts. Destination Development development policy guidance is discussed below across Building on integrated tourism planning, the right three main themes (Table 14): (i) an enabling environment for firms and investors, (ii) MSME growth and product measures can help PICs build diversified, high-quality diversification, and (iii) target marketing for diversification. destinations that attract high-value, high-yield tourists. While a strong enabling environment is necessary for most To do so, the public and private sectors must work together market segment development (with the notable exception to invest in targeted destination development by fostering being cruise), MSME growth, product development and MSME growth for market and product development, paired targeted marketing are essential for high value markets that with consistent, transparent communication to markets. seek unique experiences in destinations and can be harder While many PICs were already focused on MSMEs and to reach through wholesale channels given their propensity attracting higher value and niche markets and creating a to book direct. Table 14. Destination Development Priorities According to Country Type Policy area Type 1 Type 2 Type 3 Type 4 Improve the enabling environment Moderate High Very high High MSME growth and product diversification Very high Very high High High Target marketing for diversification Very high High Moderate Moderate 72 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Improving the Enabling direct booking opportunities as well as data privacy and security. PICs with greater digitization (e.g., Fiji) also can Environment explore pushing beyond traditional financial services to Since tourism experiences are predominately delivered build digital loyalty programs and e-payment systems by the private sector, ensuring a favorable business to create loyalty schemes and data for MSMEs (Box 25). enabling environment and investment climate is Key reforms and support programs to address access to foundational for diversified market development. A finance constraint include: positive business enabling environment should support large firms, which are often required to anchor destinations, – Providing training on financial management and and MSMEs that provide most of the tourism products and basic business skills to help MSMEs run profitable services in the Pacific. To be successful, tourism businesses businesses and, where necessary, access financing. require simplified business regulations, access to finance This can be supported through platforms to build and financial services, and uncomplicated firm entry and MSME capacity and increase MSME financial inclusion. exit processes. Additionally, gender-specific constraints Digital channels for this training can be used especially must be tackled to open markets for women entrepreneurs. in Type 1 and 2 countries, where MSMEs are more digitally savvy. Favorable business climate: Tourism businesses, both •  large enterprises and MSMEs, across the region struggle Encouraging creditors to lend to tourism MSMEs via –  with cumbersome licensing processes and regulations on targeted credit guarantee programs, expanding asset- registering and maintaining their businesses. As a tourism based financing (e.g., allowing mobile asset collateral, business typically engages in multiple types of activities, factoring, purchase order financing), developing obtaining licensing can add significantly to business costs. capital markets and private equity markets, and At a minimum, all countries should seek to ease business providing specialist platforms for the public listing of licensing processes and regulations by streamlining MSMEs (World Bank 2022b). Private equity markets processes and increasing cross-agency coordination on may be most appropriate at the regional level with documentation and renewals (e.g., a centralized business public listings of MSMEs in Type 1 and 2 countries. profile to avoid duplicated submissions to multiple agencies). This can be paired with capacity building on Exploring country-specific or regional tourism joint –  basic business skills so that tourism firms, especially equity funds for MSMEs backed by government equity micro and small enterprises, are operating in adherence funds to reduce risk profiles and facilitate investment with regulations. Key steps to support new firm entry in a related basket of MSMEs. include reducing foreign ownership restrictions, creating For Type 3 and 4 countries with limited public fiscal –  basic licensing categories for formalization of micro space and smaller, riskier markets, continuing to work enterprises, and potentially encouraging certain types of with donors to access grant support and capacity firms or products, provided they are based on a sound building for tourism firms may be the only viable economic rationale. For Type 1 and 2 countries, launching short-term solution for firm-level financing. or improving digital e-government services is critical for private sector growth. This should include digitizing • Gender gaps in entrepreneurship: PICs should address licensing, registration, renewal processes, fees, and legal and institutional barriers to women’s economic taxes and consolidating them in a one-stop-shop with a empowerment economy-wide, including ensuring centralized business profile to reduce transaction costs. that women have equal access to land and credit, do Importantly, creating simplified processes and systems, not face disadvantages in licensing and complying ensuring government service delivery staff are well with regulations for businesses, and can access social trained and empowered, and ensuring offline options are protection benefits and support programs. They should still available is key. A digital system is only as good as the also promote women’s entrepreneurship by supporting processes on which it is built. access to finance and information. This includes engaging •  Financial services and access to finance: Priorities existing women’s organizations and establishing include increasing financial inclusion and expanding and strengthening women’s business networks.106 digital payment systems, particularly for Type 2, 3, and 4 Approaches that leverage community-based platforms countries. Financial inclusion is critical coming out of the to facilitate access of female entrepreneurs to finance and pandemic because most firms need financing to upgrade knowledge could be effective in the Pacific. This approach their assets after a period of limited business and to was adopted for example in Cambodia, with support for meet new market expectations for health, safety, and informal self-help savings groups (targeting women’s resilience. Increasing the availability of low-cost digital groups), financial literacy training (e.g., bookkeeping, payment services is also necessary to expand the sector savings, and loans) and seed grants to groups that have and to access new, high-value markets that expect developed business plans for their members.107 106 For instance, the Solomon Islands Women in Business Association provides business training and lectures for members from the formal and  informal sectors. 107 See the World Bank’s Cambodia Livelihood Association and Employment of the Poor Project. THE FUTURE OF PACIFIC TOURISM MARCH 2023 73 • Standards: As countries look to improve the quality sector and training institutes to ensure that they are of their tourism offerings and expand into high-value reasonable and achievable in the local context. markets, setting and enforcing standards can increase While reforms discussed above are key to creating a product quality. This includes international standards robust private sector open to new tourism businesses compulsory for certification and local standards—those and markets, they would have broader benefits across for safety and health purposes and those that are industry sectors and could foster diversification outside of led. Adventure and wellness tourism are two markets tourism. For instance, (i) business regulation reforms can where standards are important to ensure the health and benefit tourism businesses and firms in other existing and safety of tourists and maintain a positive destination potential sectors; (ii) public investment in infrastructure reputation. Governments must pair new standards with to facilitate tourist arrivals can improve connectivity for appropriate enforcement regimes that do not create merchandise trade; (iii) public investment in digital and additional business barriers (e.g., obtaining certification language skills are transferrable across sectors; and (iv) or recertification should be a simplified process). New supply chain programs for farmers can help them access standards must be developed in partnership with private foreign markets. Box 25. X World Wallet and Visit Mexico: Building Customer Loyalty Through E-Payments Destination management organizations have an important role to play in accessing data and data equity, especially by providing destination-wide loyalty schemes and leveraging digital tools and technology to drive customer engagement. For example, Visit Mexico partnered with financial technology company Rêv to launch a digital wallet via a points-based loyalty program tied to a debit account: X World Wallet. The app, linked to a multi- currency debit account, gives tourists a locally accepted e-payment method and offers discounts and points to drive visitors to specific destinations and businesses. The program is designed to support small local businesses that struggle to generate repeat business. MSME Growth and Product especially community-based ones, do not have the market intelligence, insights, or capital to independently Diversification launch new ventures targeting these high-value markets. For PICs to attract high-value markets, they must be To support new market-driven products, NTOs need able to deliver high-quality experiences, which are formal product development support programs that overwhelming offered by MSMEs. MSMEs, including tour provide business and market intelligence, demonstrate operators, activity providers, and accommodations, are the the business case for investing, and build the capacity main providers of Pacific tourism products, experiences, of firms to enter new markets. These must be tailored and services. Supporting recovery of the MSME sector to each market segment, with some (e.g., adventure and fostering long-term growth is necessary to establish tourism) requiring more assistance than others (e.g., new products that can attract high-value tourists. These luxury tourism). Paired with these formal programs, NTOs investments are particularly important for experiential should support ongoing informal education through tourism market segments that engage in many activities networking events, webinars, and media coverage of and seek out local businesses. In addition to improving opportunities and trends in priority market segments. the enabling environment as laid out above, this requires Improving the diversity and number of experiences will investments at the sector level and specific, niche market- increase visitor spending by increasing satisfaction levels based approaches: and length of stay. MSME product development capacity: Most PIC •  Route and event development: In addition to •  NTOs do not have a formal system to support product product development, leadership from NTOs in route development and typically lack in-house capacity for development and experience packaging is necessary product development. This extends to communities and to showcase the range of niche and high-value market MSMEs that tend to gravitate to existing markets and activities in a country. Route development is the process replicate existing experiences as they are seen as trusted, of presenting the destination and its activities in a way proven business models. Although there was some that helps visitors understand, approach, and appreciate innovative private sector–led product development in the destinations (Box 26).108 Similarly, experience the years before COVID-19, such as Rosie Holidays (luxury packaging is a way to combine a range of activities into tours), Talanoa Treks (community trekking), and South an overall experience to showcase what the destination Sea Horizons (cultural festivals), most tour providers, has to offer. NTOs are well placed to lead these initiatives 108 As opposed to itinerary development, which includes specific activities, accommodations, and services for a dedicated trip. 74 THE FUTURE OF PACIFIC TOURISM MARCH 2023 that bring together multiple businesses and often rely on • Protected-area management: Tourism experiences are public resources. Event-based tourism can also launch often built around natural and cultural public or indigenous a destination into a new market without committing assets. There is a tendency across the region for these to long-term investments in new businesses or assets to remain under government management when products. The Pacific is well suited to offer event opened for commercial activities. However, in order to tourism, with Type 1, 2, and 4 countries having deliver high quality, innovative and consistent tourism opportunities in cultural, adventure, and sport tourism experience for high-value markets while also conserving and Type 3 in marine tourism. Event development the environment, private sector investment and funds can underwrite initial startup costs but require management can provide new opportunities (Box 27). To a clear commitment and matching funding from the support PPPs in protected areas, Pacific countries must event producer and robust planning that considers streamline, harmonize, and simplify their protected-area event infrastructure and service considerations management regimes and create formal, legal pathways (accommodations, transport, facilities). for concessions or PPPs. Box 26. The Wild Atlantic Way: A Case Study in Route and Product Development The Wild Atlantic Way developed by Failte Ireland (national tourism development authority) between 2015-2019 provides a comprehensive case on both route and product development to expand the tourism offer and open a new tourism destination. The 2,500 km route links together nine coastal areas in the West of Ireland and stands as a core tourism experience through which tourists can explore the wider destination. In addition to infrastructure and wayfinding investments, route development included creating a new overarching brand, definition of zones and itineraries to market to travel trade and consumers, dedicated marketing campaigns and a trip planner tool, investment in discovery points (e.g., access points, lookouts, attractions), and support for extensive experience development and business support programs. Failte Ireland and local enterprise offices provided business and product development support, including industry market insights and competitor set analysis, facilitating networking, trade forums and manual, and business-level support to develop high-quality, market-ready visitor experiences. Industry capacity building and investment is delivered through Failte Ireland in such areas as sales, distribution, revenue management, cross-promotion, digitalization, and customer care. Key factors underpinning the success of the Wild Atlantic Way include starting with a strong foundation of research; creating a strategic approach and comprehensive monitoring and evaluation plan; thinking big and linking geographies together to achieve scale; providing good leadership and adequate budgets for staffing and investments; fostering strong partnerships with environmental, government, community, and business stakeholders; creating a comprehensive investment approach; and promoting brand-led development with commitment from industry and travel trade. Source: Visit England 2016. Box 27. South African Joint Ventures: Private Sector Support for Conservation Private sector engagement in protected area management and wildlife conservation in South Africa provides one possible approach to improving tourism revenue generation for conservation. Wilderness Safaris and &Beyond are tour and lodge operators that have achieved success in expanding small operations to support tourism flows to broader geographic areas; creating local employment; and launching supply chain linkages, investment, biodiversity conservation, and corporate social responsibility programs. Both operators have core goals to support tourism, conservation, and sustainable business operations through community joint ventures. In addition to revenue and income, both businesses provide technical expertise on business and financial management to communities to foster long-term empowerment. Their success is due to a strong enabling environment for concessions and leasing (both with government and directly with communities), including clear land tenure and public sector investment in trunk infrastructure and access and a long-term, mutually beneficial joint venture agreement providing income for communities. The model is designed to transition conservation and protected- area management from donor or government funding to a private sector–driven approach. Source: World Bank 2014. THE FUTURE OF PACIFIC TOURISM MARCH 2023 75 Image: Solomon Islands Target Marketing for Diversification positive stories about the destination and leverage social media is an effective way to shift consumer sentiment in Strong product offerings and dynamic firms should be markets. One successful example of this tactic is Rwanda’s supported by coordinated destination-level marketing efforts to rebuild its reputation after the genocide in the that targets priority markets with consistent messaging. Aside from Fiji, the PICs have limited funding for destination- 1990s. In addition to traditional marketing, it leveraged level marketing that impacts their market penetration and print media, tourism awards, and public events such as awareness in priority markets. This is especially true for Type gorilla-naming ceremonies to attract positive media 3 and 4 countries that have more limited fiscal space and attention. lower tourism taxation revenue. Measuring return on investment: The return on •  Investment in destination marketing: NTOs have a key investment for destination marketing is difficult to role to play in destination marketing and awareness raising measure and monitor. However, NTOs need to be able as a public investment, particularly given coordination to understand and communicate the impacts of their failures across the private sector, high transaction costs, and marketing investments (Box 29). All countries should concentration of market power in anchor businesses. NTO- seek partners to design monitoring systems to measure led marketing should be designed to build awareness of the impacts of their campaigns, especially on conversion destination in target markets and create and communicate to bookings, to demonstrate the value of investing in a consistent message. Public investments in marketing new tourism markets. Type 1 and 2 countries can build and promotion are critical because they underwrite the on existing relationships with market research firms, risk of accessing and entering new priority markets and and Type 3 and 4 countries can explore relationships ensure that marketing includes the range of activities and with regional universities. All countries can work with locations available in the destination. The latter is important distribution partners to use call-to-action marketing as countries attempt to spread the benefits of tourism to rural or less-developed tourism areas and markets, such as tools to measure effectiveness of campaigns and adventure tourism, that are dominated by MSMEs unable to leverage resources of associations such as the Travel and conduct destination awareness marketing on their own. Key Tourism Research Association and the Adventure Travel elements of successful marketing include: Trade Association to increase their understanding of evidenced-based decision making tools and processes. • Digital marketing: Digital marketing needs strong leadership, a method to measure returns on investment, In addition to destination marketing, PICs must and a holistic approach for digital marketing throughout consider market-specific regulatory forms. As they seek the customer journey. Building in-house digital marketing to develop new high-value markets, specific regulatory skills in Type 1 and 2 country NTOs will foster sustainable reforms may be required to open these markets. marketing expertise, while Type 3 and 4 countries should Immigration reforms on visa-free or visa-on-arrival access is focus on partnerships in order to avoid spreading their fundamental to open markets. As countries seeks to attract internal resources too thin. new markets, they must consider visa regimes that match • Cooperative marketing: NTOs, especially in Type 1 and market needs. For example, digital nomads and longer- 2 countries, have an opportunity to lead cooperative stay tourists need special visas that allow them to stay in marketing campaigns that leverage private sector the country for up to 12 months and work remotely, along support (financial and in kind) to deliver effective, with appropriate taxation policies to avoid double taxation consistent messaging. Cooperative marketing must have (Box 30). The retiree market also requires special residential strong leadership and accessible tools for messaging, permits, foreign land ownership rights, and part-time work imaging, and distribution channels (Box 28). or investment privileges. Similarly, as countries seek to open • Public relations: For Type 3 and 4 countries, investing or expand Asian markets, facilitating visa-free or visa-on- heavily in marketing will be challenging given limited arrival systems for these countries will necessary. Increasing fiscal space and the negative destination sentiment that connectivity through aviation policy liberalization and air pervades core markets, especially for Type 4 countries. route development will also ease new market entry and Investing in public relations campaigns that focus on decrease the cost of opening these high-value markets. 76 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Box 28. New Zealand Destination Marketing: Shifting Perceptions to Increase High-Value Arrivals Tourism New Zealand is mandated to increase the value of international arrivals and increase spend per arrival to create sustainable economic prosperity through tourism. Leveraging the 100 percent Pure New Zealand brand, Tourism New Zealand began a targeted campaign toward premium travelers in 2013. A dedicated internal team began with core market research (including demographic and psychographic profiles) to build targeted content, identify appropriate marketing placements, and create accessible distribution channels. They leveraged industry partnerships for ad and native ad placement and to measure results. The latter was done in partnership with New Zealand Luxury Lodges (portfolio of 32 properties) to measure and report revenues and the International Air Transport Association to measure growth in inbound business and first-class airfare. Marketing focused on storytelling and included print and digital campaigns, targeted social media, a media familiarization trip, and engagement of an affluent influencer. It leveraged and built upon the existing brand with a core focus on a diverse, immersive product offering, exclusivity of experiences, and personalized interactions with New Zealand people. The campaign resulted in a 141 percent increase in New Zealand Luxury Lodges revenues over four years (TEAM Tourism Consulting 2018). Box 29. Belize Digital Marketing Campaign: Driving Sales and Measuring Success with Digital Marketing The Belize Tourism Board worked with Digital Visitor to increase air arrivals from U.K. markets through an interactive digital campaign and consumer data collection. The campaign was designed to build destination- level awareness and knowledge of Belize, collect consumer data on interested travelers, and drive online sales through campaign partners. The multichannel campaign leveraged social media tools such as Facebook Audience Network, YouTube campaigns, and interactive Instagram Stories to drive visitation to Belize’s destination website. Engaging content was created to communicate the Belize brand in short and long formats that could be used in different spaces. The campaign included data capture campaigns to collect consumer information in compliance with the General Data Protection Regulation and build Belize’s email database. The campaign measured results, including a 100 percent increase in booking through partners, 15 million impressions with the targeted audience, and more than 6,500 email address collected in compliance with the General Data Protection Regulation (Digital Visitor n.d.). Box 30. Barbados Welcome Stamp Visa: Regulatory Reform to Attract New Markets In response to COVID-19, Barbados launched the Welcome Stamp Visa program to attract long-term digital nomads and remote workers. The one-year visa program began in July 2020, and by May 2021, more than 2,500 people had applied, mainly from Canada, Nigeria, the United States, and the United Kingdom, far exceeding the original goal of 1,000 applications. The visa program was paired with a digital campaign that partnered with global media to reach potential travelers. Results include 1,796 stories in North American top-tier media outlets and 4.8 billion impressions, worth USD 49 million in advertising value. In a survey of 100 Welcome Stamp Visa holders, around 75 percent had never visited Barbados and were paying USD 2,500 to USD 5,000 per month for housing, supporting the local economy. Implementing the new program required regulatory updates in visa, immigration, and taxation regulations (DCI n.d.; New York Times 2021). THE FUTURE OF PACIFIC TOURISM MARCH 2023 77 3.3 Building Human Capital in The pandemic has exacerbated the labor shortage, bringing preexisting challenges across the region to the forefront, the Tourism Workforce including lack of firm productivity and high cost of in-house For Pacific tourism to shift to high-value markets and training for firms. Poor-quality skills and lack of market- reduce economic leakage, the skills shortage in the specific skills can hinder development of high-value tourism workforce must be addressed through better markets that seek high-quality customer service and diverse training, updates to labor policies and programs, and experiences in destinations. To address these systemic, investment in basic education. Even before the pandemic, economy-wide challenges requires a combination of skills the Pacific tourism industry found it challenging to development, labor policy, and gender-related reforms source workers with the right types and quality of skills. (Table 15). Table 15. Building Human Capital Priorities According to Country Type Policy area Type 1 Type 2 Type 3 Type 4 Build tourism skills Moderate Very high Very high Very high • Skills training: There is debate about the effectiveness of deliver positive returns, including cost of delivery (initial current training and educational programs in producing implementation costs and variable costs per trainee), qualified, skilled graduates prepared for employment. To effectiveness at producing employable graduates improve the content of courses and delivery, specific skills (justifying involving the private sector in curricula and gaps must be understood. Countries should regularly delivery), and types of skills and market segment targeted. analyze skills gaps and create market information Given that direct benefits of providing vocational training systems to ensure that TVETs and educational primarily accrue to employers of graduates and to the institutions are aware of in-demand skills, gaps, and graduates themselves, it can be appropriate for employers graduate success (Box 31). Further resourcing for TVET and students to at least partially finance the costs of teacher training is also important. More importantly, establishing and maintaining training institutions. For additional focus is needed on soft skills development, instance, prospective employers may partially cover the such as conflict resolution, timeliness, and responsibility. fixed and/or variable costs of training through PPPs, while Some countries have begun to turn to work readiness tuition payments by students—which may themselves training, which should be supported through policy and be financed by student loans and scholarships –could resourcing. Offering formal training in soft skills and partially cover the variable costs of training. informal learning opportunities is necessary to build a culture of work readiness. For Type 3 countries in • Private sector engagement: To increase the efficacy of particular, accessing or fostering regional training and existing training and education programs in the region, higher education programs to reach economies of scale private sector involvement in curriculum development for quality education is important. Supporting regional and standards settings must be institutionalized so that approaches to training and education, for example training is aligned with private sector needs in terms through scholarships, can reduce public investment in of content and delivery modes (Box 32). Although this expensive vocational training programs in each country. is being done in some countries, the tourism private It is challenging to obtain international accreditation for sector’s role in training must be strengthened through TVET certificates and courses. As countries aim to improve enhanced apprenticeships, lecturers who are actively their TVET experiences, they should seek international working in tourism, and monitoring of graduate success. linkages with the most appropriate regional systems Many tourism graduates require additional, in-house (Australia and New Zealand versus the United States). training once they are hired. Leveraging the private Accreditation systems should aim for flexibility and sector’s ongoing, in-house training through PPP models focus on achievement rather than highly standardized or subsidies can ease the public investment burden in individual courses that are difficult to update. training and education while leveraging the best training •  Rigorous cost-benefit analysis of TVET: Investments available, especially for Type 2, 3, and 4 countries. This in TVET can help improve local skill supply, as a process will also help identify market-specific skills that complement to other policies (e.g., public investment need to be developed. Two key markets include wellness in basic education, reform of migrant worker programs, and adventure tourism, where highly skilled professionals relaxation of restrictions on expatriate recruitment). are necessary to develop products, ensure safety, and However, reforms should be guided by international best create quality experiences. Skills development programs practices on TVET and carefully designed, as there is no in these areas, as well as others such as SCUBA diving, guarantee that their benefits will justify the investment should be paired with strong standards based on globally cost. Key factors determine a program’s capacity to accepted certifications or associations. 78 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Digital skills development: Digital skills development •  • Gender: To broaden the benefits from tourism growth, programs should be designed to build digital abilities PICs should address the gender gaps that undermine at all levels, including in basic education, vocational female workers’ participation in tourism by: schools, higher education institutes, industry, and Equipping women with the necessary skills to enter –  government. Digital education programs in basic and progress in tourism employment through job education and vocational schools in particular should placements and on-the-job-training. Evidence has be built around globally accepted standards and have shown that on-the-job and skills trainings provided built-in updates to ensure that curricula stay relevant. through subsidized internships can increase post- For the tourism workforce and entrepreneurs, NTOs can project wage employment rates for both male and create networking and mentoring programs in the digital female youth (World Bank 2018). In addition, ensuring space, which has been more effective than traditional women have access to higher-paid occupations training. Leveraging industry relationships with tourism requires targeted actions such as leadership training businesses in Australia and New Zealand can help the and mentoring; revising human resource policies; industry stay up to date with trends in technology. performance evaluation and promotions; and addressing gender stereotypes through dedicated Labor mobility programs: Labor mobility programs •  trainings of staff at different levels of seniority (Das provide an opportunity for Pacific Island populations to and Kotikula 2019). earn money overseas and gain new skills. They are an important source of income for many families across Adopting measures to tackle social norms, address –  the region, although they can put additional pressure gender-based violence and reduce the burden on an already-limited tourism workforce, with some of unpaid domestic work and care. This includes combining employment interventions with strength- countries particularly concerned about this given ened mechanisms for counselling and referral, as COVID-19-related labor shortages. When designing well as reducing risks of sexual harassment through programs, countries should take a strategic approach workplace policies and codes of conduct (e.g., following in the recruitment and matching process to ensure that IFC’s Rakorako model). This also involves community the right participants are being selected and matched outreach to facilitate women’s participation in with appropriate positions and employers. To do so, employment and skills development initiatives.109 At the countries must resource their labor mobility operations policy level, this includes addressing sexual harassment sending units with adequate financial and human in national employment legislation; strengthening resources to support the recruitment and vetting process. implementation of national domestic violence laws; Involving the private sector, on the sending and receiving establishing parental and maternity leave policies; and sides, in the recruitment and matching process can providing good-quality, affordable childcare. provide more information on the types of jobs hospitality Immigration and labor reform: In parallel with efforts •  workers go into and the types of skills they may learn to expand the domestic skill base, which will take time there (Box 33). Fostering partnerships between sending to realize results, PICs should review the rules governing and receiving private sector employers can help success entry and hiring of foreign workers, particularly for to be achieved on both sides. It should be noted that positions for which the quantity and quality of local skills these private sector approaches are relatively new and are insufficient. Tourism businesses, especially those have not yet been studied. Thoroughly assessing these seeking to develop high-value, sustainable offerings, initiatives will be important to setting policy guidance. should be consulted to identify excessively stringent, Overall, the most important policy actions to support costly rules that could be candidates for reform. Any long-term income generation, whether through mobility liberalization measures could be extended to other programs or domestic employment, should encourage sectors to bring benefits for private sector growth workforce upskilling. beyond tourism. Box 31. Turismo Portugal: Forecasting Skill Needs to Build Strong Training Turismo Portugal, the country’s NTO, offers skills training in tourism and hospitality through a network for 12 tourism schools spread across the country. Both their training curricula and marketing to students is overseen by the National Agency for Qualification and the National Agency for Vocational Education and Training. Together they inform national and regional skills development priorities based on research, consultations with industry, and the Qualification Needs Anticipation System, which provides a comprehensive analysis of skills supply and demand. The Qualification Needs Anticipation System collates data from a number of skills planning exercises to inform policy, and improve the offer to private sector, students, and tourism employees looking to upskill through training. During COVID-19, Turismo Portugal shifted training to a digital, online platform, greatly expanding their reach through the Digital Academy (CEDEFOP 2017; Opçao Turismo 2020). 109 F  or instance, the Vanuatu provincial TVET centers established under the Vanuatu Skills Partnership have been able to attract an increasing number of female participants using some promising approaches in this regard. The dedicated TVET center Gender Strategy has aimed to address key barriers to women’s participation in TVET, including domestic responsibilities, social norms, and lack of support from partners/family, limited decision-making within training organization, and training environment (including by training of female trainers). THE FUTURE OF PACIFIC TOURISM MARCH 2023 79 Image: Vanuatu Box 32. Amadeus Travel Tech School and Lab: Private Sector Provision of Digital Training for Tourism Amadeus partnered with public and private sector entities to launch a Travel Tech School alongside the Living Lab in Spain’s Canary Islands. The program provides vocational training to supplement instruction from the University of Las Palmas de Gran Canaria, with credits counting towards existing degree programs. As an initiative, it is designed to nurture and develop strong technology and digital skills, reinforcing the human capital required to ensure tourism can take advantage of technology advancements. The program seeks to bring both students and existing businesses into a living lab environment, where the benefits of future technology can be explored. This ensures that industry advances its exposure to digital trends and has a space where they can explore the potential benefits of technology, together with experts, specialists, and future leaders. The teaching methods focus on autonomy in practice, encouraging students to develop the soft skills necessary to compete in today’s world. While the Travel Tech School teaches programming, robots and machine learning, the institution also secured USD 6 million in funding to develop a new pedagogical system called Neurotalentour - a system designed to use virtual reality to stimulate challenges in a learning environment. The company managing this initiative, The Wise Dreams, has built a support network with regional organizations including DMOs, Governmental and key industry stakeholders. (The Wise Dreams, n.d.; World Bank 2022e). Box 33. Coral Seas Hotel: Private Sector–Led Labor Mobility as Workforce Development Tactic The Coral Seas Hotel group in Papua New Guinea operates seven hotels throughout the country including both leisure and business-oriented properties. They have taken a strategic approach to leverage the regional labor mobility programs to improve staff skills and incentivize good work. The group links directly with employers in Australia to identify opportunities for their staff to participate in the labor mobility programs and then uses these placements as rewards for staff who are high performers. Since the hotel is actively engaged in placement and return processes, they are more easily able to control the exit and re-entry process of their workforce. However, this is a relatively new program and has not yet been studied to determine medium- and long-term success. 80 THE FUTURE OF PACIFIC TOURISM MARCH 2023 3.4 Mainstreaming Resource in essential services, targeted policy reforms, and programs that incentivize and equip the private sector to make Efficiency and Resiliency sustainable investments (Table 16). Although resilience in Destinations investments are necessary for the long-term viability of all tourism markets, high-value markets are more sensitive To mainstream investments in resilience and resource to resource efficiency, because they often seek sustainable efficiency in the tourism sector, a coordinated approach destinations. High-volume and high-value markets will by governments, NTOs, and the private sector is also need robust disaster preparedness planning and required. This approach should be underpinned by management to build their confidence, all the more so enhanced knowledge, especially on climate adaptation and given the prospects of intensifying natural disasters with resilience at the destination level, and strategic investments climate change. Table 16. Resource Efficiency and Resiliency Priorities for Country Types Policy area Type 1 Type 2 Type 3 Type 4 Improve resource efficiency High Moderate Moderate Moderate Build destination resilience High Very high High Very high • Knowledge: Developing and disseminating more environmental degradation and identifying the economic knowledge about the impacts of climate change and rationale for actions to address environmental and environmental degradation on tourism and about climate challenges. Knowledge should also be developed opportunities for improved resilience and resource and disseminated to foster investment in resource efficiency is foundational for all country types. Critically, efficiency, for instance on resource monitoring and costs, hotel resource use benchmarking, and market understanding the long-term benefits of investing demand for sustainable services, which can reduce risk in resilient large- and small-scale infrastructure can for investors. Data generation in these areas can be assist governments and the private sector in making paired with dissemination programs to raise awareness informed short term investment decision. This would of the environmental and cost savings of investments include understanding the long-term economic, social, in renewable energy and green and climate-smart and environmental impacts of climate change and technologies. THE FUTURE OF PACIFIC TOURISM MARCH 2023 81 • Policy reforms: To achieve these goals, ministries of resource-efficient equipment. This can include property- tourism must advocate and network through cross- linked efficiency financing and insurance for green assets ministerial committees to identify and implement policies tied to environmental and social criteria, ensuring that that facilitate the emergence of more-sustainable, private solutions are not crowded out. For MSMEs, -resilient destinations. T This is a prime example of financial constraints on investing in resource efficiency the rationale for a whole of government approach are a major obstacle. Special credits and preferential loan in tourism planning, as these policy and regulatory terms for renewable energy, water efficiency system areas are for the most part not within the purview of installation, and resilient infrastructure targeted at tourism ministries. Critical among these reforms would MSMEs can help ease the transition. Equally as important be leveraging knowledge on the economic rationale as financial incentives for the private sector are greater for climate action to regulate and discourage actions knowledge about the circular economy, resilience, that harm the environment. Other key reforms to and resource efficiency options and benefits that can consider include conserving and protecting biodiversity; be delivered through targeted training programs and integrating circular economy principles into tourism- awareness-raising campaigns. At the regional level, there related legislation and policies; improving construction is an opportunity to develop and encourage uptake of standards and building codes for resilience and resource regional sustainability certifications, offer sustainability efficiency (while respecting local challenges and supply awards, and provide promotional opportunities to constraints); promoting PPP models in developing and highlight green-certified firms and destinations, creating managing essential services; providing incentives to a demand-side motivation for firm-level investment in reduce resource use, particularly water and energy; resource efficiency. Investment in clean technologies and implementing independent power production could also benefit PIC communities by reducing air and regulations for resorts with renewable energy sources to water pollution from fossil fuel combustion and spills and sell surplus power and thus reduce the payback period for creating job opportunities for installation, operation, and private investment. maintenance of such technologies (IRENA 2014). Essential service investments: Strategic investments •  Safety and security: Destination safety often ranks •  by the public and private sectors in essential services among the top 10 destination selection factors for such as electricity and water, wastewater, and solid travelers. Increasing safety, security, and political stability waste management will be necessary to serve growing in Type 4 countries is critical for long-term sustainable populations and expanding tourism markets. Planning tourism growth. Developing destinations in safe these investments in line with tourism forecasts is provinces or regions of a country dealing with conflict crucial to ensure that services have the capacity to has proven successful in the past, but this success can serve populations and visitors sustainably. Although be easily threatened by national issues, negative brand typically outside the purview of tourism ministries, reputation, or flare ups of violence. governments should consider how investments in Disaster •  preparedness and risk management essential services meet current and future tourism for tourism: In addition to investment in resilient demand and affect destination competitiveness. infrastructure, NTOs and tourism businesses must be Pursuing high-value markets that prioritize sustainability well prepared for managing a crisis when disaster strikes will put additional pressure on destination infrastructure, (Box 35). Working closely with industry, NTOs should since tourists expect resource-efficient and circular develop comprehensive crisis-preparedness frameworks, services and adequate waste management, particularly including detailed action plans for various disaster in environmentally sensitive locations. PICs and regional scenarios, capacity-building programs, communications organizations must continue promoting regional protocols, and safety and security arrangements. These and sub-regional opportunities for circular economy should be paired with sufficient resources that can infrastructure in waste management and recycling to be rapidly mobilized (e.g., crisis escrow accounts) and achieve economies of scale. disaster insurance products to enable industry response • Private investments and incentives: The private sector and recovery. Plans must be thoroughly communicated must also participate and invest actively in resilient, to industry, communities, and tourists to ensure a resource-efficient destinations and businesses (Box coordinated response and build confidence across the 34). The public sector can encourage these investments sector. For Type 1 and 2 countries, investing in prepared through incentives, access to finance, access to technical marketing campaigns that can be delivered quickly in knowledge and information on available resources, the aftermath of disaster can help shorten the demand facilitation of supply chain cooperation or cluster buying recovery period (e.g., Fiji’s Stronger than Winston and installation, and reduction in the cost of importing campaign). 82 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Box 34. International Finance Corporation and United Nations World Tourism Organization Hotel Greening: Supporting Knowledge Development to Unlock Green Finance The United Nations World Tourism Organization partnered with the IFC for a series of technical training programs to promote green finance and unlock its potential to accelerate tourism’s recovery from COVID-19 and stimulate sustainable growth, with a pilot phase in seven countries (India, Indonesia, Jamaica, Philippines, South Africa, Thailand, Vietnam). The program was a post-COVID medium-term credit line made available to hotels affected by the downturn in tourism caused by the pandemic, coupled with provisions for green retrofitting, and disbursed in partnership with local financial institutions starting in 2021. Through the partnership, they also increased knowledge about government incentives to catalyze green building in tourism: • Tax incentives such as tax credits to offset additional costs associated with resource-efficient construction; • Bonus density to allow taller or larger buildings; • Expedited permitting to prioritize permits for green construction or waive permit fees; • Grants and loans to cities to encourage solar power or subsidize certification; • Technical assistance to inspectors and government service providers on how to audit green buildings; • Net metering to support independent power production and grid connectivity; • Public campaigns to build support for green buildings; and • Legislation to integrate certification standards into codes. For example, Colombia supported green building development in residential and commercial properties by initiating a series of incentives such as exclusion of value-added tax and income tax deductions for project design services and technical solutions including insulation and energy-efficient air conditioning systems (IFC and UNWTO n.d.). Box 35. Resilient Tourism Framework The World Bank report Resilient Tourism: Competitiveness in the Face of Disasters outlines a five-stage resilient tourism framework for destinations, the private sector, development partners, financial institutions, and tourism destinations to manage and mitigate disaster risk (Figure 20). This includes increasing access to disaster risk financing and risk insurance, developing resilience knowledge bases and crisis playbooks specific to regional and national contexts, linking financial support and subsidies to compliance and resilience criteria, and expanding training and certification programs in tourism crisis management (World Bank 2020e). Figure 20. Tourism Resilience Building Cycle THE FUTURE OF PACIFIC TOURISM MARCH 2023 83 Image: Palau 84 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Conclusion The PICs have the opportunity to reset tourism to destination resilience, notably by prioritizing tourism in maximize its value and developmental impacts, provided public policy for enhanced safety, ensuring investments they take concrete action to strengthen the sector’s and reforms also take resource efficiency into account. competitiveness, sustainability, inclusiveness, and These countries must also build skills to leverage their resilience. With limited fiscal space and public sector existing tourism products and assets into world class capacity, prioritization is essential and varies depending on experiences. the country: Recommendations in this report offer a starting • For Fiji (Type 1), strengthening tourism management and point for each country, with further analysis and data increasing public sector capacity is necessary to move required to inform sound, detailed policy guidance. Policy from a regional leader to a global competitor. This should recommendations and discussion in this report focus on be paired with policies and programs to support MSME addressing high-level constraints across market segments. development and product and market diversification. Each PIC must examine its policy objectives—economy wide and tourism specific—to determine the best strategic market • Palau, Samoa, Tonga, and Vanuatu (Type 2) also need to segments to target and the most important policy actions. strengthen tourism management and adopt a whole- Deep, country-specific analysis (based on quantitative of-government approach to sector development, simulation presented in this report) must be conducted to ensuring that tourism-related policies and regulations provide the evidence base and policy guidance to achieve are strategically integrated into government. Similarly, greater value from each PIC’s tourism sector. MSME development, product diversification, and enhanced skills must be developed through private sector Policy reforms must also be balanced and assessed growth to ensure a competitive tourism offering and a against risks of uncoordinated investments and sufficient supply of skilled workers must be developed for changing priorities. The shift to high-value markets will long term sector sustainability. Type 2 country tourism require a committed approach that brings together multiple industries are most at risk from the impacts of climate agencies and stakeholders from the public and private change and natural disasters, given their existing tourism sectors. Without this coordination, standalone investments supply and exposure, and must invest in more resilience. in developing high-value tourism could falter or not achieve their intended objectives. The whole-of-government and Given their less-mature tourism sectors, FSM, Kiribati, •  whole-of-sector approach is a necessary underpinning for RMI, and Tuvalu (Type 3) must generate basic tourism success. The transition to higher-value models of tourism data to make evidence-based policy decisions, improve requires patience and long-term prioritization. Initial the general enabling environment for private sector investments will take time to seed, and growth may be growth, and build tourism skills to foster a dynamic slower than anticipated. Leveraging the data and tools tourism private sector. described in this report can help develop a more valuable • Finally, Solomon Islands and PNG (Type 4) must improve sector and provide the incentives to commit to this more- tourism management and coordination and enhance sustainable future of Pacific tourism. THE FUTURE OF PACIFIC TOURISM MARCH 2023 85 Image: Papua New Guinea 86 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Annex A: Tourism Typology and Country Characteristics Although Pacific Island countries (PICs) have specific on tourism (proxied by receipts expressed as a share of challenges and opportunities as destinations, they fall gross domestic product (GDP)), volume of tourism arrivals, into broad types. Identifying groups of countries facing and maturity of leisure tourism markets (proxied by share of arrivals with leisure as the main reason for traveling).110The similar challenges can provide a framework for delivering typology also considers destinations’ profiles in terms of policy advice across this broad group of countries and dominant leisure market segments, safety, and security, comparing learnings across types. This study, therefore, all of which are key determinants of tourism’s appeal uses a typology of Pacific tourism destinations to allow for and potential.111 Providing such a country typology helps generalizable comparisons. It identifies four types based on differentiate levels of readiness for further investments in several quantitative indicators (Table 17): economic reliance the industry. Table 17. Typology of Pacific Tourism Destinations Type 3 Type 2 (Federated States of Type 4 Type 1 (Palau, Samoa, Factor Micronesia, Kiribati, (Papua New Guinea, (Fiji) Tonga, Vanuatu) Republic of the Marshall Solomon Islands) Islands, Tuvalua) Economic reliance on tourism Medium to high (tourism receipts as % of gross High (>20%) Medium to low (<10%) Low (<5%) (>10%) domestic product) Moderate (60,000 Volume of international visitor arrivals High (>800,000) Low (<16,000) Varying to 200,000) Medium to large Share of leisure tourists Large (>55%) Medium to low (<55%) Low (<30%) (>30%) Marine and Marine and Dominant leisure segment Couples, families Marine adventure adventure Profile as safe, secure destination Yes Yes Yes No Tuvalu is an exception, with greater economic dependence on tourism but overall low arrivals, mostly because of the limitation of other industries a.  in the country. Type 1 Destination: Fiji spurred public and private investment, which eventually led the urban area of Nadi to develop into the tourism hub it Fiji emerged gradually as the leading destination in Pacific remains today and to the development of several smaller tourism. Its tourism dominance can be partially attributed tourism hubs in the country. to advantages dating back more than a century, when its geographic location helped establish it as a sea transport Before the COVID pandemic, the magnitude and quality hub and later a refueling stop for transpacific flights. At of Fiji’s tourism offering made it stand out in the region. the same time, Fiji started attracting international visitors Several indicators illustrate Fiji’s destination maturity and seeking “exotic” tropical islands, and the country established attractiveness to tourists and investors. By 2019, it reported a tourism board in the 1920s. A key catalyst for tourism 423 accommodation properties with almost 13,000 rooms, growth in Fiji was the post–World War II redevelopment of accounting for 40 percent of all room stock for PICs (SPTO a military airstrip on the west coast of the island of Viti Levu 2020). Fiji hosts 31 internationally branded properties of 42 to service new commercial flights. The redeveloped airport across the PICs, accounting for almost 40 percent of Fiji’s 110 Leisure tourism refers to travel for the purpose of vacation or holidays, as opposed to other travel motivations. 111  ountries not considered safe and secure are those on the World Bank’s fragile and conflict-affected situations country list and those that have C experienced violent unrest in the past five years. THE FUTURE OF PACIFIC TOURISM MARCH 2023 87 room supply.112 Fiji is unique in having several “exclusive” remaining regulatory barriers have reduced the country’s properties at the high end of the spectrum (Tourism Fiji attractiveness to prospective investors in accommodations. 2017).113 The country’s larger, higher-quality offerings extend Essential service infrastructure shortfalls have limited the to tour operators; it had approximately 160 in 2019, offering potential to open new areas to tourism. Skilled workforce experiences based predominantly on the islands’ compelling shortages have threatened the quality of tourism supply and (marine and terrestrial) nature and culture.114 Fiji is home to destination reputation. Limited access to finance and other 23 percent of PIC tour operators. barriers have constrained the growth of MSMEs that could provide unique visitor experiences that would enhance Fiji’s many visitor arrivals and tourism receipts also set it Fiji’s attractiveness to high-value tourists and increase the apart. It has the largest share (39 percent) of international sector’s inclusivity. flight arrivals to the region, with an average of 142 flights per week in 2019. International overnight arrivals to Fiji, which had grown at a 4 percent compound annual growth Type 2 Destinations: Palau, rate since 1999, reached an all-time high of 894,000 in 2019 Samoa, Tonga, and Vanuatu (59 percent of the total across the PICs). Leisure tourists Modern tourism emerged later in Type 2 destinations accounted for 73 percent of these arrivals (Fiji Bureau of and has remained smaller, but all Type 2 countries have Statistics n.d.), highlighting its position as a popular holiday established a critical mass of tourism infrastructure and destination, especially for families and couples from nearby services in recent decades. In Palau, increased air access Australia and New Zealand. The large number of arrivals from Asia and the United States in the 1960s, followed by brought in USD 1.35 billion in direct tourism receipts in investment in the first international hotel in the 1970s, 2019 (57 percent of total receipts across the PICs) (UNWTO spurred tourism development on the back of its SCUBA 2021a). Tourism receipts were much higher in Fiji than in the diving offer. In Vanuatu, tourism development expanded other countries in absolute terms. Nevertheless, because Fiji after independence in the 1980s. Recognizing the economic had other relatively well-developed sectors, the country’s potential of attracting tourists from nearby markets such economic reliance on tourism before COVID-19 was as Australia, the new government established Air Vanuatu comparable with that of Type 2 destinations based on the in 1981 and supported opening new areas for tourism relative value of receipts to GDP. development. These advances led to several destinations emerging across the island group and new products Government intervention has played an important role offering experiences of Vanuatu’s nature and culture. The in addressing challenges to the competitiveness of Fiji’s 1980s also saw growth of tourism in Samoa. The upgrade tourism industry. In addition to Fiji’s robust tourism assets, of its international airport to receive jets, followed by new intentional government support over several decades has tourism-enabling government policies, led tourism markets contributed to the country’s success in tourism development. to grow from nearby Australia and New Zealand. Initially Accessibility, availability of suitable land, the regulatory led by the VFR market because of migration links, leisure environment, access to finance, quantity and quality of arrivals eventually began to match volumes of VFRs, with labor, high costs of construction and operation, and lack foreign tourists attracted to Samoa’s marine and terrestrial of enabling public infrastructure (e.g., air, sea, and road offerings. As in Samoa, tourism in Tonga has grown from transport; information and communications technology; VFRs roots into a destination that attracts nearly an utilities; waste management) have constrained tourism equal share of leisure tourists. The government’s support investment in Fiji as in other PICs, but the government for tourism has in more recent years centered on natural has sought to address these constraints over the years experiences, especially whale watching, but Tonga has through targeted efforts, including land reform, investment moderated tourism to avoid disruption of the local culture. incentives, regulatory reform, business development As a result, the pace of tourism development in Tonga has support programs, institutional support, and investments been somewhat slower than in other countries of this type. in infrastructure and accommodation. As a result, Fiji has Notwithstanding differences in the evolution of tourism, in the last few decades, these destinations have achieved a regionally competitive investment climate for tourism, significant results in expanding public infrastructure to evidenced by relatively high private domestic and foreign support tourism, increasing products and services, and direct investment in the sector. improving air access. As of 2019, they provided 30 percent Despite Fiji’s success, it must address several constraints of the room stock across PICs, 49 percent of tour operators, that have undermined the competitiveness of its and 28 percent of international flights. Vanuatu led on all tourism sector since before the pandemic. For instance, counts, followed by Samoa. 112 Source: Authors based on consultations and desk study. In 2019, Fiji hosted 22 global brand properties (of 31 for PICs) and nine Pacific regional brand  properties (of 11). Based on Tourism Fiji classification of accommodation type according to price, with “exclusive” reflecting a daily room rate greater than FJD 2,500  113 (USD 1,100). 114 Includes operators classified as excursions, inbound tours and transfers, and marine operators (Tourism Fiji 2022).  88 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Growth of tourism in these countries has made it a critical contributor to their economies. Type 2 destinations experienced sustained growth in arrivals over the two decades before the pandemic, with compound annual growth rates of around three to four percent, despite some volatility.115 In 2019, Samoa attracted the most overnight international visitors (174,000), followed by Vanuatu (121,000), Palau (94,000), and Tonga (69,000) (UNWTO 2021a), together accounting for 30 percent of overnight visitor arrivals to the studied PICs. Leisure tourists were the predominant type of traveler for each. Like Fiji, Type 2 countries have generated substantial tourism receipts, increasing their prioritization of the sector and their economic reliance on it. Palau and Vanuatu, where estimated direct tourism receipts in 2019 were 34.9 and 31.5 percent of GDP, respectively, became especially reliant on tourism.116 Samoa followed, at 24.2 percent. Tonga’s receipts were a much lower share of GDP (11.1 percent), likely because of the high value of remittances in the Tongan economy. Palau, Samoa, Tonga, and Vanuatu share several advantages in developing tourism. As with Fiji, their proximity to source markets (three-to-four-hour flights from the closest ports of departure) has been a critical driver of market demand and supported establishment of tourism-enabling air services. Location has supported development of cruise tourism in some Type 2 countries, led by Vanuatu (45 percent share in 2019) because it is the closest to Australia’s east coast cruise ship hub. Country size has also played a role in the scale of tourism in these countries, with all, but especially Vanuatu, having the geographic capacity to develop a critical mass of supply. These destinations have also benefited from government commitment to developing the sector over several decades by investing in infrastructure, enabling private sector investment, and marketing the destination. Also common to these countries is that potential visitors perceive them as safe island destinations offering a wide range of nature- and culture-based activities, albeit at a scale smaller than Fiji. One element that sets Type 1 and 2 countries apart is the significantly smaller marketing budget in Type 2 countries. Type 2 destinations nonetheless face challenges in terms of tourism competitiveness. Barriers to developing a business-enabling environment and limited budgets for public infrastructure are common across the four countries, although less so than in Type 3 and 4 countries. The countries have also faced difficulties differentiating themselves, despite each having unique selling points (e.g., Palau’s dive sites, Tonga’s whale watching, Vanuatu’s volcanoes). All have strived to develop more distinctly local visitor experiences that appeal to target segments and maximize visitor stays and spending. Natural disasters have limited arrivals to Samoa, Tonga, and Vanuatu.  115 Palau experienced a period of extraordinary growth followed by a sudden decline in 2016 because of shifts in main source markets. Image: Fiji 116 Source: Authors’ estimate based on UNWTO tourism receipts data and  Credit: Elliot Wright GDP data from the World Development Indicators. THE FUTURE OF PACIFIC TOURISM MARCH 2023 89 Type 3 Destinations: The nature and scale of tourism supply in Type 3 countries are the least mature among PICs. In 2019, Federated States of Micronesia, Kiribati had 47 properties offering accommodation to tourists, Kiribati, Republic of the FSM had 30, RMI had 12, and Tuvalu had ten. Together, these Marshall Islands, and Tuvalu added up to just 1,300 rooms, or 5 percent of PICs’ total room supply (SPTO 2020). Other than a few medium-size hotels The Federated States of Micronesia (FSM) and more and resorts in Kiribati and FSM, most accommodations are recently Kiribati, the Republic of the Marshall Islands small. The quality of properties in these countries is modest (RMI), and Tuvalu have sought to develop their relatively according to international standards, and no international small marine-based tourism sectors in the face of brands are present. There are also few tour operators. FSM geographic and other constraints. FSM was poised for has 50 operators spread across its four islands providing tourism development in the early 1960s when its four diving, fishing, and land-based tours, followed by RMI, islands, then still part of the U.S. Trust Territory, benefited which has 20 local operators offering fishing or diving trips. from new air services connecting the region to East Asia Kiribati’s six tour operators supply fishing, war heritage, and and the United States. Early investment in hotels followed, cultural experiences. In Tuvalu, accommodations provide and by the time FSM became independent in 1979, it was tours to a marine conservation site, diving, and cultural attracting American and Japanese tourists interested in activities. Low private sector investment in tourism in these diving, historic sites, and remote islands. However, FSM it countries results from the multitude of demand constraints, never experienced the growth enjoyed by neighboring Palau. compounded by unsupportive business environments and Factors included its greater distance from source markets high costs. Similarly, these resource-constrained economies (and hence higher cost to access and less-frequent flights), have made limited investments in tourism-enabling lack of sustained investment in tourism (e.g., infrastructure, infrastructure. Access to the islands, particularly Kiribati, marketing, and product development), widely dispersed RMI, and Tuvalu, is limited, with only a few weekly flights small islands with high transport costs, and a less compelling for travelers from source markets. (FSM’s 2019 average of dive proposition. Similarly, for Kiribati, RMI, and Tuvalu, long 13 flights per week, together with RMI’s 11, Kiribati’s ten, and distances from source markets, small land size, and threat Tuvalu’s four, accounted for just 10 percent of international of rising sea levels have limited tourism infrastructure and flights across PICs). This paucity of transportation and a product development and therefore restricted tourism tendency for diving and fishing visitors stay longer account for the average length of stay rivaling other countries despite growth. An additional barrier facing RMI and Kiribati is their tourism supply limitations. As a result, per-trip visitor spend reputation as sites for nuclear testing in the mid-twentieth matches or exceeds that in Type 1 and 2 destinations, with century, partly explaining why tourism interest emerged Kiribati standing out as the highest for leisure visitors to its much later than in western Micronesia. However, in recent leading fishing destination, Kiritimati. years, the governments of both, as well as of Tuvalu, have recognized the potential of their marine assets, driving tourism development ambitions. FSM remains hopeful Type 4 Destinations: about expanding the sector around its marine, historical, Papua New Guinea and cultural attributes, although tourism investment and arrivals have stagnated. and Solomon Islands Although tourism is more developed in Papua New Type 3 countries have the lowest tourism volumes of Guinea (PNG) than in Solomon Islands, the two countries the PICs. Together, they accounted for only 2 percent of share characteristics. Their colonial histories affected arrivals to PICs in 2019, explaining tourism’s limited economic the emergence of tourism leading up to and beyond their weight before the pandemic. Tourism has struggled to independence from Australia (1975) and Britain (1978), flourish in FSM, which had a compound annual growth respectively. Many early accommodations and tour rate of just 0.6 percent from 1999 to 2019, with overnight products developed from colonial roots because source leisure arrivals peaking at 22,000 in 2008 before decreasing markets in the former colonial powers drove early travel to 18,000 in 2019.117 The more-recent emergence of tourism for business, leisure, and VFR. The two countries’ World in Kiribati, RMI, and Tuvalu accounts for their lower volume War II histories also drove demand from leisure tourists of overnight visitor arrivals in 2019 (7,900, 6,100, and 3,600, interested in historical sites and have created strong respectively) and stronger growth rates than FSM. A small historical tourism markets. PNG’s cultural diversity, globally proportion of leisure visitors (focused on marine activities) significant terrestrial biodiversity, and marine attributes also is common for Type 3 countries, leading to a low absolute formed the basis for its dispersed tourism offerings across value of receipts representing a relatively modest share of several key provinces, with Solomon Islands sharing similar GDP in Tuvalu (16.6 percent in 2019), FSM (10.8 percent), RMI foundations on a smaller scale. These factors, together with (8.8 percent), and Kiribati (1.8 percent). Although tourism is proximity to Asia and Australia, increased overnight visitor important to these economies, they have not relied on it in arrivals to PNG and Solomon Islands at compound annual recent years. growth rates of 1.8 and 3.1 percent, respectively, between UNWTO 2021a. 117 90 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Image: Festival of the Pacific Arts in Solomon Islands Credit: Tom Perry 1999 and 2019 to reach 95,000 and 28,900 overnight visitors, with several well-appointed but rustic resorts appealing respectively. to travelers in destinations outside of Port Moresby. Approximately 100 tour operators (PSDI 2021b) nationwide Safety and security challenges have contributed to slow enable access to a range of nature-, culture-, and history- and volatile tourism growth in PNG and Solomon Islands, based visitor experiences designed to appeal to adventure respectively. Over the past 30 years, frequent episodes travelers. Solomon Islands has a similar but smaller supply of violence in PNG have led to extended travel advisory landscape. Of the approximately 180 accommodation warnings in source markets, as has occasional political properties (2,000 rooms) available in 2019, more than half unrest, deterring prospective travelers. Civil unrest disrupted were in or around the capital, Honiara. It hosts several tourism in Solomon Islands from 1999 to 2003 and again in business-oriented medium-sized to large hotels of various 2014. These safety and security factors, unique to Type 4 quality levels, none of which are internationally branded. countries, have greatly affected their tourism development. Other tourism destinations in outer provinces offered smaller, Also setting Type 4 countries apart is their limited typically more rustic accommodations. Greater growth of reliance on tourism because of strong natural resource business-oriented than of leisure accommodations in Type 4 sectors. More than 96 percent of PNG’s exports are destinations reflected the size of these segments. Overnight merchandise exports, a substantial part of which is liquified visitors traveling for leisure accounted for just 15.7 percent of natural gas and other natural resources. Tourism receipts 2019 overnight visitor arrivals for PNG and 27.8 percent for for PNG account for 9 percent of the total share of tourism Solomon Islands, with business and other travel associated receipts across the PICs (and 3 percent for Solomon Islands) with official or professional trips dominating the market but for the smallest share of GDP (0.9 percent for PNG, 5.2 (SPTO 2020). percent for Solomon Islands in 2019).118 Low market demand and investment barriers constrain Tourism has seen long-term growth trends in Type 4 investment in leisure tourism products and services in countries, however this has been driven by business PNG and Solomon Islands. In addition to safety concerns, tourism as opposed to leisure tourism. As of 2019, PNG cost factors have impeded growth of the leisure market. had approximately 500 accommodation providers with a Dispersal of tourism experiences in locations far from the combined 6,200 rooms (SPTO 2020), the bulk of them in the international entry point makes travel in PNG and Solomon capital of Port Moresby. The size and quality of hotels in Port Islands expensive and complicated because of poor, irregular Moresby grew rapidly in the 2010s because the booming domestic air service. High operation costs (e.g., energy, resources sector was driving international and domestic water, foreign labor) make accommodations expensive. business travel, and the capital was preparing to host the Tourism-enabling public infrastructure is also weak in these Asia-Pacific Economic Cooperation meeting in 2018. By locations, deterring prospective travelers and investors. 2019, Port Moresby had several large (more than 100 rooms) Lack of suitable land for new investment, constraints on hotels, three of which are internationally branded. PNG- access to finance (especially for MSMEs), and other barriers based hotel groups also hold a portfolio of properties in the to a business-enabling environment have further impeded capital and other provinces. Accommodation quality varies, development of leisure tourism hubs in these countries. Source: Authors’ estimate based on UNWTO tourism receipts data and GDP data from the World Development Indicators.  118 THE FUTURE OF PACIFIC TOURISM MARCH 2023 91 Image: Vanuatu 92 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Annex B: Methodological Notes Potential Benefits is a good example of a country that implemented a high- value tourism strategy in 2002. The increase in average of Targeting High-Value expenditures per arrival that Costa Rica experienced over Markets for Pacific Island time since implementing this strategy—approximately 13 percent between 2004 and 2019—suggests a greater Countries proportion of high-value arrivals to the destination. The following simple simulation assesses the relative Similarly, Bermuda introduced a high-value tourism strategy impacts of targeted marketing approaches on overall in 2012 (Bermuda Tourism Authority, 2012). Since then, revenue in a country over the medium to long term. average spend per visitor has increased, particularly from It explores the hypothesis that high-value strategies in 2015 to 2019, suggesting a slight lag in the market segment Pacific Island countries (PICs) would increase revenue in the composition after the commitment to change (Bermuda long run. To do so, a simple simulation is developed based on Tourism Authority 2012). Other than these two reference the following equation: points, benchmarking data on spend per arrival per market segment (lower versus higher value) to leverage for this Revenueit = high value proportion × IVAit × high value spend simulation are limited, so the below results are based on + low value proportion × IVAit × low value spend industry estimates and explored through scenarios for low, where i and t are the scenario and time period considered, medium, and high price increase and price elasticity cases. respectively. International visitor arrivals (IVA) for year t are The simulation estimates and disaggregates revenue computed by multiplying arrivals in the previous year by a impacts over 30 years by summing the expenditures of growth rate and a diminishing multiplier to reflect the price all high- and low-value arrivals in the destination using elasticity of demand, based on the first hypothesis described. a simple equation to model future revenue growth. The simulation was developed with two underlying The simulation was applied to three countries based on assumptions regarding numbers and composition of data availability: Fiji (Type 1), Vanuatu (Type 2), and Papua visitor arrivals. The first is that, as prices in the destination New Guinea (PNG) (Type 4). Information was collected increase, the overall number of visitor arrivals will decrease on key variables, including growth rate forecasts, current slightly. The literature supports this assumption; for composition of total arrivals in higher- and lower-value instance, a study in Vietnam found that, for every 1 percent segments, and spending per higher- and lower-value arrival price increase, international tourists to Vietnam decreased per trip. Arrival forecasts for 2022 to 2024 were taken from by an average of 0.55 percent (Nguyen 2022), and another the Pacific Asia Travel Association (PATA) online database. study in the Caribbean found that, as prices increased by 1 The PATA forecast for total visitor arrivals was used for each percent because of a change in the real exchange rate, the country’s 2022 baseline, and PATA–forecasted year-on-year number of arrivals decreased by 0.16 percent (Laframboise growth rates were used for 2023 and 2024. From 2024 to et al. 2014). Other factors play a role in tourism demand, 2042, the compound annual growth rate for international including prices in competitor destinations; tourist income arrivals between 1999 and 2019 was used in place of an in source markets; and political, health, and other external existing forecast, assuming that business-as-usual growth shocks, but this simulation focuses on how value-led will return to pre-COVID average levels after initial recovery marketing and supply strategies affect price changes. (Table 18). The pre-COVID proportion of high-value markets The second assumption is that, as a country targets was calculated from existing sources for each country based tourism supply and marketing toward high-value on percentage arrivals of high-value niche markets, such as arrivals (high-value marketing), the proportion of high- birding, diving, and cultural tourism (IFC 2020b, PNG TPA value arrivals will increase, and the proportion of lower- 2019, World Bank 2020d). Spend per arrival was sourced value arrivals will decrease. Data on market composition from the same reports, with some variance in approaches over time for tourism destinations are limited. Costa Rica between countries because of data differences.119 For the three countries, spend per high-value arrival is weighted average expenditures per person per trip across the high-value niche markets.  119 Spend per low-value arrival is average spend per trip for all others (Fiji); average spend per trip of all visitors including high-value visitors (PNG); and average spend per trip for the relaxation market, excluding high-value arrivals (Vanuatu). THE FUTURE OF PACIFIC TOURISM MARCH 2023 93 Table 18. Simulation Data Inputs for Fiji, Papua New Guinea, and Vanuatu Proportion of 2022 – 2023 2023 – 2024 Compound higher-value Spending per Spending per 2022 arrivals growth rate growth rate annual growth market in total lower-value higher-value forecast a forecast (%) a forecast (%) a rate 1999-2019 b arrivals (2019) arrival (USD) c arrival (USD) c (%) c Fiji 277,130 2.80 1.34 1.02 23 1,206 2,048 Papua New 76,366 2.06 1.43 1.02 19 2,154 2,775 Guinea Vanuatu 20,819 4.25 1.52 1.04 52 1,737 1,984 Sources:  a. PATA 2022. b. UNWTO 2022b; PNG TPA 2022. c. World Bank 2020d; IFC 2020b; PNG TPA 2019. The data indicate that Fiji has the largest spread Several price increase rates were used to explore the between high- and low-value arrival spending, potential impact on arrivals. As mentioned, Costa Rica is which may be because of the smaller proportion a good example of a country that implemented a value-led of high-value holiday arrivals in Fiji. The country is tourism strategy under the 2002-2012 National Tourism better placed to target the relaxation tourist market, Development Plan to increase visitor yield and reduce with fewer products and activities geared toward tourism’s impacts on the environment. In the 15 years before niche markets. In contrast, PNG and Vanuatu have a 2019, average spend per visitor to Costa Rica increased by relatively high proportion of high-value tourists and 13 percent, although part of this increase may be attributable more existing products targeting niche tourist markets. to other factors, such as increasing average length of stay. (In PNG, although only 19 percent of overall arrivals are As such, this is the baseline for the upper bracket in price high-value markets, 56 percent of total holiday arrivals increases, increased slightly to 15 percent to account for the are high-value holiday arrivals, excluding business additional five-year period (total of 20 years) used in the travelers and visits to family.) The supply of high-value simulation. The lower and mid-point price increases are products in Vanuatu and PNG is available to all markets and 5 percent and 10 percent, respectively, to check the results’ the higher spending of lower-value visitors may indicate sensitivity to different levels of price increase. that these tourists are also spending on some high-value products. Reductions in arrivals because of the shift to a high-value strategy were calculated by multiplying the elasticity The diminishing growth multiplier is applied to number of arrivals to calculate the rate at which arrivals decrease level by the price increase (Table 19). These final data over time in the value-led case as price increases. For points were used as Multiplier 1 in the simulation to develop every 1 percent price increase, overall international tourist an overall reduction in visitor arrivals over the full 20-year arrivals to Vietnam decreased by an average of 0.55 period. This price increase was also used to determine percent (Nguyen 2022). This was different for the Asian and overall revenue in the simulation. Although the price intercontinental markets, with reductions of 0.36 percent increase resulted in a reduction in arrivals in the value-led and 1.24 percent, respectively. As such, these were used as model, the price increase also contributes to greater spend lower and upper bounds for price elasticity in the simulation, per arrival in this simulation. The mid-point price increase and the average of 0.55 percent was used as the mid-level (10 percent over the 20-year period) was used to determine elasticity. this price and spend increase. Table 19. Multiplier 1 Data Points According to Price Elasticity Level and Price Increase Level Upper-bound Price elasticity Lower-bound price increase Mid-point price increase price increase % Lower -1.8 -3.6 -5.4 Mid-point -2.7 -5.5 -8.2 Upper -6.2 -12.4 -18.6 Multiplier 2 follows the second assumption on the S-curve, indicating slow growth to start as new marketing proportion of high- and low-value arrivals to estimate and supply strategies are implemented followed by a period change in market segmentation through value-led of fast growth in high-value arrivals and eventually leveling promotion and industry development. In the value-led out. The Multiplier 2 brackets were used in the simulation to case, Multiplier 2 increases the proportion of high-value determine potential revenue changes based on increasing arrivals over time, with growth in this market fitting an high-value arrivals. 94 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Table 20. Multiplier 2 High-Value Market Proportion Change According to Country 2019 proportion of Country Lower bound Mid-range Upper bound high-value arrivalsa % Fiji 23 30 50 70 Vanuatu 52 60 70 80 Papua New Guinea 19 23 25 30 a. Source: World Bank 2020d; IFC 2020b; PNG TPA 2019. Multiplier 2 is country specific because of the differing high-value niche markets already make up 56 percent of initial market compositions and existing and potential these. There is no major anticipated change in composition niche market supply. In 2019, Fiji had 23 percent high-value of international business travel markets, leaving limited arrivals, leaving a high opportunity for growth from these room for growth of high-value tourists as a percentage of markets, dependent on value-led strategies and market- overall arrivals, although there is high potential for most of specific products, discussed in Section 3. As such, Fiji sees the leisure market to shift to high-value markets. As such, the highest possible increase in high-value markets of the PNG’s lower bracket is 23 percent (a 4 percent increase), and three countries, with a lower bracket of 30 percent high- the upper bracket is 30 percent of total arrivals, almost the value arrivals and an upper bracket of 70 percent (Table 20). entire 34 percent leisure market. Vanuatu has the highest value-led composition of markets, In the scenario with lowest growth in high-value with 52 percent of all international arrivals being high value markets, overall visitor arrivals are highest. Table 21 because of an existing value-led strategy. As such, Vanuatu’s shows total estimated visitor arrivals in 2042 for each increase is lower than that of Fiji, starting at 60 percent combination of price increase and price elasticity for the high-value composition (an increase of 8 percent), but the value-led scenario. For all countries, the simulation finds upper bracket is the highest of all countries (80 percent) the largest arrival numbers when price increase and price because of Vanuatu’s potential as a value-led destination. elasticity are at their minimum. Conversely, the largest Finally, PNG’s initial market composition is 19 percent high- growth in high-value markets results in the fewest arrivals. value arrivals, the lowest of the three countries, but because These results alone are not a good indication of the outcome of its large business travel market, the leisure market of value-led marketing strategies, because it is possible for accounts for only 34 percent of all international arrivals, and fewer arrivals to produce higher overall revenue. Table 21. Simulated International Visitor Arrivals by 2042 in Fiji, Papua New Guinea, and Vanuatu Under a Value-Led Marketing Scenario Price increase Country Price elasticity Lower bound (5%) Mid-point (10%) Upper bound (15%) Lower bound (0.36%) 1,404,150 1,379,067 1,354,411 Fiji Mid-point (0.55%) 1,390,858 1,353,054 1,316,227 Upper bound (1.24%) 1,343,588 1,262,450 1,185,980 Lower bound (0.36%) 286,771 281,648 276,613 Vanuatu Mid-point (0.55%) 284,056 276,335 268,814 Upper bound (1.24%) 274,402 257,831 242,214 Lower bound (0.36%) 303,329 297,911 292,585 Papua New Guinea Mid-point (0.55%) 300,458 292,291 284,336 Upper bound (1.24%) 290,246 272,719 256,199 Note:  bolded numbers represent the highest number of overall arrivals for each country, when price increase and price elasticity are at their minimum. THE FUTURE OF PACIFIC TOURISM MARCH 2023 95 Despite fewer arrivals, shifting to higher-value markets led case (Table 22). As expected, the upper-bound proportion could increase revenue from tourism. In the simulation, of high-value arrivals yields the greatest difference between the volume-led scenario refers to a situation in which the the value- and volume-led scenarios. That is, the greater the destination does not implement a value-led marketing growth in high-value markets as a portion of all arrivals, the strategy but continues as usual through mass-market, high- more tourism revenue the country earns, although all of the volume tourism. In this case, the price does not increase, the lower-bracket proportions also saw a revenue increase in number of arrivals continues to grow at a rate similar to the the value-led scenario of more than 5 percent over revenue pre-COVID-19 growth rate, and spend per arrival remains the same. For all three countries, the simulation finds that in the volume-led scenario. In Fiji, the mid-range and upper- total tourism revenue in the value-led case (growing share bracket market proportions yielded revenues more than of high-value tourists) would be higher than in the volume- 20 percent higher than under the volume-led scenario. Table 22. Total Tourism Revenue in 2042 with Constant Mid-Point Price Elasticity and Price Increase Total tourism revenue per high-value arrival growth (USD million) Country Marketing strategy Lower bound Mid-range Upper bound Value led 2,174.6 2,425.1 2,675.6 Fiji Volume led 2,005.9 Value led 572.7 580.2 587.7 Vanuatu Volume led 544.7 Value led 738.0 742.0 752.0 Papua New Guinea Volume led 701.7 Note:  Cells shaded orange indicate revenues more than 5% higher than the price-led scenario; cells shaded green indicate revenue more than 20% higher than the volume-led scenario. When running the full simulation, all countries had lower upper-bound scenario was largest for Fiji because it has visitor arrivals for the value-led marketing strategy than the most room for growth of high-value market arrivals the volume-led scenario but with higher overall tourism as a portion of overall arrivals (Figure 21). PNG (Figure 23) revenue. The revenue increase ranged from 5 percent at and Vanuatu (Figure 22) had smaller differences between the lower bound for PNG to 33 percent at the upper bound the scenarios, although revenue was still higher under the for Fiji. As expected, revenue change between the volume- value-led marketing scenarios for both countries than under led scenario, the lower-bound value-led scenario, and the a volume-led scenario. Figure 21. Fiji Visitor Arrivals and Revenue Over Time with Lower and Upper Proportion of High-Value Arrivals Brackets Note: Chart starts at 2023 as 2022 revenue skews the chart due to COVID-19 recovery. 96 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Image: Kiribati Figure 22. Vanuatu Visitor Arrivals and Revenue Over Time with Lower and Upper Proportion of High-Value Arrivals Brackets Note: Chart starts at 2023 as 2022 revenue skews the chart due to COVID-19 recovery. Figure 23. PNG Visitor Arrivals and Revenue Over Time with Lower and Upper Proportion of High-Value Arrivals Brackets THE FUTURE OF PACIFIC TOURISM MARCH 2023 97 Potential Impacts of Declining rafting, cultural performances and dance groups, nightclubs, playhouses) operate almost all tourism excursions, cultural Visitor Satisfaction on attractions and activities, and entertainment options. At Expenditures the regional level, the United Nations Economic and Social Commission for Asia and the Pacific found that 98 percent The main hypothesis used for this simulation was that of all enterprises in Asia-Pacific are MSMEs (UNESCAP loss of tourism and tourism-related micro, small, and 2022). As one data point, an analysis of the Fiji COVID-19 medium-sized enterprises (MSMEs) in PICs would reduce Business Survey focused on MSMEs found that 87 percent the diversity of offerings and visitor satisfaction rates of overall business respondents and 73 percent of tourism and therefore visitor expenditures. In the absence of respondents were MSMEs (IFC 2020a). Within the tourism data linking visitor satisfaction and spending in the Pacific industry, respondents, facilities, and service and attraction or other small island developing states, the simulation uses providers were mainly MSMEs. In Samoa, data from business results from Croatia (Jurdana and Frleta 2016), which found licenses show that 94 percent of tourism businesses are that a 5 percent drop in satisfaction with diversity of tourism MSMEs. For FSM and Solomon Islands, expert review of services was associated with a 2 percent drop in visitor tourism businesses’ inventories revealed that almost all spending at the destination. tourism businesses, especially in the facilities, services, and The analysis is built on two assumptions on market attraction categories, were MSMEs. composition and MSME dominance in owning and The analysis considers upper and lower limits of operating tourism facilities in the Pacific. The first variation in visitor satisfaction, based on destination assumption is that the source markets studied in Croatia in case studies (Figure 24). Overall visitor satisfaction can the reference study on tourist satisfaction and expenditures vary significantly from year to year, although it averages out (Jurdana and Frleta 2016) are broadly comparable with the to more gradual changes over time. Three destinations are source markets in the Pacific. Croatian markets covered in used as examples to explore the upper and lower limits of the study, which collected data in 2014, were predominately visitor satisfaction rate change. Barcelona is used as a lower international (88 percent) and short-haul markets (89 limit benchmark that demonstrates fairly gradual change percent of those). In the Pacific countries studied in this in visitor satisfaction over time. Barcelona has experienced simulation (Fiji, Federated States of Micronesia (FSM), shifting satisfaction rates, with a 4.1-percentage-point Samoa, Solomon Islands), tourism source markets are also increase in visitor satisfaction between 2014 and 2017 (1.37 predominately international, in the absence of significant percentage points per year) and a 1-percentage-point domestic tourism. However, to create a more comparable decrease between 2017 and 2020 (-0.33 percentage points short-haul data set in the Pacific, only the main short-haul per year), likely due to the challenges of over-tourism before source market for each PIC were considered: New Zealand the pandemic. As a medium change case, between 2012 for Samoa and Australia for the rest of the countries. A single and 2019, visitor satisfaction with Hawaii from U.S. West source market was used to simluate expenditure impacts Coast markets increased 6.9 percentage points from 81.8 for simplicity’s sake. Long-haul markets, which account percent satisfied to 88.7 percent satisfied (0.99 percentage for 30 percent of total arrivals for Fiji (2019), 19 percent for points per year). Similarly, Singapore faced volatility in Samoa (2019), and 35 percent for Solomon Islands (2018), satisfaction rates from year to year until 2014 but then were excluded. For FSM, the only data available through stabilized. There were two drastic reductions in satisfaction the international visitor survey were for Yap, a main tourism over 1-year periods of 3.5 percentage points between 2011 destination. Although the Yap tourism market mainly and 2012 and 5.4 percentage points between 2013 and 2014, consisted of long-haul arrivals (81 percent), it is included demonstrating a large shift in satisfaction over a short to increase the number of PICs and typology categories period. However, visitor satisfaction rates grew overall covered in this simulation. 8.7 percentage points between 2009 and 2019, from 67.1 The second assumption is that the delivery and percent to 75.8 percent satisfied (0.87 percentage points per operation of tourism facilities, services and attractions year).120 Finally, on the upper end, satisfaction of Japanese are done predominantly by MSMEs in the Pacific. Globally, visitors to Hawaii increased 7.4 percentage points from the tourism industry comprises mainly MSMEs, with more 2012 to 2019 (1.1 percentage points per year) but decreased than 80 percent of global tourism firms falling into this 3.4 percentage points from 2012 to 2015 (-1.1 percentage category. Small businesses (e.g., hiking operators, river points per year). Based on a review of available studies and news reports, no specific events occurred in Singapore during these years to cause this drastic change in  120 satisfaction rates. News reports indicate that visitor satisfaction declined because of poor tourism services and changing customer expectations as the market shifted to high-value markets. 98 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Figure 24. Visitor Satisfaction for Various Reference Destinations, 2010-2019 Source: Hawaii Tourism Authority 2022; Singapore Management University 2022; Observatori del Turisme de Barcelona 2022 Based on these examples, lower and upper limits of satisfaction of 0.3 percentage points per year for a best-case variation in visitor satisfaction have been conservatively scenario and a decline rate of 1.1 percentage points per year set over 10 years starting in 2022 (Figure 25). Barcelona has as a worse-case scenario. The base year was set as 2022, and been used as the base for an optimistic, less-volatile scenario, the analysis was applied for 10 years to determine overall setting the year-on-year decrease at 0.3 percentage points, whereas Japanese visitor satisfaction in Hawaii has been used satisfaction rate declines. Finally, a business-as-usual option for the pessimistic, most-volatile scenario (-1.1 percentage was considered that reflects no change in satisfaction rates points per year). That is, the simulation used a decline rate of over the period. Figure 25. Assumption of Year-on-Year Changes in Satisfaction Rates Under Three Scenarios Source: Hawaii Tourism Authority 2022; Observatori del Turisme de Barcelona 2022. THE FUTURE OF PACIFIC TOURISM MARCH 2023 99 After projections for decreases in satisfaction were constraints, 2019 visitor satisfaction and local spending modeled, data on current satisfaction and spending averages were translated to 2022; that is, the 10-year from the four PICs studied were gathered and applied to projections start at 2022, with the last available satisfaction the simulation. First, information was gathered on visitor and spending data from 2019. Second, information on actual satisfaction rates and average visitor local expenditures per arrivals in 2019 (and 2020 for Fiji) from the main short-haul trip for the main short-haul source markets from the 2019 source market was collected and used as a base for arrivals international visitor surveys (IVS) of Fiji, FSM, Samoa, and projections up to 2032. For these, the study used the overall Solomon Islands (Table 23).121 The simulation used only local spend to mirror the study on Croatia. In 2019, local spend arrivals pre-pandemic CAGR growth rates from 1999 to 2019 accounted for 35 percent of total spending in Fiji, 49 percent onward to 2032, along with a couple of other premises, to in Samoa, 5 percent in Yap/FSM (period 2015-2018), and mirror the growth assumptions from the high-value and 39 percent in Solomon Islands. Because of data availability high-volume tourism growth simulation (Table 24).122 Table 23. Pre-COVID Satisfaction and Spend Data Main short-haul % arrivals from that Visitor satisfaction Local spend per trip Country 2019 arrivals source market market (1-5) (USD) Fiji Australia 367,020a 41 4.5 b 429 c Samoa New Zealand 77,094 44 4.4 d 459 e Federated States of Australia 720 f 4 4.4 g 791 h Micronesia Solomon Islands Australia 11,010 38 3.9 447 Sources:  Government of Fiji 2020; NZTRI 2020a; NZTRI 2020b; UNWTO 2022b; Yap Visitors Bureau 2019. a. 58,062 Australian arrivals to Fiji in 2020.  Visitor satisfaction for Australia was transformed to a 1-5 scale to be in line with the Croatian studies and the international visitor surveys b.  (IVSs) of the rest of the countries analyzed under this scenario.  Individual local spending has been calculated by subtracting prepaid spending from total spending and dividing by total number of visitors. c.  An exchange rate of 1 Fijian dollar = 0.46 USD was used. d. The Samoa 2019 IVS does not split satisfaction for source markets. e. Data were taken from spending per day and multiplied by average length of stay. An exchange rate of 1 Samoan tala = 0.37 USD was used. f. Estimation based on the Yap 2015-2018 Visitor Survey. g. The Yap 2015-2018 IVS does not split satisfaction or spending for source markets. h. Result of spending per day multiplied by average length of stay. Table 24. Arrivals Forecast from Main Short-Haul Source Market to Fiji, Federated States of Micronesia, Samoa, and Solomon Islands, 2022-2032 Federated States of Solomon Islands Year Fiji (Australia) Samoa (New Zealand) Micronesia (Australia) (Australia) 2022 37,780 13,184 360 5,505 2023 306,202 60,596 720 11,010 2024 409,800 91,140 724 11,347 2025 426,088 94,464 729 11,695 2026 443,024 97,909 733 12,054 2027 460,632 101,480 737 12,423 2028 478,941 105,181 742 12,804 2029 497,978 109,017 746 13,197 2030 517,771 112,992 750 13,601 2031 538,351 117,113 755 14,018 2032 559,748 121,384 759 14,448 121 For FSM, information on spending and visitor satisfaction was gathered from the Yap Visitor Survey presentation, which covers 2015 to 2018  and does not differentiate between market sources. 122 For Australian visitors to FSM, it was assumed 4 percent arrivals from the country as specified in the Yap 2015-2018 VSAT and that, in 2022, arrivals  to FSM and Solomon Islands half the ones of 2019, and in 2023 they return to normal levels. 100 THE FUTURE OF PACIFIC TOURISM MARCH 2023 The simulation found that a gradual decline in visitor income in the business-as-usual case). Under the more- satisfaction could result in sizeable losses in tourism conservative scenario, in which satisfaction declines only 0.3 expenditures over time. With an annual decrease of percentage points per year, Fiji would realize USD 2.9 million 1.1 percentage points in visitor satisfaction (worst-case less local spending, FSM USD 0.01 million less, Samoa USD scenario), Fiji could realize USD 10.5 million less local 0.7 million less, and Solomon Islands USD 0.08 million less spending (Figure 26) , FSM USD 0.03 million less (Figure over 10 years than in the business-as-usual case, without 28), Samoa USD 2.4 million less (Figure 27), and Solomon considering inflation (equivalent to 0.14 percent of total Islands USD 0.3 million less (Figure 29) over 10 years from potential income in the business-as-usual case). These are their main short-haul source markets than in the business- large numbers considering that they reflect only in-country as-usual case (equivalent to 0.5 percent of total potential spending in the four countries studied. Figure 26. Annual Decrease in Local Visitor Spending from Main Short-Haul Source Market Compared with Business as Usual for Fiji, 2023-2032 Figure 27. Annual Decrease in Local Visitor Spending from Main Short-Haul Source Market Compared with Business as Usual for Samoa, 2023-2032 THE FUTURE OF PACIFIC TOURISM MARCH 2023 101 Figure 28. Annual Decrease in Local Visitor Spending from Main Short-Haul Source Market Compared with Business as Usual for Federated States of Micronesia, 2023-2032 Figure 29. Annual Decrease in Local Visitor Spending from Main Short-Haul Source Market Compared with Business as Usual for Solomon Islands, 2023-2032 These estimates of potential losses in tourism revenue a lack of tourist facilities, excursion offerings, and cultural due to declining satisfaction are conservative. This diversity options. A decrease in diversity of facilities might simulation is based on results of an empirical study that also affect length of stay, which would further limit overall expenditures and tourism spend into the local economy as related satisfaction with the diversity of tourism facilities spending would become centralized within accommodation. to spending at a moment in time. Other factors that could Finally, other cultural and traditional implications need to affect tourism revenues the negative user-generated be considered even though these are somewhat difficult in content reviews and poor word-of-mouth marketing from accounting for in an economic model. 102 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Benefits of Resource Efficiency Type 2 country because Vanuatu has more accommodation establishments than Samoa. in Tourism Businesses To capture the benefits of implementing resource This simulation is based on a cost-benefit analysis using efficiency measures in hotels, the default values EDGE, the IFC’s tool and green building certification that EDGE provides was altered to represent local system,123 to assess potential returns on investment circumstances. In this study, some inputs were modified. in more-resource-efficient tourism operations in PICs. Modified variables included construction year, hotel rooms, It focuses on the case of hotels in three countries based on internal and roof areas, construction costs, and number of data availability and tourism dependency.124 Fiji, Samoa, and floors. Information was gathered and inserted according Vanuatu were selected to represent destinations with a to regional or national averages (Table 25). Unmodified large contribution from tourism to gross domestic product parameters included air conditioning systems and (GDP) and medium to large market size, corresponding operational details such as fuel usage, as they seem to be to Types 1 (Fiji) and 2 (Samoa, Vanuatu) of this study. in line with real market observations, among many other In Fiji, the city of reference was Nadi because 38 percent parameters that can be updated in the EDGE tool. One of accommodations are located there or nearby (Tourism important consideration is the 80 or 70 percent occupancy Fiji 2017). In Samoa and Vanuatu, the capitals (Adia and rate assumption, depending on hotel categories, which Port-Vila, respectively) are the only options available in the would be close to pre-pandemic high peak season room tool, and Port-Vila was chosen to be the reference for a occupancy (UNWTO and STR 2022). Table 25. EDGE Manual Inputs for Various Hotel Locations and Categories Number of floors Roof area Gross internal Construction Hotel category Pool Number of rooms above grade (m2) area (m2) costs (USD/m2) Type 1 (Fiji) 1 star 1 713 713 2,500 19 No 2 star 1 1,275 1,275 3,000 34 3 star 1 600 600 3,750 16 4 star 3 465 1,395 5,000 31 Outdoor unheated 5 star (small) 3 765 2,295 5,000 34 5 star (large) 3 4,780 14,340 7,500 239 Type 2 (Samoa, Vanuatu) 1 star 1 113 113 2,500 3 No 2 star 1 250 250 3,000 10 3 star 1 975 975 3,750 26 Outdoor unheated 4 star 3 1,125 3,375 5,000 75 Sources: Interviews with experts and data from the Vanuatu Department of Tourism and the Vanuatu Tourism Office, the Asian Development Bank, and the World Bank. Note: Assumptions for all hotel categories and countries: - Construction year: 2002 - Number of floors below grade: 0 - 20 percent of electricity generation from diesel - Cost of electricity: 0.32 USD/kWh 123 EDGE is a free design tool comprising a web-based software application, universal standard, and certification system focused on making residential  and commercial buildings more resource efficient. Based on a building’s parameters and local conditions, EDGE estimates costs, savings, and payback periods for green building measures using region-specific, use-based analysis. For a project to obtain EDGE certification, it must achieve a minimum standard of using 20 percent less energy, water, and other materials than local benchmarks. For more information, see https://edgebuildings.com. 124 The EDGE App has 11 available project infrastructure types: homes, apartments, serviced apartments, hotels, resorts, retail, industrial, offices,  hospitals, education, and mixed use. Hotels are further split into five categories from 1 to 5 stars. THE FUTURE OF PACIFIC TOURISM MARCH 2023 103 Different energy, water, and materials efficiency therefore obtain higher energy savings in the medium run. measures were selected to reach at least 20 percent Using hotel supply estimations for each country savings, the threshold for EDGE certification. For 1- to studied, the results of the cost-benefit analysis were 3-star hotels, simple measures were selected, such as roof extrapolated to the national level. For the three selected insulation, efficiency lighting, and upgrading to water- countries, available data were used to classify hotels into efficient faucets for public or private bathrooms. For 4- and five categories (1 to 5 stars) and estimate the number of 5-star hotels, more costly investments were selected, such rooms per hotel and category (Table 26). Using these data, as onsite renewable energy and smart measures. These an average total market supply was computed for the three larger, higher-earning hotels have more accessible capital countries, allowing extrapolation of cost savings to the for investment in these resource-efficiency areas and can national level. Table 26. Categories of Rooms and Assumptions of Hotel Categories in Fiji, Samoa, and Vanuatu Country Year 1 star 2 star 3 star 4 star 5 star (small) 5 star (large) Rooms 2017 4,715 3,191 3,333 283 34 239 Fiji Hotels 314 213 222 19 6 9 Rooms 2019 978 691 293 854 Samoa Hotels 65 46 20 57 Rooms 2018 625 1,055 885 407 Vanuatu Hotels 42 70 59 27 Source: STA 2021; Tourism Fiji 2017; World Bank 2020d. Results suggest that investments in resource efficiency of building dimensions and associated costs. In particular, considered for hotels in PICs would be paid back quickly. adoption of renewable energy for electricity generation, Table 27 shows the amount that hotels would need to invest which in turn brings much higher annual carbon dioxide savings, explains the high cost of investment for 4- and to implement the considered energy, water, and materials 5-star hotels. Although capital expenditures required to efficiency measures needed to reach 20 percent efficiency implement the measures would not be negligible, savings gains and the payback periods. As expected, investment would more than pay them back within one year in most size increases with hotel category (1 to 5 stars) because cases and sometimes sooner. Table 27. Selected Key Performance Indicators for Investments in Resource Efficiency Operational savings Incremental cost Payback, Carbon dioxide Utility savings Hotel category (tons of carbon (USD) a years b savings (% total) (USD/year) dioxide/year) Type 1 (Fiji) 1-star 2,601 0.1 47.0 20.6 45,735 2-star 4,945 0.1 66.7 21.2 65,206 3-star 3,500 0.0 82.8 20.5 80,063 4-star 201,566 1.1 115.1 25.0 181,188 5-star (small) 221,397 1.1 124.6 24.8 197,352 5-star (large) 1.2 123.3 24.8 209,261 Type 2 (Samoa, Vanuatu) 1-star 1,012 0.1 9.54 18.6 7,098 2-star 1,666 0.0 90.48 23.3 62,572 3-star 5,026 0.1 102.73 24.3 71,332 4-star 225,110 1.2 160.61 23.4 187,406 a. Additional cost of implementing selected efficiency measures compared with baseline. Number of years to repay incremental cost compared with cost savings of utilities. The method used is simple payback based on the measure’s b.  capital cost. 104 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Results were extrapolated at a national level based Fiji needs much more investment because it has more on World Bank estimations of available room supply. hotels, especially those categorized as 1 to 3 stars. Samoa (Table 28). For Fiji, individual Type 1 key performance needs more investment than Vanuatu because it offers indicators were used, and Samoa’s and Vanuatu’s calculations more deluxe rooms, which were classified as being part of were based on Type 2 key performance indicators. Overall, 4-star hotels. Table 28. National Investment Needs and Results in Resource Efficiency Measures for Fiji, Samoa, and Vanuatu Investment needed Emissions saved (tonnes of Country Payback, years (USD million) carbon dioxide/year) Fiji 7.2 0.11 38,096.74 Samoa 3.1 0.11 12,348.71 Vanuatu 1.8 0.09 15,901.49 Benefits of Resilient Tourism there is no assessment of national resilience levels for the tourism industry. In addition to the large pool of variables, Infrastructure a model should consider investments over time and annual The cost-benefit analysis outlined below constructs a savings. The World Bank’s simulation below is designed simplified simulation that compares the current cost of to provide an overarching understanding of the costs and retrofitting tourism-related infrastructure and upgrading benefits of investing today related to future benefits from new buildings with future tourism economic benefits that tourism revenues and is applied on a case-by-case basis for would be lost because of damage and revenue reductions each country and so is not translatable to other countries based on forecasted future natural disasters from 2022 given the idiosyncrasies of each PIC. The goal is to initiate a discussion about the need for additional information on to 2052. resilience levels of tourism supply in the Pacific and provide Investment needs in the tourism industry were taken a framework for future research. from a World Bank (2016) study on climate change and The simulation is built on some main assumptions and disaster risk management prepared for the Pacific gives flexibility to country-specific variables when the Possible report (World Bank 2016). A current investment in best data are not available. First, the simulation assumes light retrofitting of tourism-related buildings was calculated that all natural disasters will consist of cyclone impacts based on assessment of investment needs for the housing with the same violence as past cyclones, because cyclones sector adjusted to reflect the impact of cyclones on the have been the most serious climate hazard for PICs in terms tourism industry in past post-disaster needs assessments125 of total damage and loss (World Bank 2016). It does not and corrected for inflation. A current investment in account for impacts of climate change on intensity, duration, evaluating design upgrades reflects necessary modifications or frequency. Second, the resilience of building materials in to design standards incorporated into building codes that the market will increase every year, but it is not possible apply to new buildings and was collected from the same to avoid the full impact from cyclones without applying Pacific Possible study. This current investment covers the specific resilience standards and techniques. To account for progressive adjustment in design standards required to this, the simulation includes an impact diminisher of 0.9 that account for changes in temperature, precipitation, and reduces savings over time; that is, for every cyclone event, humidity that affect the life and habitability of buildings but expected savings will be 10 percent less than for the previous not regulatory changes, enforcement costs, or infrastructure event. This impact diminisher has not been applied to new maintenance. The amount was also adjusted to reflect the building supply, since supply is constantly growing with proportionate impact on the tourism sector and inflation new available materials. Third, the simulation assumes that until today. the economy goes back to normal after 2024, so no effects of COVID-19 on international arrivals and market supply The simulation provides a framework for performing growth are contemplated. Fourth, the simulation does not sensitivity analyses to address the many considerations consider impact on human life even though past natural and variables that could affect return on investment in disasters have displaced communities and injured and killed resilient tourism infrastructure. A perfect model would people, affecting society and the economy. These effects are include a precise estimation of the occurrence and impact not usually considered in econometric models but are often of natural disasters, detailed and exhaustive information a key motivating factor for government and international on countries’ current tourism-related supply and resilience intervention in resilience. Apart from this, it is likely that levels, and precise costs for investing in asset retrofitting. investment in tourism infrastructure that is resilient to The future of cyclones remains uncertain (Australian the impacts of cyclones would increase protection from Bureau of Meteorology and Commonwealth Scientific and earthquakes, tsunamis, and other natural disasters and Industrial Research Organisation 2014), and even though their associated savings. In this regard, the simulation is some countries have information on current tourism supply, conservative regarding implied benefits. Adjustment factors for the tourism sector with respect to the housing sector are 0.10 for Fiji, 0.72 for Samoa, 0.24 for Tonga, and 0.63 for Vanuatu.  125 THE FUTURE OF PACIFIC TOURISM MARCH 2023 105 The best representation of the cost-benefit model for In all four cases, post-disaster needs assessments or rapid this analysis is a net present value approach, in which the assessments produced in collaboration with the World Bank sum of discounted cashflows from cyclones affects savings, were used for data on the impacts of the cyclones. All of and incremental revenue benefits derived from growth them estimate the impact of the cyclones in the tourism in tourism exceeds investment in retrofitting existing sector and account for damage and losses, adjusted for tourism-related structures and implementing design inflation. Therefore, since future savings data were gathered upgrades for new buildings. In the equation, savings from from the past and taken up to today, there is no discount cyclone impacts reflect damage to assets and lost revenues. rate in the equation, as impact quantifications are already Damage is direct physical impact on tourism assets in present value. Finally, the number of expected cyclones (accommodation providers, restaurants, tour operators, in the coming 30 years was pulled from the Pacific Possible travel agencies, cultural heritage sites), and lost revenues study on climate change and disaster risk management, include losses based on cancellations, an expected decrease which provides information on the number of Category in international visitor numbers in the immediate aftermath 4 and 5 cyclones that occurred between 1981 and 2016 and of the disaster,126 and extended closure of some restaurants from the Emergency Events Database.127 It was assumed and accommodations. It also reflects higher operational that seven Category 4 or 5 cyclones would hit Fiji, six costs that the private sector incurs because of the disaster, would hit Samoa and Tonga, and 12 would hit Vanuatu. The such as higher energy costs. Incremental impact savings assessment was done under historical climate condition are additional savings in future tourism damage and losses parameters and assuming independent successive events derived from a larger market supply. Supply growth rates with no compounding effects. are based on historical accommodation supply growth Only a percentage of this damage and losses was rates in the case of Samoa and Tonga, and on historical accounted as future savings, because retrofitting international visitor arrivals for Fiji and Vanuatu, since in options for existing buildings can decrease expected these cases growth of tourism businesses or hotels was annual losses by 35 to 50 percent (World Bank 2016). disproportionate to neighboring countries. In addition, Fiji The Pacific Possible study found that, for residential low accommodation growth rates before the pandemic buildings, light retrofitting options decrease expected annual were probably lower than expected due to the 2006 coup. damage by approximately 37.0 percent in Fiji, 32.0 percent in The simulation is applied to four countries from which Samoa, 34.5 percent in Tonga, and 33.5 percent in Vanuatu. comparable information on the impacts of past cyclones The same percentages have been used to account for the is available. The countries and sources of impacts from savings that new design upgrades would mean. Apart from cyclones include Fiji and Category 5 Tropical Cyclone this, damage and losses deriving from Tropical Cyclone Evan Winston 2016, Samoa and Category 3 Tropical Cyclone Evan (the only Category 3 cyclone studied) were multiplied by 2.73 2012, Tonga and Category 5 Tropical Cyclone Gita 2018, to better adjust them to the potential impacts of a cyclone and Vanuatu and Category 4 Tropical Cyclone Pam 2015. of Category 4 (NOAA n.d.). NPV(2022-2052) = - investment today retrofitting - investment today evaluation design upgrades n + ∑ savings from tropical cyclones (TC) impact todayt × impact diminishern (2052-2022) t= ×n TCe n + ∑ incremental impact savings (2052-2022) t= ×n TCe Where n = number of forecasted tropical cyclones (TCs) from today to 2052 t = years from today when the TC is happening (t=0 in 2022) incremental impact savings = savings from TC impact todayt [(1+industry growth rate)t - 1] 126 Some studies in the academic literature that examine the impact of natural disasters in international visitor arrivals (e.g., Rosselló et al. 2020) find  that, for storms, there is a 0.003 percent decrease in arrivals for every USD 1 million cost of the disaster. https://www.emdat.be/.  127 106 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Investing in resilient tourism infrastructure in resilience investment beyond savings from TC impacts. anticipation of natural disasters was found to have These include expected reduction losses from other a positive net present value for all four countries natural hazards, impact on people, and positive effects on analyzed (Table 29). Relative to their pre-pandemic GDP other sectors. For Fiji, a higher return on investment could and tourism revenues, the present value of the operation potentially be achieved by focusing on areas in the country for Tonga is the highest of the four countries, followed by that are particularly prone to the impacts of cyclones, such Vanuatu, Samoa, and Fiji. While the return on investment as Vanua Levu and other outer islands. For Vanuatu, damage for Fiji is smaller due to the large number of hotels in the from the 2015 cyclone impact may be underestimated due country, policymakers should consider the benefits of to lack of data from hotels. Table 29. Potential Return on Investment in Resilient Tourism Buildings Gross domestic  Net present value Tourism receipts 2019 Country Benefit-cost ratio product 2019 (2022 USD million) (2022 USD million) (2022 USD million) Fiji 164.65 2.75 5,496.0 1,345.0 Samoa 234.07 5.65 852.3 206.0 Tonga 272.29 7.51 512.4 57.1 Vanuatu 413.63 3.81 930.3 295.0 Long-term benefits from investment varied between Although the results are estimates based on limited countries based on number of forecasted cyclones, available data, the simulation can be helpful for estimated impacts on tourism sector with respect to understanding the variables that have the greatest other sectors, and expected growth in accommodation impact on the final outcome. Limitations of the data and supply. For instance, Vanuatu has the highest present modeling mean that the margins of error in the estimates value because, historically, Category 5 cyclones have struck give rise to significant confidence bands around the twice as often as in Fiji, Samoa, and Tonga, increasing the present benefits of the investment. Still, the purpose of this savings over time from rebuilding tourism infrastructure. exercise was to build a business case that links the future Fiji has the lowest benefit results because it has the lowest of tourism in PICs to the vulnerability and hazard exposure expected growth in supply and the highest investment costs of their assets and to pave the way for further analysis and relative to expected cyclone impact savings. The latter is policy consideration. Sensitivity analysis helps explain the partially because of the large supply already in existence and parameters that might have a greater positive or negative therefore high costs to refurbish it all to resilient standards. impact on the investment justification process. Figure 30 Samoa and Tonga have high expected returns on investment shows the sensitivity of the countries’ net present value because of the estimated impacts of a cyclone in absolute to relevant parameters in the simulation equation, which terms and higher projected growth in accommodation influence the results differently for the four destinations supply, the latter mainly for Tonga. being analyzed. Figure 30. Results of Sensitivity Analysis on the Resilient Tourism Buildings Simulation THE FUTURE OF PACIFIC TOURISM MARCH 2023 107 Image: Papua New Guinea 108 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Annex C: Overview of Recent Tourism Development Strategies in Pacific Island Countries 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Pacific Tourism Organisation (SPTO) Strategic Plan (2020-2024) Pacific Regional Tourism Organisation Pacific Sustainable Tourism Framework (2021-2030) (SPTO) Pacific Tourism Statistics Strategy (2021-2030) Fiji Tourism Tourism Fiji Fijian Tourism 2021 Development Plan Corporate Plan (2017-2021) 1 Fiji (2007-2016) 2022-2024 Fiji National Sustainable Tourism Framework to be developed Samoa Tourism Sector Plan (2021-2026) Samoa Tourism Sector Plan (2014-2019) (In final draft) Samoa Samoa Tourism Workforce Development Plan (2020-2025) VSTAP Crisis Vanuatu Strategic Tourism Action Response & Recovery Plan (VSTAP) (2014-2018) Strategy (2020-22) Domestic Marketing Strategy (2021-2023) Vanuatu Tourism Market Development Plan (2019-2030) Vanuatu Vanuatu Sustainable Tourism Policy (2019-2030) 2 Vanuatu Sustainable Cruise Tourism Strategy (2020-2030) Vanuatu Sustainable Tourism Strategy (2021-2025) Vanuatu Tourism Human Resource Development Strategy (2021-2030) Palau Responsible Tourism Policy Framework (2017-2021) Palau Palau Bureau of Tourism Strategic Plan (2019-2023) Tonga Tourism Sector Tonga Tourism Sector Roadmap Roadmap Update (2018-2023) Tonga (2014-2018) Tourism Crisis Response Strategy Federated Federated States of Micronesia States of National Tourism Policy (2015-2020) Micronesia Kiribati National Tourism Ministry Commerce, Trade Development Strategy & Tourism Strategic Plan Kiribati (2016-2019) (2020-2023) 3 Kiribati Sustainable Tourism Development Policy Framework (2021-2036) Republic of Republic of the Marshall Islands the Marshall ` Strategic Tourism Development Plan Islands (2020-2024) Tuvalu National Tourism Development Tuvalu Sustainable Tourism Policy (2021-2030) Strategy (2014-2019) Papua New Guinea Papua New Papua New Guinea Tourism Sector Tourism Master Plan Guinea Development Plan (2022-2026) 4 (2007-2017) Solomon Solomon Islands. National Tourism Solomon Islands Tourism Sector 5 Point Recovery Plan (2021-2030) Islands Strategy (2015-2019) THE FUTURE OF PACIFIC TOURISM MARCH 2023 109 Image: Samoa Credit: Jessie McComb 110 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Annex D. Implementation Tools for Policy Reform and Destination Management Understanding which policy reforms and programs can support destination development and market diversification is the first step in increasing value from the tourism sector in Pacific Island countries. Policy reform action plans must be paired with clear guidance on implementation and monitoring progress for ministries of tourism, national tourism offices, destination management organizations, and other key agencies that oversee industry and micro, small, and medium-sized enterprise development. Country governments and tourism industries can leverage several policy implementation tools that the World Bank Group and other institutions have developed and published for this purpose, including: World Bank Group • Tourism for Development: Tourism Diagnostic Toolkit Resilient Tourism: Competitiveness in the Face of Disasters •  • Tools and Resources for Nature-Based Tourism • Destination Management Handbook United Nations World Tourism Organization •  Guidelines for Institutional Strengthening of Destination Management Organizations (DMOs) – Preparing DMOs for new challenges Practical Guidelines for Integrated Quality Management in Tourism Destinations – Concepts, Implementation •  and Tools for Destination Management Organizations Big Data for Better Tourism Policy, Management and Sustainable Recovery from COVID-19 •  Tourism Action Coalition for a Sustainable Ocean • Blue Tourism Resource Portal Pacific Asia Travel Association • Crisis Resource Center • Associated Tourism Destination Resilience course Pacific Tourism Organisation • Sustainable Tourism Policy Framework • SME Recovery Toolkit  THE FUTURE OF PACIFIC TOURISM MARCH 2023 111 References A Brother Abroad. 2022. “Global Digital Nomad Study.” https://abrotherabroad.com/digital-nomad-statistics. ABC News. 2022. “Chinese resort company brought to task for environmental damage in Fiji.” https://www.abc.net.au/news/2021-04-09/freesoul-court-decision-on-environmental-vandalism-with-surfers/100038548. ADB (Asian Development Bank). 2007. “Oceanic Voyages: Aviation in the Pacific Region.” Manilla: ADB. ———. 2013. “The Economics of Climate Change in the Pacific.” Manila: ADB. ———. 2017. “Cook Islands: Renewable Energy Sector Project.” Project Administration Manual. Manila: ADB. ———. 2018. “Women and Business in the Pacific.” Manilla: ADB. 2021. “Pacific Energy Update 2020.” ———.  https://www.adb.org/sites/default/files/institutional-document/671701/pacific-energy-update-2020.pdf. ———. 2022. “COVID-19 and the Future of Tourism in Asia and the Pacific.” Manila: ADB. Adroit Market Research. 2022. “Luxury Travel Market Size.”  https://www.globenewswire.com/en/news-release/2022/10/10/2530851/0/en/Luxury-Travel-Market-Size-Worth-USD-2-61-trillion- by-2030-Growth-Prospects-Investment-Analysis-Increasing-Demand-Outlook-Adroit-Market-Research.html Alegre, J., M. Cladera, and M. Sard. 2011. “Analysing the Influence of Tourist Motivations on Tourist Expenditure at a Sun-and-Sand Destination.” Tourism Economics 17 (4)L 813-832. Amadeus. 2021. “Rebuild Travel Survey.” https://amadeus.com/en/insights/themes/rebuild-travel. Aslan, Sevinç, and Mithat Zeki Dinçer. 2019. “The Effects of Small and Medium-Sized Tourism Enterprises on Destinations.” In The Routledge Handbook of Tourism Impacts, edited by D. G. Nunkoo, 155-167., Routledge. ATTA (Adventure Travel Trade Association). 2020. “Adventure Travel Overview & Market Sizing.” https://cdn-research.adventuretravel.biz/research/5bbf8f5b128404.33945465/Adventure-Travel-Market-Sizing-12458903.pdf. ———. 2022. Adventure Travel Industry Snapshot. Seattle, WA: ATTA. 2008a. “Making Land Work: Volume One—Reconciling Customary Land and Development.” Canberra: Australian Agency for AusAid.  International Development . 2008b. “Making Land Work: Volume Two—Case Studies on Customary Land and Development in the Pacific.” Canberra: Australian ———.  Agency for International Development. Australian Bureau of Meteorology and Commonwealth Scientific and Industrial Research Organisation. 2014. “Climate Variability,  Extremes and Change in the Western Tropical Pacific: New Science and Updated Country Reports.” Melbourne, Australia: Australian Bureau of Meteorology and Commonwealth Scientific and Industrial Research Organisation. Balasundharam, V., L. Hunter, I. Lavea, & P. Seeds. 2021. “Managing Fiscal Risks from National Airlines in Pacific Island Countries.” Washington, DC: International Monetary Fund. Baleinakorodawa, P., and U. Vaai. 2021. “Fiji COVID Poverty Crisis.” Toda Peace Institute. https://toda.org/global-outlook/fiji-covid- poverty-crisis.html. Bermuda Tourism Authority. 2012. “National Tourism Master Plan”. Hamilton: Bermuda Tourism Authority. ———. 2019. “National Tourism Plan 2019-2025.” Hamilton: Bermuda Tourism Authority. Blake, Adam. 2003. The Economic Rationale for Government Intervention in Tourism. Nottingham: University of Nottingham. Booking.com. 2021. “Sustainable Travel Report 2021.” https://globalnews.booking.com/download/1037578/booking.comsustainabletravelreport2021.pdf. Bündnis Entwicklung Hilft. 2021. “WorldRiskReport 2021.” Berlin: Bündnis Entwicklung Hilft / Institute for International Law of Peace and Armed Conflict. CEDEFOP (European Centre for the Development of Vocational Training). 2017. “Skills Anticipation in Portugal.” https://www.cedefop.europa.eu/en/data-insights/skills-anticipation-portugal Cheer, J. M., Pratt, S., Tolkach, D., Bailey, A., Taumoepeau, S., & Movono, A. 2018. Tourism in Pacific Island countries: A status quo round-up. Asia Pacific Policy Studies, 5(3). CLIA (Cruise Lines International Association). 2019. “2018 Australia Ocean Source Market Report.” Washington, DC: CLIA. ———. 2022. “2022 State of the Cruise Industry Outlook.” Washington, DC: CLIA. Collier, B., and M. Ragin. 2022. “As Climate Risk Grows, so Will Costs for Small Businesses.” https://hbr.org/2022/08/as-climate-risk- grows-so-will-costs-for-small-businesses Colthorpe, A. 2022. “Tonga’s First Large-Scale Battery Systems Take Country Closer to Achieving NDC Climate Targets.”  https://www.energy-storage.news/tongas-first-large-scale-battery-systems-take-country-closer-to-achieving-ndc-climate- targets/ 112 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Connell, J. 2021. “COVID-19 and Tourism in Pacific SIDS: Lessons from Fiji, Vanuatu and Samoa?” The Round Table - Commonwealth Journal of International Affairs 110 (1): 149-158. Costa Rica Tourism Board. 2002. “Plan Nacional de Desarrollo Turistico Sostenible 2002-2012.” San Jose: Costa Rica Tourism Board. ———. 2022. “CST Tourism Sustainability.” https://www.ict.go.cr/en/sustainability/cst.html. Crick, F., S. M. Eskander, S. Fankhauser, and M. Diop. 2018. “How Do African SMEs Respond to Climate Risks? Evidence from Kenya and Senegal.” World Development 108: 157-168. Cummins, N. 2020. “The Challenges Facing South Pacific Aviation.” https://www.eways-aviation.com/blog/the-challenges-facing-south-pacific-aviation. Das, S., and A. Kotikula. 2019. “Gender-Based Employment Segregation: Understanding Causes and Policy Interventions.” Washington, DC: World Bank. DCI (Development Counsellors International). n.d. “Barbados Remote Work Campaign Forges a Path to COVID-19 Tourism Recovery.” https://aboutdci.com/case-studies/barbados-remote-work-campaign-forges-a-path-to-covid-19-tourism-recovery/. Destination Think. 2020. “Reimagine What Tourism and Travel Can Become.” https://destinationthink.com/blog/reimagine-what- tourism-travel-can-become/. Digital Visitor. n.d. “Destination Marketing: Belize.” https://digitalvisitor.com/case-studies/belize/. Dwyer, L., and P. Forsyth. 1992. “The Case for Tourism Promotion: An Economic Analysis.” The Tourist Review 47 (3): 16-26. EM-DAT (Emergency Events Database). 2022. “The International Disaster Database.” https://www.emdat.be/database. Erman, A., S. A. De Vries Robbe, N. Browne, and C. Solis Uehara. 2021. “Resilience of the Caribbean Tourism Industry – New Evidence from a Firm Survey: 360° Resilience Background Paper.” Washington, DC: The World Bank. Faber, B., and C. Gaubert. 2019. “Tourism and Economic Development: Evidence from Mexico’s Coastline.” American Economic Review 109 (6): 2245-2293. FAO (United Nationsl Food and Agriculture Organization). 2011. “Fiji Domestic Market Study: Opportunities and Challenges for Vegetable Import Substitution.” Rome: FAO. FBOS (Fiji Bureau of Statistics). 2020. “2019-20 Household Income and Expenditure Survey Main Report.” Suva: Fiji Bureau of Statistics. 2022.  ———.  “Tourism and FBOS (Fiji Bureau of Statistics). 2022. “Tourism and Migration Statistics.” https://www.statsfiji.gov.fj/statistics/tourism-and-migration-statistics.html. Fiji Islands Environment Management Act, Act No. 1 of 2005 (March 17, 2005). Fiji Women’s Rights Movement. 2016. “Sexual Harassment of Women in the Workplace in Fiji: 2016 Follow Up Study.” Suva: Fiji Women’s Rights Movement. Fortune Business Insights. 2021. “Luxury Hotel Market Size, Share & COVID-19 Impact Analysis.” https://www.fortunebusinessinsights.com/luxury-hotel-market-104408. FSM Statistics (Federated States of Micronesia Statistics). 2022. “International Arrivals.” https://www.fsmstatistics.fm/social/international-arrivals/. Global Green Growth Institute. 2019. “Market Assessment for Solar Power for Off-Grid Hotels in Fiji.” Suva, Fiji: Unpublished report. World Bank. Global Market Insights. 2022. Luxury Tourism Market Size By Type, Tour Type, Generation, COVID-19 Impacts Analysis, Regional Outlook, Application Development Potential, Price Trend, Competitive Market Share & Forecasts, 2022-2030. Global Wellness Institute. 2021. “The Global Wellness Economy: Looking Beyond COVID.” Miami, FL: Global Wellness Institute. GlobalPetrolPrices.com. 2021. “Electricity Prices.” https://www.globalpetrolprices.com/electricity_prices/#hl160. Gösling, S., and J. Higham. 2021. “The Low-Carbon Imperative: Destination Management under Urgent Climate Change.” Journal of Travel Research 60 (6): 1167-1179. Gounder, R. 2020. “Economic Vulnerabilities and Livelihoods: Impact of COVID-19 in Fiji and Vanuatu.” Oceania 90 (S1): 107-113. Government of Fiji. 2013. “Post-Disaster Needs Assessment: Tropical Cyclone Evan, 17th December 2012.” Suva: Government of Fiji. ———. 2016. “Post-Disaster Needs Assessment: Tropical Cyclone Winston, February 20, 2016.” Suva: Government of Fiji. ———. 2020. “International Visitors Survey Fiji 2019.” Suva: Ministry of Industry, Trade and Transport.  021. “Minister Faiyaz Koya’s Speech at Opening of the Tourism Talanoa Session.” ———. 2 https://www.fiji.gov.fj/Media-Centre/Speeches/English/MINISTER-FAIYAZ-KOYA-AT-OPENING-OF-THE-TOURISM-TAL. Government of Samoa. 2009. “Post-Disaster Needs Assessment following the Earthquake and Tsunami of 29th September 2009.” Apia: Government of Samoa. THE FUTURE OF PACIFIC TOURISM MARCH 2023 113 ———. 2013. “Post-Disaster Needs Assessment Cyclone Evan 2012.” Apia: Government of Samoa. Government of Tonga. 2018. “Post Disaster Rapid Assessment: Tropical Cyclone Gita, February 12, 2018.” Nuku’alofa: Government of Tonga. Government of Vanuatu. 2015. “Vanuatu Post-Disaster Needs Assessment.” Port Vila: Government of Vanuatu. ———. 2020. “Post-Disaster Needs Assessment: TC Harold & COVID-19, Vanuatu.” Port Vila: Government of Vanuatu. Grand View Research. 2020. Adventure Tourism Market Size, Share & Trends Analysis Report. Guo, Y., J. Jiang, and S. Li. 2019. “A Sustainable Tourism Policy Research Review.” Sustainability 11 (11). Harrison, D., & Pratt, S. 2010. Political Change and Tourism: Coups in Fiji. In R. Butler, & W. Suntikul, Tourism and Political Change (p. 160). Oxford: Goodfellow Publishers Limited. Hawaii Tourism Authority. 2022. “Visitor Satisfaction and Activity.” https://www.hawaiitourismauthority.org/research/visitor-satisfaction-and-activity/. Huang, H. H., Kerstein, J., & Wang, C. 2018. The impact of climate risk on firm performance and financing choices: An international comparison. Journal of International Business Studies, 49, 633–656. IATA. 2019. “Air Passenger Market Analysis”. IATA Economics Report. https://www.iata.org/en/iata-repository/publications/economic-reports/air-passenger-monthly---dec-2019/. IFC (International Finance Corporation). 2015. “Vanuatu Agri-tourism Linkages: A Baseline Study of Agri Demand from Port Vila’s Hospitality Sector.” Washington, DC: IFC. ———. 2018a. “From the Farm to the Tourist’s Table—A Study of Fresh Produce Demand from Fiji’s Hotels and Resorts.” Washington, DC: IFC. ———. 2018. “Papua New Guinea Tourism Demand Assessment Part I: Investing in the Growth Potential of Niche Tourism of Papua New Guinea.” Washington, DC: IFC. ———. 2019a. “Shaping the Future of Adventure and Cultural Travel: Profiles and Behaviors of Adventure and Cultural Travelers  from the United States and Australia.” https://www.ifc.org/wps/wcm/connect/region__ext_content/ifc_external_corporate_site/ east+asia+and+the+pacific/resources/fiji-shaping+the+future+of+adventure. ———. 2019b. “Assessment of the Economic Impact of Cruise Tourism in Fiji.” “Destination Research Hawaii: Highlights and Learnings from 100 Years of Tourism Development.” Washington, DC: IFC. ———. 2019c.  “Papua New Guinea: Tourism Demand Assessment Part II - Case Studies for Niche Market Success.” Washington, DC: IFC. ———. 2019e.  “Fiji COVID-19 Business Survey: Tourism Focus. Washington, DC: IFC and Fiji Ministry of Commerce, Trade, Tourism ———. 2020a.  and Transport.” ———. 2020b. “Vanua Levu Tourism Market Demand Assessment. Suva: IFC.” ———. 2021. “Fiji TC Yasa Business Survey.” Washington, DC: IFC. IFC and UNWTO (United Nations World Tourism Organization). n.d. “Government Incentives for Green Hotels: UNWTO  and IFC Webinar Series.” https://webunwto.s3.eu-west-1.amazonaws.com/s3fs-public/2020-06/Government-Incentives- for-Green-Hotels-unwto.pdf ILO (International Labor Organization). 2020b. “COVID-19 and Employment in the Tourism Sector: Impact and Response in Asia  and the Pacific.” https://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/documents/briefingnote/wcms_742664.pdf. ———. 2020a. “Pacific Labour Market Review.” Suva: ILO. ———. n.d. “Statistics on Women”. https://ilostat.ilo.org/topics/women/. IMF (International Monetary Fund). 2021b. “Managing Fiscal Risks from National Airlines. IMF Working Paper.” Washington, DC: IMF. ———. 2021a. “Tourism in the Post-Pandemic World: Economic Challenges and Opportunities for Asia-Pacific and the Western Hemisphere.” Washington, DC: IMF. ———. 2022. “International Financial Statistics.” https://data.imf.org/?sk=4c514d48-b6ba-49ed-8ab9-52b0c1a0179b  Policy Responses“Policy Responses to COVID-19: Policy Tracker.” ———. n.d. “ https://www.imf.org/en/Topics/imf-and-covid19Policy-Responses-to-COVID-19 Inter-American Development Bank. 2021. Innovation, Firm Performance & Gender (IFPG) Issues in Enterprises in the Caribbean Survey (2020 & 2021). Cowansville (Quebec): Economic Expertise & Consulting (EEC International). International Institute for Energy Conservation. 2015. “Energy Efficiency Guidelines for Hotels in the Pacific.” https://prdrse4all.spc.int/system/files/energy_efficiency_guidelines_for_hotels_in_the_pacific.pdf IRENA (International Renewable Energy Agency). 2014. “Renewable Energy Opportunities for Island Tourism.” IRENA. Jiang, M., T. DeLacy, N. Mkiramweni, and D. Harrison. 2011. “Some Evidence for Tourism Alleviating Poverty.” Annals of Tourism Research 38 (3): 1181-1184. Jurdana, D. S., and D. S. Frleta. 2016. “Satisfaction as a Determinant of Tourist Expenditure.” Current Issues in Tourism 20 (7): 691-704. Khokhobaia, M. 2019. “The Role of Small and Medium Size Enterprises in Regional Tourism Development: The Case of Georgia.” Proceedings of 2nd International Conference on Business, Management and Economics. Vienna, Austria . 114 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Khor, Hoe Ee, Roger P. Kronenberg, and Patrizia Tumbarello. 2016. “Resilience and Growth in the Small States of the Pacific.” Washington, DC: IMF. Kiribati NSO (National Statistics Office). 2022. “Tourism Statistics.” http://nso.gov.ki/. Kovena. 2022. “Pacific Islands Hotel Insights 2022 Report”. Melbourne: Kovena. Krishnamurthi, S. 2020. “Could Eco-Tourism Mark the Post-Covid Future for the Blue Pacific?” Earth Journalism Network https://earthjournalism.net/stories/could-eco-tourism-mark-the-post-covid-future-for-the-blue-pacific. Laframboise, N., N. Mwase, J. Park, and Y. Zhou. 2014. “Revisiting Tourism Flows to the Caribbean: What is Driving Arrivals?” Washington, DC: IMF. Liang, X., and C. Andris. 2021. “Measuring McCities: Landscapes of Chain and Independent Restaurants in the United States.” Environment and Planning B: Urban Analytics and City Science 49 (2). Mahon, R., S. Becken, and H. RennieH. 2013. “Evaluating the Business Case for Investment in the Resilience of the Tourism Sector of Small Island Developing States.” Geneva / Canterbury: United Nations Office for Disaster Risk Reduction / Lincoln University. Mastercard. 2016. “Consumer Insights by MasterCard.” CHTA Market Place Conference. http://www.caribbeanhotelandtourism.com/wp-content/uploads/2016/10/Consumer-Insights-by-MasterCard-Advisors.pdf MBIE (Ministry of Business, Innovation and Employment). n.d. “Ministry of Business, Innovation and Employment.” https://www.mbie.govt.nz/immigration-and-tourism/tourism/. MBIE and Department of Conservation. 2019. “New Zealand-Aotearoa Government Tourism Strategy: Enrich New Zealand- Aotearoa Through Sustainable Tourism Growth.” New Zealand Government. Montanes, R. L., and S. Nakamura. 2022. “COVID-19 Impact on Poverty in Pacific Island Countries: A Macro-Micro Simulation Approach.” Washington, DC: World Bank. Movono, A. 2022. “Pacific Aviation Is Struggling to Take Off After the Pandemic—How Can the ‘Blue Continent’ Stay Connected?”  The Conversation https://theconversation.com/pacific-aviation-is-struggling-to-take-off-after-the-pandemic-how-can- the-blue-continent-stay-connected-187522. Movono, A., and R. ScheyvensR. 2020. “Pacific Tourism Is Desperate for a Vaccine and Travel Freedoms, but the Industry Must Learn  from this Crisis.” The Conversation https://theconversation.com/pacific-tourism-is-desperate-for-a-vaccine-and-travel- freedoms-but-the-industry-must-learn-from-this-crisis-150722. New York Times. 2021. “The Caribbean Conundrum: United by Tourists, Divided by Covid.” https://www.nytimes.com/2021/05/25/travel/caribbean-vacation-coronavirus.html. NZTRI (New Zealand Tourism Research Institute). 2020a. “Samoa International Visitor Survey January-December 2019.” New Zealand Tourism Research Institute. ———. 2020b. “Solomon Islands International Visitor Survey, January to December 2019.” New Zealand Tourism Research Institute Nguyen, Q. H. 2022. “Tourism Demand Elasticities by Income and Prices of International Market Regions: Evidence Using Vietnam’s Data.” Economies 10 (1). Nielsen IQ. 2021. The Conference Board® Global Consumer Confidence Survey conducted with Nielsen Q2 2020 vs Q2 2021. Nielsen IQ. NOAA (National Oceanic and Atmospheric Administration). n.d. “Hurricane Damage Potential.” https://www.weather.gov/jetstream/tc_potential. OAG (Official Aviation Guide). 2022. “OAG Schedules Analyzer Power Table Report.” https://analytics.oag.com/analyser-client/schedules-analyser/powertables-report?action=loadjobbin&reportId=2294696 ———. 2022. “Traffic Analyzer.” https://analytics.oag.com/analyser-client/home. Observatori del Turisme a Barcelona. 2022. “Tourism Activity Reports. City of Barcelona. 2015-2019”. https://ajuntament.barcelona.cat/turisme/en/estadistiques_enquestes. OECD. n.d. OECD Statistics. Retrieved 10 14, 2022, from https://stats.oecd.org/ Opçao Turismo. 2020. “Turismo de Portugal Launches Digital Academy.” https://opcaoturismo.pt/wp/en/turismo-de-portugal-lanca-academia-digital/. PVA (Palau Visitors Authority). 2021. “Palau Tourism Industry Report.” Koror: Palau Visitors Authority. PASO (Pacific Aviation Safety Office). 2022. “Pacific Regional Aviation Strategy 2022-2032.” Port Vila, Vanuatu: PASO. PATA (Pacific Asia Travel Association). 2022. “PATA Asia Pacific Forecasts 2022-2024: Executive Summary.” Bangkok, Thailand: PATA. Pearce, D. 2015. Destination management in New Zealand: Structures and functions. Journal of Destination Marketing & Management, 4(1), 1-12. PNG TPA (Tourism Promotion Authority). 2019. “International Visitor Survey.” Port Moresby: PNG Tourism Promotion Authority. ———. 2022. “Annual Visitor Arrival Statistics.” https://www.papuanewguinea.travel/research-and-statistics. Prasad, B. C. 2008, November. Reviving Growth in the Fiji Islands: Are we Swimming or Sinking? Pacific Economic Bulletin, 23(2), 5-26. Pratt, S. 2015. “The Economic Impact of Tourism in SIDS.” Annals of Tourism Research 52: 148-160. PRTC (Puerto Rico Tourism Company). n.d. “Puerto Rico Tourism Company.” https://prtourism.com/about-us/. THE FUTURE OF PACIFIC TOURISM MARCH 2023 115 PSDI (Pacific Private Sector Development Initiative). 2021a. “Looking Forward. Vol. 1: Evaluating the Challenges for Pacific Tourism After COVID-19.” Sydney: PSDI. ———. 2021b. “Pacific Tourism Sector Snapshots.” Sydney: PSDI. Pacific Private Sector Development Initiative (PSDI). 2022. Reopening Border to Tourism in Pacific Island Countries: Key Lessons and Guidance. Sydney. Pacific Private Sector Development Initiative (PSDI). 2022. PTI (Pacific Trade Invest). 2022. “Pacific Islands Export Survey 2022.” https://pacifictradeinvest.com/media/iqvbcn1v/pti-australia-pacific-export-survey-2022-full-report.pdf. Qualmark. n.d. “Qualmark.” https://www.qualmark.co.nz/en/learn-about-us/ Rasoolimanesh, S., S. Seyfi, R. Rastegar, and C. M. Hall. 2021. “Destination Image During the COVID-19 Pandemic and Future Travel Behavior: The Moderating Role of Past Experience. Journal of Destination Marketing & Management 21. ReportLinker. 2022. “Global Luxury Travel Market Size, Share & Industry Trends Analysis 2022-2028.” https://www.reportlinker.com/p06364573/Global-Luxury-Travel-Market-Size-Share-Industry-Trends-Analysis-Report-By-Tour -By-Age-Group-By-Regional-Outlook-and-Forecast.html. RMI EPPSO (Republic of the Marshall Islands Economic Policy, Planning and Statistics Office). 2022. “Statistical Yearbook.” https://rmieppso.org/statistical-yearbook/. Rosselló, J., S. Becken, and M. Santana-Gallego. 2020. “The Effects of Natural Disasters on International Tourism: A global analysis.” Tourism Management 79: 2-10. Rozenberg, J. B. 2021. 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks. Washington, DC: The World Bank. Rupasingha, A., & Patrick, J. M. 2009. Tools for Understanding Economic Change in Communities: Economic Base Analysis and Shift-Share Analysis. New Mexico State University. Retrieved from https://www.cdfa.net/cdfa/cdfaweb.nsf/fbaad5956b2928b086256efa005c5f78/3dce10502365d4cf88257a1b006db496/$FILE/ Tools%20for%20Understanding%20Economic%20Change%20in%20Communities%20-%20Economic%20Base%20Analysis%20 and%20Shift-Share%20Analysis%20-%20NM%20State%20University.pdf Safran, P. 2015. “Understanding Land Issues and Their Impact on Tourism Development.” Manilla: ADB. Samoa Chamber of Commerce & Industry. 2020. “Rapid Assessment of the COVID-19 Impact on Businesses, Employment and Households in Samoa.” Apia: Samoa Chamber of Commerce & Industry. Scheyvens, R., and M. Russell. 2009. “Tourism and Poverty Reduction in the South Pacific.” Report for the New Zealand Ministry of Foreign Affairs and Trade (MFAT), Massey University. https://www.mfat.govt.nz/assets/Uploads/Tourism-and-poverty-reduction-in-the-South-Pacific.pdf. ———. 2011. “Tourism, Land Tenure and Poverty Alleviation in Fiji.” Tourism Geographies 14 (1): 1-25. 2012. “Tourism and Poverty Alleviation in Fiji: Comparing the Impacts of Small- and Large-Scale Tourism Enterprises.” ———.  Journal of Sustainable Tourism 20 (3): 417-436. Schlumberger, C. E., and N. Weisskopf. 2014. “Ready for Takeoff? The Potential for Low-Cost Carriers in Developing Countries.” Washington, DC: World Bank. Siegel, B. 2021. “What Happens When You Stop Marketing? The Rise and Fall of Colorado Tourism.” Longwoods International. Singapore Management University. 2022. “National and Sectoral Scores”. https://ise.smu.edu.sg/csisg/score-ranking. Smeral, E. 2006. “Aspects to Justify Public Tourism Promotion: An Economic Perspective.” Tourism Review 61 (3): 6-14. Solomon Island Government. 2020. “Solomon Islands International Visitor Survey.” Honiara: Tourism Solomons. Solomon Islands NSO (National Statistics Office). 2022. “Tourism and Migration Statistics.” https://www.statistics.gov.sb/statistics/90-migration-statistics. SPREP (Secretariat of the Pacific Regional Environment Programme). 2020. “Webinar Series to Encourage Sustainability as World Emerges from COVID-19.” https://www.sprep.org/news/webinar-series-to-encourage-sustainability-as-world-emerges-from-covid-19. SPTO (Pacific Tourism Organisation). 2015. “Niche Market Study: Romance.” Suva, Fiji: SPTO. ———. 2020. “2019 Annual Review of Visitor Arrivals Report.” Suva, Fiji: SPTO. ———. 2021b. “2020 Annual Visitor Arrivals Snapshot.” Suva, Fiji SPTO. ———. 2021a. “Pacific Sustainable Tourism Policy Framework.” Suva, Fiji: SPTO. STA (Samoa Tourism Authority). 2020. “Samoa International Visitor Survey.” Apia: Samoa Tourism Authority. ———. 2021. “Sector Plan 2021/22 – 2025/26.” Apia: Samoa Tourism Authority. ———. 2022. “Tourism Statistics.” https://www.samoatourism.org/section/19/statistics. Sumb, A. 2017. “New Zealand Travellers’ Perceptions of Safety and Security in Papua New Guinea.” Contemporary PNG Studies 27: 42-50. SuperGuide. 2022. “SuperGuide.” https://www.superguide.com.au/retirement-planning/retiring-overseas-implications-super-tax. 116 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Sustainable Hospitality Alliance and IFC. 2020. “Business Case for Sustainable Hotels.” https://sustainablehospitalityalliance.org/resource/business-case-for-sustainable-hotels/. Tahana, J. 2020. “A Surge in Poverty as Tourism Jobs in Samoa Disappear.” Radio New Zealand. https://www.rnz.co.nz/international/pacific-news/416094/a-surge-in-poverty-as-tourism-jobs-in-samoa-disappear. Taher, R. 2010. “General Recommendations for Improved Building Practices in Earthquake and Hurricane Prone Areas.” Newark: Architecture for Humanity. Tanner, T. S. 2015. “The Triple Dividend of Resilience: Realising Development Goals Through the Multiple Benefits of Disaster Risk Management.” London: Global Facility for Disaster Reduction and Recovery at the World Bank and Overseas Development Institute. Tarlow, P. 2014. “Tourism Security: Strategies for Effectively Managing Travel Risk and Safety.” Waltham, MA: Butterworth-Heinemann. Taylor, M. 2020. “Navigating Through Covid19—Our Blue Pacific Ocean Journey.” https://opocbluepacific.net/navigating-through-covid19-our-blue-pacific-ocean-journey/. TEAM Tourism Consulting. 2018. “Developing and Marketing the UK as a Luxury Destination: Four Case Studies  (New Zealand, Mexico, California, Iceland).” https://www.visitbritain.org/sites/default/files/vb-corporate/Documents-Library/ documents/visitbritain_luxury_tourism_final_report.pdf The Weekly Journal. 2022. “Puerto Rico Tourism Industry Continues to Break Records.” https://www.theweeklyjournal.com/ business/puerto-rico-tourism-industry-continues-to-break-records/article_aea4cfa4-2817-11ed-8a69-67d3567f1554.html. The Wise Dreams. n.d. “The Wise Dreams.” http://thewisedreams.com/. Tonga Statistics Department. 2022. “Migration Statistics.” https://tongastats.gov.to/statistics/social-statistics/migration/. Tourism Fiji. 2017. “2017 Room Inventory Report.” Suva: Tourism Fiji. ———. 2022. “Tourism Fiji Industry Database.” https://tourismfijicomfj.sharepoint.com/:x:/s/CloudShare-Operations/Ee_WVPWN-3ZHhZHZI tFLnSYB1eLky0JzisSkrdsSePDccg?rtime=qmPpBLUJ20g Tourism New Zealand. n.d. ”Tourism New Zealand.” https://www.tourismnewzealand.com/about-us/. ———. 2022c. “Tourism Grows 4% in 2021 but Remains far Below Pre-Pandemic Levels.” https://www.unwto.org/news/tourism-grows-4-in-2021-but-remains-far-below-pre-pandemic-levels. TravelAge West. n.d. “Puerto Rico Is a Tourism Case Study in Overcoming Setbacks.” https://www.travelagewest.com/Travel/USA-Canada/Puerto-Rico-Is-a-Tourism-Case-Study-in-Overcoming-Setbacks. TRIP Consultants. 2013. “Tonga Tourism Sector Roadmap 2014-2018.” Brisbane: TRIP Consultants. Tripadvisor. 2022. Beyond COVID-19: “The road to recovery for the travel industry.” Retrieved from https://www.tripadvisor.com/Covid19WhitepaperMay2020#group-accommodations-NG7F0K8gGe Tuvalu CSD (Central Statistics Division). 2022. “Migration Statistics.” https://stats.gov.tv/category/population-and-social/migration-population-and-social-statistics/. UNCDF (United Nations Capital Development Fund). 2021. “The Opportunity for Digital and E-Commerce Payments in the Pacific Region.” New York: UNCDF. UNDP (United Nations Development Programme). 2020. “How Can Small Islands Reimagine Tourism for a Green Recovery.” https://www.undp.org/blogs/how-can-small-islands-reimagine-tourism-green-recovery. UNESCAP (United Nations Economic and Social Commission for Asia and the Pacific). 2020. “Tourism as a Driver of Sustainable Development in Asia-Pacific Small Island Developing States.” Bangkok: UNESCAP. ———. 2022. Policy Guidebook for MSME Development in Asia and the Pacific, 2nd Edition. Bangkok: United Nations. University of Oxford. 2022. “COVID-19 Government Response Tracker.” https://www.bsg.ox.ac.uk/research/covid-19-government-response-tracker. United Nations University. 2016. “World Risk Report.” Bonn: Bündnis Entwicklung Hilft and United Nations University. Retrieved from https://collections.unu.edu/ USGAO (U.S. Government Accountability Office). 2018. “Workplace Retirement Accounts.” Report to the Ranking Member, Committee on Finance United States Senate. UNWTO (United Nationals World Tourism Organization). 2007. “A Practical Guide to Tourism Destination Management.” Madrid: UNWTO. ———. 2020a. “Tourism in SIDS: The Challenge of Sustaining Livelihoods in Times of COVID-19.” Madrid: UNWTO. ———. 2020b. “One Planet Vision for a Responsible Recovery of the Tourism Sector. “ Madrid: UNWTO. ———. 2021a. “Compendium of Tourism Statistics, Data 2015-2019, 2021 Edition.” Madrid: UNWTO. ———. 2021b. “Sécurité et Sûreté dans le Secteur du Tourisme Volume 1: Des Liens Etroits entre Tourisme, Sécurité, Sûreté et Développement.” Madrid: UNWTO. ———. 2022a. “International Tourism Consolidates Strong Recovery Amidst Growing Challenges.” https://www.unwto.org/news/international-tourism-consolidates-strong-recovery-admidst-growing-challenges. THE FUTURE OF PACIFIC TOURISM MARCH 2023 117 ———. 2022b. “Tourism Data Dashboard.” Madrid: UNWTO. ———. 2022c. “Tourism Grows 4% in 2021 but Remains far Below Pre-Pandemic Levels.” https://www.unwto.org/news/tourism-grows-4-in-2021-but-remains-far-below-pre-pandemic-levels. ———. n.d. “Tourism Statistics Database.” Retrieved from https://www.unwto.org/tourism-statistics/tourism-statistics-database UNWTO and STR (Smith Travel Research). 2022. “Tourism Recovery Tracker.” https://www.unwto.org/tourism-data/unwto-tourism-recovery-tracker. U.S. Travel Association. 2017. “What’s at Stake When Destination Marketing Stops: The Power of Travel Promotion.” Washington, DC: U.S. Travel Association. Vanuatu NSO (National Statistics Office). 2022. “International Visitor and Resident Arrivals.” https://vnso.gov.vu/index.php/en/statistics-report/economic-statistics/international-visitor-resident-arrivals. Vanuatu Chamber of Commerce & Industry. 2020. “Vanuatu Private Sector Economic Update.” Port Vila: Vanuatu Chamber of Commerce & Industry. Vanuatu Department of Tourism & Vanuatu Tourism Office. 2020. “National Tourism Business Impacts Survey - TC Harold and COVID-19 Pandemic.” Port Vila: Vanuatu Department of Tourism. Vanuatu Department of Tourism and Vanuatu Tourism Office. 2020. “National Tourism Business Impacts Survey: TC Harold and COVID-19 Impacts.” Visa Navigate. 2021. “Preparing for the return of travel in a post-COVID world.” Retrieved from https://navigate.visa.com/europe/research-and-insights/preparing-for-the-return-of-travel-in-a-post-covid-world/ Visit England. 2016. “Wild Atlantic Way Case Study.” https://www.visitbritain.org/sites/default/files/vb-corporate/Documents- Library/documents/England-documents/waw_case_study_15_nov_2016_final_-_copy.pdf. Walker, D. 2016. “Social Security Matters.” https://blog.ssa.gov/social-security-benefits-u-s-citizens-outside-the-united-states/. World Bank. 2014. “Tourism in Africa: Harnessing Tourism for Growth and Improved Livelihoods.” Washington, DC: World Bank. ———. 2016. “Pacific Possible. Climate and Disaster Resilience.” Sydney: World Bank. ———. 2017b. “Pacific Possible: Long Term Economic Opportunities and Challenges for Pacific Island Countries.” Washington, DC: World Bank Group. ———. 2017a. “Republic of Fiji—Systematic Country Diagnostic.” Washington, DC: World Bank Group. ———. 2018. “PNG Urban Youth Employment Project Impact Evaluation.” Washington, DC: World Bank. 2019. “Pacific Islands: Harnessing the transformative power of digital connectivity.” https://www.worldbank.org/en/news/ ———.  feature/2019/11/04/pacific-islands-harnessing-the-transformative-power-of-digital-connectivity. ———. 2020a. “Rebuilding Tourism Competitiveness.” Washington, DC: World Bank Group. ———. 2020b. “Pacific Island Countries in the Era of COVID-19: Macroeconomic Impacts and Jobs Prospects.” Washington, DC: World Bank Group. ———. 2020c. “From Containment to Recovery: Economic Update for East Asia and the Pacific.” Washington, DC: World Bank Group. ———. 2020d. “Vanuatu Tourism Investment Needs Assessment and Plan (2020-2030).” Washington, DC: World Bank. ———. 2020e. “Resilient Tourism: Competitiveness in the Face of Disasters.” Washington, DC: World Bank. ———. 2021. “How Could the Pacific Restore International Travel?” Washington, DC: World Bank Group. ———. 2022a. “Shifting Tourism Demand Risk, Health and Sustainability in the Age of COVID 19.” Washington, DC: World Bank Group. ———. 2022b. “Expecting the Unexpected: Tools and Policy Considerations to Support the Recovery and Resilience of the Tourism Sector.” Washington, DC: World Bank Group. ———. 2022c. “World Development Indicators Database.” https://databank.worldbank.org/source/world-development-indicators. ———. 2022d. “Fiji Climate Vulnerability Assessment: Making Fiji Climate Resilient.” Washington, DC: World Bank. ———. 2022e. “Case Study Analysis on Digital Adoption in Tourism.” Washington, DC: World Bank. ———. n.d. “Mapping of Digital Along the Tourism Value Chain.” Unpublished mimeo. World Bank and IFC. 2020. “Tourism Recovery in the Pacific: Building Resilience After COVID-19.” Washington, DC: World Bank Group. WTTC (World Travel and Tourism Council). 2020. Economic Impact Assessment Reports. London: World Travel and Tourism Council. ———. 2022. “Economic Impact Assessment Reports.” London: World Travel and Tourism Council. Yap Visitors Bureau. 2019. “Yap Visitor Survey and Regional Examples.” Yap: Yap Visitors Bureau. 118 THE FUTURE OF PACIFIC TOURISM MARCH 2023 Image: Marshall Islands THE FUTURE OF PACIFIC TOURISM MARCH 2023 119 For more information please contact: E-mail: tperry@worldbank.org www.worldbank.org March 2023