12. December 2005

The Travel Bug - Issue 8

Tourism Worth $2.6b to South Pacific
Tourism was worth an estimated $2.6billion to the South Pacific region, a research commissioned by the South Pacific Tourism Organisation revealed. The report, 'The Economic Impact of Tourism in SPTO Member Countries' prepared by the New Zealand Tourism Research Institute said the economic value of tourism had grown by over 60 per cent since 2000. Tourism accounted for over 50 per cent of GDP in some Pacific countries and often accounted for between 10 and 20 per cent of formal employment. SPTO said tourism was a sector which had strong backward and forward linkages so that when tourism developed, nearly every other sector of the economy benefitted. As part of the study, a survey was undertaken of tourism operators in the South Pacific to better ascertain the inter-industry linkages that tourism provides. The report estimated that a total of $638million was spent by the tourism industry on local wages and salaries in 2004, whilst a further $655 million was directed to the purchase of materials/supplies from within the local economies of (either local or imported goods sold through local wholesalers) and $478million was spent on other costs (including areas such as financial services and insurance). In simple terms, for every $1.7million of visitor expenditure in the region, $1.1million of local wages/salary payments and other purchases were made from local economies in the region. The report indicated that it was clear the industry had great potential to generate further downstream benefits for island economies. For the SPTO country members as a group, departure tax generated well over $34.9million in 2004. The report estimated that government revenue from direct tourist expenditure alone in 2004 in SPTO member countries was $791million. This figure included departure tax and conservative estimates of corporate tax taken from industry revenue. The figures do not include duties, tariffs and other tourism related taxes. "The Report provides some very valuable data; clearly tourism is a major driver in most Pacific economies and a major source of direct revenue for most governments," Ross Hopkins, the policy and programs adviser at SPTO indicated. The research indicated the figures (in terms of the value of tourism) were currently understated due to lack of data and they do not include cruise ship tourist expenditure or tourist expenditure on airline services. TRNZI indicated the underestimate may be at least 20 percent, which would make tourism worth at least $3.1billion to the region. "It is interesting to note however that despite most governments giving priority to tourism development, most donors do not have the sector very high on their agenda," the SPTO said. "Clearly there is a need for donors to further consider how tourism can be developed at a regional and country level and to support initiatives through their own programs." (Source: SPTO Update in November 2005)

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