Fiji Hotel and Tourism Association, 15 February 2024 – We recently met with the Macroeconomic Forecasting Unit of the Ministry of Finance in the very midst of the ongoing interplay of economic forecasts and policy formulations, as part of the lead-up to the national budget.
At the heart of this consultation lies the recognition of the tourism sector’s paramount importance to Fiji’s economic prosperity and social well-being. At least until we bring other industries up to par to share this onerous burden and reduce this overreliance on just one sector – factors our well-meaning suite of development partners keep reminding us is a risk we should be addressing as part of Fiji’s longer-term strategies.
With tourism serving as a cornerstone of the nation’s economy, accounting for a substantial portion of GDP and employment, the stakes are high and the responsibilities are weighty.
Our engagement with the unit team underscores a shared commitment to harnessing the industry’s potential while navigating the complexities that lie ahead.
A year ago, as we dived into 2023, we learnt that the Government needed more money to operate (so it could fix the crumbling health system, lay more roads, repair the bridges, improve the schools, plug the water leaks, generate more energy, reduce poverty, and repay that formidable debt), but had very limited options with only 22,000 of our population paying income taxes, a private sector with stunted growth, negligible investments due largely to Fiji having the worst Ease of Doing Business rate, and the see-sawing of tax increases and incentives that did not have the expected impacts.
The next step was clear – we needed to stimulate economic growth from its current narrow base. Easier said than done, but a challenge that saw a more consultative process take hold so that everyone had a say on the country’s development plans.
Despite coming off a phenomenal year with record visitor numbers that saw almost year-round high air carriage and hotel occupancies that further translated to pumped up demand for tours, transport, food and beverage spends in restaurants and eateries, high fresh produce, supermarket and other supplies sales; there is widespread awareness that the new year brings with it another set of challenges.
The under-anticipated high demand for Fiji which peaked earlier than expected and continued for longer than anyone hoped, has now entered more competitive times. Other competitor destinations, many of whom we compete with being at far higher economic levels than ourselves, have caught up having changed their post-reopening tactics and realigned their marketing focus.
Higher inflation rates and increasing costs of living in our key markets, coupled with global economic developments that pressure interest rates, make money markets nervous or impact people’s sense of safety; all gnaw away at affordability issues and eventually on the decisions for what people will eventually spend money on.
Last year was also a record year of remittances for Fiji having reached $1.25 billion. This boosted domestic spending and plays into what is often used as a bargaining chip for why Pacific Island Country governments should support formal migrant worker programs, even though our people leaving are paying those countries that need their labour through the high costs of visas.
And therein lies our other notable challenge that has now seeped into the public sector as well as the already well-aware private sector – the increasing loss of skilled workers.
So the the significance of this consultation to understand the headwinds, identify the opportunities and get clarity on the bottlenecks is not taken lightly.
Where are we at, for the already identified opportunities for growth? Especially in increasing our footprints in medical, sports, cruise, events, and green tourism.
Will increasing taxes on industries like tourism provide sufficiently higher benefits that would outweigh the negative impact that higher taxes would otherwise have on restricting further growth in the sector and even end up turning away investors? This has not worked historically and the current imbalance and shortage of room inventory by over 3,000 in comparison to our now increased seat capacity has been a clear indication of why it didn’t work.
Or does it require a mix of reviewing which investment incentives and taxes worked, then refining the regulatory frameworks that can support the growth in SMEs, new sectors like BPO; and if we’re clever with how we modify our immigration processes, even support our ability to attract critical human capital that in turn would fast track our sluggish improvements in infrastructure development, capital projects and educational reforms.
The consultations with the macroeconomic unit and scheduled discussions with other arms of Government tasked with monitoring the economy and evaluating risks and opportunities indicate the value placed on tourism, balanced with the need to ensure that we are prepared for those risks and can turn those opportunities into new revenue lines.
These include tracking investments in identified growth areas, understanding restrictions, calculating progress, and reviewing policy-level bottlenecks.
To put this into perspective – if we want to be able to welcome the target 1 million visitors, we need sufficient destination marketing efforts in core and new markets that would increase the national airline’s annual carrying capacity and bring visitors in to stay at an extra 30 new hotels with at least 200 rooms each within at least 3 years.
Could this happen by 2024 or 2025?
It is highly unlikely at the current rate of exiting skilled labour, slow turnaround of capital projects and existing red tape to conduct business generally. However, it must be said that we can already see the vast body of work being done to unravel and cut that red tape down significantly.
Can we sustain the current trajectory or work towards an incremental increase?
We’re certainly going try damned hard to, short of any sudden tax changes, natural disasters that are prone to the Pacific region and not losing much more of our skilled labour. And from what we’re hearing about backpackers being conveniently welcomed back into Australia and New Zealand, at least we can expect to see the demand for Pacific labour reduce our skills exodus somewhat.
Eventually anyway.
In the meantime, we’re rolling out our version of the red carpet, by committing wholeheartedly to innovation and creating higher value service and efficiency in tourism through our premier event, the HOTEC tradeshow that takes place biennially.
Scheduled for October 2024, this event offers a unique platform for networking, idea exchange, and business development.
Local and international suppliers to all segments of the industry will convene to showcase new products, technologies and opportunities over a few days that will include food and beverage, marine
products, industrial kitchen equipment, luxury bedding, HR and payroll software, locally sourced liquor and coffee options, and environmentally friendly guest room amenities
As well as a chance to see our local SMEs offer their homegrown options and much more.
We are reaching out to hospitality stakeholders around the Pacific and domestically to immerse themselves in the tradeshow highlights to see the latest advancements driving sustainability and authenticity in tourism offerings, especially as we are about to introduce some new features, new partners and new competitions.
While we work on efforts to ease business red tape, we’ve got our sleeves rolled up to roll out the red carpet because continuous improvement is better than delayed perfection.
And 2024 is the Year of the Dragon – representing good luck, strength, and health. Tourism’s continued success and health depend on how strongly we all push towards the same goals.
If the sun shines, our welcome smiles remain genuine and those expected cyclones keep missing us, then our good luck is holding!
Fantasha Lockington – CEO, FHTA (Published in the Fiji Times on 15 February 2024)
