Final Report Feasibility Study for Expedition Cruising in Vanuatu Nov 2021 SFAI B&P

Feasibility Study by: SFAI Barrett & Partners
Team Leader: Lindsay D Barrett
Team Members: Lynn Clement
Roney Aruhuri

CONTENTS

EXECUTIVE SUMMARY: MAIN FINDINGS...................................................................................................................... i
Glossary ......................................................................................................................................................................... ii
1. Introduction.......................................................................................................................................................... 1

1.1 Background .................................................................................................................................................. 1
1.2 Methodology................................................................................................................................................ 1
1.3 Financial and Vessel Selection...................................................................................................................... 2
1.4 Marketing..................................................................................................................................................... 3
1.5 Opportunity.................................................................................................................................................. 4
1.6 Overall Conclusion ....................................................................................................................................... 4
2. Market Analysis and Feasibility ........................................................................................................................... 5
2.1 Introduction ................................................................................................................................................. 5
2.2 Tourist demographic .................................................................................................................................... 5
2.3 Future Considerations.................................................................................................................................. 6
2.4 Competition/Experience .............................................................................................................................. 7
2.5 Share of Market ......................................................................................................................................... 11
2.6 Customer Feedback/Satisfaction ............................................................................................................... 12
2.7 Conclusion.................................................................................................................................................. 12
3. Environmental Considerations .......................................................................................................................... 13
3.1 The Cruise Industry and Sustainability ....................................................................................................... 13
3.2 Growth of Expedition Cruising ................................................................................................................... 13
3.3 Drivers for Sustainability ............................................................................................................................ 13
3.4 Reducing Carbon Emissions ....................................................................................................................... 14
3.5 Reducing Footprint..................................................................................................................................... 14
3.6 Sustainable Food Sources .......................................................................................................................... 14
3.7 Sustainable Visits to Areas and Communities............................................................................................ 14
3.8 Safe Work Environment ............................................................................................................................. 14
3.9 Promoting Conservation ............................................................................................................................ 15
3.10 Challenges in Cruising ................................................................................................................................ 15
4. Technical – Vessel Selection............................................................................................................................... 17
4.1 Background ................................................................................................................................................ 17
4.2 Age of Vessel .............................................................................................................................................. 18
4.3 Advantages of a New Vessel ...................................................................................................................... 19
4.4 Cost of Vessels............................................................................................................................................ 19
4.5 Service and Maintenance........................................................................................................................... 19
5. Crew Requirements............................................................................................................................................ 21

5.1 Introduction ............................................................................................................................................... 21
5.2 Smaller Vessel - 15 crew - 25 passenger vessel ........................................................................................... 21
5.3 Larger Vessel - 30 crew - 65 passenger vessel ........................................................................................... 21
5.4 Respective Costs for Crew.......................................................................................................................... 22
6. Legal and Ethical Practices ................................................................................................................................. 23
6.1 Vanuatu Law............................................................................................................................................... 23
6.2 International Maritime Law ....................................................................................................................... 23
6.3 Investor considerations.............................................................................................................................. 24
6.4 Recommendation....................................................................................................................................... 24
7. Financial Estimates............................................................................................................................................. 25
7.1 Vessel costs and specifications .................................................................................................................. 25
7.2 Revenues and Expenditure considerations, Pricing and Assumptions....................................................... 26
7.3 Vessel Costs................................................................................................................................................ 27
7.4 Costs Prior to Operation (000’s Vatu) ........................................................................................................ 27
7.5 Preliminary Expenses ................................................................................................................................. 28
7.6 Vessel No. 1 Operating Budget – 5 years ................................................................................................... 29
7.7 Vessel No. 4 Operating Budget – 5 years ................................................................................................... 32
8. Suggested Possible Itineraries ........................................................................................................................... 35
8.1 Torba Province ........................................................................................................................................... 35
8.2 Sanma Province.......................................................................................................................................... 37
8.3 Shefa Province............................................................................................................................................ 39
8.4 TAFEA Province .......................................................................................................................................... 41
9. SWOT Analysis.................................................................................................................................................... 44
9.1 Strengths .................................................................................................................................................... 44
9.2 Weaknesses................................................................................................................................................ 44
9.3 Opportunities ............................................................................................................................................. 44
9.4 Threats ....................................................................................................................................................... 45
10. Financing the Project ..................................................................................................................................... 46
11. Limitations ..................................................................................................................................................... 47
APPENDIX A - Acknowledgements ........................................................................................................................... 48
Appendix B - Marketing ............................................................................................................................................. 49
Statistics .................................................................................................................................................................. 49
Market Research ..................................................................................................................................................... 49
Future Outlook ........................................................................................................................................................ 50
Current situation ..................................................................................................................................................... 50
Trends in Industry ................................................................................................................................................... 51
Marketing ................................................................................................................................................................ 52

Appendix C - Job Descriptions ................................................................................................................................... 58
Quality Assurance Officer........................................................................................................................................ 60

Appendix D - World Bank Discussion Brief………………………………………………………………..……………………………….…….62-90
Appendix E – Terms of Reference………………………………………………………………………………..…………………………………..91-94

EXECUTIVE SUMMARY: MAIN FINDINGS

1. We are of the view that the venture is possible with professional
management and correct marketing support. But caution that there are
several risks which could impact heavily on projected results.

2. After careful market and financial analysis we concluded that a vessel which
could carry approximately 65 passengers with 30 crew would be the ideal
vessel for Expedition Cruising in Vanuatu.

3. Initial Capital Costs for purchase and delivery of this type of vessel is
estimated at Vt 2.06 billion. But a net operating profit of Vt156 million, based
on a 50% occupancy, could be realised by Year 2 with an overall Return on
Investment over 5 years of 74.8%

4. The feasibility of the project will depend on the ability to attract a
commercially skilled group of people who know the industry and are willing
to take a longer-term view to ensure success.

5. The Expedition Cruise product would need to adhere to certain
environmental considerations to reduce carbon emissions and to adopt a
range of sustainability practices as currently recommended.

6. Proposed Itineraries would provide both diversity and authenticity and could
be developed from and within the 6 Provinces.

7. We recommend, largely because it is a completely “untested” market for
Vanuatu, that in order to succeed, there should be no fear of spending an
appropriate budget figure on marketing. One of the reasons is that for the
numbers of tourists needed, the competition to attract the customer
demographic is fierce. Most of the larger expedition cruise corporates
bombard possible tourists almost daily on email, social media and via
booking agents such as booking.com, Agoda etc with tour selections available.

8. The above summary must be read in conjunction with the detail provided in
the following study.

i

GLOSSARY

COLREG – Convention of the International Regulations for Preventing Collisions at
Sea, 1972.
Expedition Cruise – a small ship with adventurous itinerary, usually carrying less
than 1,000 passengers
Gen Z - refers to those born from the mid-1990s to the early 2000s
GRT – Gross Register Tonnage
GSTC – Global Sustainable Tourism Council
IMO – International Maritime Organisation
ISO – International Organisation for Standardisation
ISPS – International Ship and Port Security
MARPOL – International Convention for the Prevention of Pollution from ships.
Mega Cruise – cruise ship with more than 500 passengers
MGO – Marine Gas Oil
Millennials – refers to those born between early 1980’s and mid 1990’s
POC – Port of Call
RSE – Recognised Seasonal Employee
ROI – Return on Investment
SOLAS – Safety of Life at Sea
STCW – Standards of Training Certification and Watch keeping for Seafarers
VTO – Vanuatu Tourism Office

ii

1. INTRODUCTION

1.1 BACKGROUND

x This study has been undertaken to provide a feasibility study to examine and ascertain
whether a smaller expedition type cruise ship (50 – 200 people) could be home based in
Port Vila to service both a domestic market and an international fly in and cruise product.

x The study assumes a post-Covid safe environment and that international borders are re-
opened in 2023.

x It will examine via a market and financial analysis, the viability of the concept.
x It assesses whether there is a business case for a Vanuatu based ship to also cruise to

other Pacific Islands, and to Australia and New Zealand sometime in the future.
x It covers various possibilities for local experiences in remote islands and villages.
x Eco-friendly, sustainable and environmentally friendly tourism has been given due regard

in the study.

1.2 METHODOLOGY

Our terms of reference defined “expedition cruise ship tourism” as:

1. Transoceanic and inter island travel in ships with passengers carrying capacity between
50 to 600.

2. Itineraries including remote and isolated places which do not require berthing.
3. Passengers who seek more adventure and different natural, cultural, scientific, and

educational experiences away from mass tourism destinations.
4. Product quality to range from mid to high end luxury markets.

With the above in mind, we have attempted to build a successful business model which is most
likely to fulfil the objectives stated above.

This has involved an extensive fact-gathering exercise which has sought information from many
industries with a view to supplementing our knowledge of the market and the financial
environment under which such a ship operation could succeed. A list of those people, to whom
we are most grateful, is attached as Appendix A.

These persons have provided information including the following, (which is not meant to be
exhaustive).

x Ship cost
x Insurance cover and costs
x Crewing requirements
x Berthing requirements and costs
x Remote and interesting venues within Vanuatu
x Configurations of ship berths
x Sources of revenue

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x Ground entertainment costs at locations
x Vessel types
x Current trends and practices
x Maintenance costs of vessel
x Crew rostering
x Costs to charter or own vessel
x Funding requirements
x Legal requirements
x Pollutants and other environmental factors

1.3 FINANCIAL AND VESSEL SELECTION

We selected four different types of vessel to examine for this project. Two smaller vessels (25
passengers, 15 crew) and two larger vessels (65 passengers, 30 crew). We attach their
parameters under “Vessel Capital Costs”- page 23. We ultimately concluded that neither smaller
vessel would be suitable for this project if it was to be viable and be attractive to an investor.

Similarly, we considered larger vessels which would carry 100+ passengers and larger crews, and
concluded that due to the fact that the Ports of Call (Venues) desired were to be unique, be
exclusive, be sustainable and be environmentally friendly, then small groups were essential to
preserve their features. Further, the costs of larger vessels were, we concluded, too expensive
to justify taking the significant risks associated with this size of vessel.

However, to justify our conclusion on the two smaller vessels, we undertook to cost out and
budget both cash flow and operating costs for a period of 5 years on one of them (the new one)
in order to support our view. Those findings are found in Section 7, under Vessel # 1 (pages 25-
27).

Ultimately, we concluded that a vessel which could carry approximately 65 passengers with 30
crew would be the ideal vessel for Expedition Cruising in Vanuatu. This vessel was also fully
costed and budgeted for 5 years with much different results. These are found in section 7 under
Vessel # 4 (pages 28-30).

65 passengers would not appear to be too cumbersome on the ports of call or the local capacities.
If necessary, tours could be organized for either morning and/or afternoon, or split into smaller
groups if there were alternative activities provided at the venue.

Thus, full financial analysis has been provided to justify and attract a potential investor or
investors to the project, but we draw the reader’s attention to the SWOT analysis we have
provided which outlines the possible risks (and rewards) which are present. (pages 39-40).

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1.4 MARKETING

We have outlined (pages 4-10) various marketing considerations which impact on the feasibility
of the project.

We recommend, largely because it is a completely “untested “market for Vanuatu, that in order
to succeed, there should be no fear of spending an appropriate budget figure on marketing. One
of the reasons is that for the numbers of tourists needed, the competition to attract the customer
demographic is fierce. Most of the larger expedition cruise corporates bombard possible tourists
almost daily on email, social media and via booking agents such as booking.com, Agoda etc with
tour selections available.

Without a concentrated marketing campaign, the venture will fail. On the other hand, if the
venues Vanuatu has available are given adequate publicity, the product will ultimately sell itself
well.

A quote from the World Bank Discussion Brief dated January 2019 on cruising in Vanuatu
(Appendix D) states:

“Vanuatu is not expected to increase its attractiveness as a Port of Call to back further
development of culture and adventure products in outer islands. As a result, despite a rapidly
growing expedition cruise market – a projected 60% increase in the number of ships between
2018 to 2024, and 138% increase in market capacity (Cruise News Industry 2019) – Vanuatu’s
market share from 2021 onwards is forecast to remain at its 2018-2020 average (based on
scheduled calls) equivalent of 8.3% of worldwide expedition ships, or roughly 10 ship voyages.”
This forecast has now been further impacted by Covid-19 but the basic conclusion is a major
consideration in determining future viability of expedition cruising in Vanuatu

However, the key to this statement is “lack of further development of culture and adventure
products in outer islands”. This is fundamentally where we disagree. The reality seems to us to
be that Vanuatu has plenty of both cultural and adventure attractiveness which can be easily be
developed as long as numbers of disembarking passenger visitors are small enough to be catered
for at the venue.

It is true that many of the possible ports of call are underdeveloped, but for a small numbers of
visitors, this supposed difficulty can be overcome with a relatively small capital investment and
some management training.

Once again, we can see why larger expedition cruise ships cannot contemplate disgorging 200-
600 people on small island communities all at once. That simply cannot work.

However, up to 65 persons, perhaps in 2 groups should enjoy the intimacy of this number, and
the reciprocity of local hospitality then becomes a joyful experience.

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1.5 OPPORTUNITY

The feasibility of the project will depend on the ability to attract a commercially adept group of
people who know the industry and are willing to take a longer-term view to ensure success. In
this regard, we have assumed that investment can be found, and have ignored the cost of
financing the venture as a consequence. However, if the venture was to be fully financed by
means of Investment guarantees or otherwise, then the cost of finance, at say, 5% pa would be
about VT100M per annum, excluding principal repayments, and would need to be added to the
operational budget and cash flows we have produced

1.6 OVERALL CONCLUSION

We are of the view that the venture is possible, but caution that there are several risks which
could impact heavily on projected results. However, with the help of destination marketing from
the VTO and on ground support from the Department of Tourism, the NCTMC and others that
will benefit, we see a good future for a relatively small operational vessel here in Vanuatu.

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2. MARKET ANALYSIS AND FEASIBILITY

2.1 INTRODUCTION

The first part of a Market Feasibility is to ascertain the market which is to be targeted, then
compare competitive products aimed at a similar market, then, finally, ascertain what share of
the target market can be acquired, given there is product available to attract that market.

The first of these is relatively easy. The mid to high end luxury market is that targeted by all
expedition ships, worldwide.

It is fair to say that the demographic for such tourists is usually defined by persons who are elderly
(50-70 years of age), wealthy and (usually) fairly active. There is a good reason for this. These
people need to visit places which provide an element of adventure, and exploit natural, cultural
and scientific diversity, which few other people on mass cruises would ever see generally. They
are prepared to pay for these unique privileges.

The majority of this demographic do not live in the Southern Hemisphere but in North America
and Europe. This, of course, is where most expedition cruising takes place.

As affluent, as an area, but not to this point fully explored, is South East Asia, where there are
many people who would fit the demographic.

The Expedition Cruise ships which have visited Vanuatu to date, appear to be as a consequence
of the ships relocating from North to South or vice-versa, and they have visited locations
established by larger vessels beforehand ,such as Mystery Island, Champagne Beach, Oyster
Island and Port Vila. As a consequence, the target market is virtually untapped to this point in
time by Vanuatu.

A comparison of competitive products must be course take into account what is available in the
region. We have reviewed the available, similar, tours available in Fiji, Australia, New Zealand,
New Caledonia and Tahiti (see pages 6-9), and have been able to conclude that what is available
in Vanuatu is unique and attractive to the “Expedition Tourist”, and we are confident that what
we have can undoubtedly attract sufficient numbers to the Country of that type of tourist.

This conclusion, however, does not necessarily create a successful business. Having sufficient
attractions for the target market does not itself create success.

2.2 TOURIST DEMOGRAPHIC

We have examined past tourist arrivals by air and given the restricted operations of Air Vanuatu,
we then looked at and assumed re-instatement of flights from Australia by Virgin Australia and
New Zealand by Air New Zealand to supplement our existing tourist arrivals. It needs to be
remembered that a large part of Vanuatu’s traffic to and from Australia and New Zealand is made
up of RSE workers either travelling to or returning from work in those countries and are not any
part of Vanuatu’s air tourist market. Incoming recent statistics under Covid-19 restrictions, this

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is estimated to be 20% of all air arrivals and departures in 2019. Tourist arrivals by air in 2019
were only 120,000. These tourists were largely family and package tourists who are not part of
the Expedition Cruise market. On the other hand, Vanuatu has not tried to attract this market in
the past, so it is, in fact “virgin” territory. To do so requires an exceptional marketing campaign,
using every outlet available including print media, social media, personal contact and support
from all types of booking agents, to whom generous commissions (14-17%) are usually payable.
This very fact means that whoever becomes responsible for marketing the product will need to
be not only of a very high quality but must be properly supported locally by the VTO, Department
of Tourism and Air Vanuatu.

Our final consideration, when looking at marketing was to work out how many Expedition Cruise
passengers could be attracted to Vanuatu, and this became a subject of great debate by
our ”experts”, but their overall conclusion was that if the Expedition Cruise ship was relatively
small, sufficient tourists could be attracted to make the product viable. These figures are
examined in detail in the section on financial analysis where we look at two different types of
vessels to ascertain whether Vanuatu can create the environment to enable a viable business to
succeed. These two vessels embrace what we believe will be each end of the feasible
opportunities available to Vanuatu (see pages 25-30).

2.3 FUTURE CONSIDERATIONS

When the cruise boat industry opens up again, vaccine passports, or at least something showing
proof of vaccination, will become part of the requirement to travel, the same way certain
inoculations, such as yellow fever, are for entering certain countries.

The pandemic has turbo charged the use of technology and this will extend to the cruise boat
industry.

Destinations will continue to be vigilant about controlling Covid-19 for the next few years.
Negative Covid-19 tests or proof of vaccination will be required for entry into many countries, as
the world works to eradicate the virus.

Cruise lines and cruise travel agents will have to help passengers navigate through this tricky area
and all the logistics that will come with travelling in the post-pandemic era. Passengers will have
to have help getting Covid tested before returning to their own countries if this is required.

Shorter cruises are gaining in popularity with people looking for smaller intimate experience.

Generation Z, or Gen Z for short, typically refers to those born from the mid-1990s to the early
2000s

Gen Z is an untapped market for cruise operators.

“This generation like the one before, prefers experiences over material items and is seeking out
travel," said CLIA. "The appeal of multiple destinations and unique experiences, such as music
festivals at sea, is attracting this new category of cruisers."

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CLIA also noted that the increase of younger cruise passengers will contribute to what it describes
as “instagrammable cruise travel”, via social media.

“Instagram photos are driving interest in travel around the world," said the association.

"With on board connectivity, cruise passengers are filling Instagram feeds with diverse travel
experiences both on-board and on land from several cruise destinations."1

With Generation Z set to surpass millennials as the largest demographic group in 2020, the future
of the industry appears bright. Generation Z and Millennials will comprise 32% and 31.5%
respectively, of the U.S. population in 2020. That means two out of three Americans is either a
millennial or a generation Z.

Both generations share a common preference for “experiences” over material items and are
committed travellers. Both have approximately 70% plus positive feelings about the cruise
industry and have emerged as committed cruisers. The two groups represent a combined
spending power of roughly three trillion dollars, and are poised to surpass baby boomers in the
next several years as the largest spending demographic group. The growing interest of millennials
and generation Z members in cruising is one of the factors that is driving the upgrade of internet
connectivity on cruise ships.2

However, the conclusion requires Gen Z to accumulate individual spending power to justify
spending on cruising.

2.4 COMPETITION/EXPERIENCE

Island Escape Cruises, a New Zealand based Company brought a 42m catamaran up to Vanuatu
for the 2011-2015 winter seasons (April – September). This vessel could accommodate 24 guests
in 12 cabins with 10 crew. The GRT was 498 and draft 2.3m. There were 3 levels of
accommodation, Stateroom, Ocean Suite and Bridge Suite. Prices for a 6 night/7 day trip in
Vanuatu were in the order of NZ$3,950 (Vt318,00), NZ$4,750 (Vt381,000)and NZ$5,550
(Vt445,000) per person depending on the accommodation option chosen. They offered Resort
stays at Aore Island Resort in Santo, Grand Hotel and Iririki Island in Port Vila which were added
onto the package.

The Company found that the venture in Vanuatu was not a viable option. Talking to the operator,
television marketing at the time took too much of the profit out of the business.

1 https://www.channelnewsasia.com/news/business/targeting-younger-passengers-offering-diverse-experiences-key-to-11550644
2 https://www.forbes.com/sites/joemicallef/2020/01/20/state-of-the-cruise-industry-smooth-sailing-into-the-2020s/?sh=1dbd1f4565fa

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2,4(a) FIJI
Fiji has two operators: Captain Cook Cruises and Blue Lagoon Cruises
Fiji has a population of 903,2453. There are 28 cities and 14 countries that fly direct into Nadi,
Fiji’s largest airport.
Fiji had 894,389 tourists arrive into the country in 2019. This was up 2.8% from 2018. 4
Captain Cook Cruises operate MV Reef Endeavour. This is a 73m long vessel with 63 suites in 14
– 28m2 size. Total of 168 passengers with 45-55 crew.
The vessel offers 3, 4 and 7 night packages with all meals included
4 nights for two people is approximately VT261,646 – VT327,300 - 4 POC
7 nights for two people is approximately VT434,791 – VT544,024 - 7 POC

For marketing they use cruise boat specialist sites along with travel agencies and with online
booking agents such as Agoda.com; Liveaboard.com, Specifica; Padi travel, Flight Centre Australia;
Expedition cruise specialists and booking.com, Hotfiji deals; Ourpacific.co.nz; Mycruises.com
Why you should (or shouldn’t) cruise with Captain Cook Cruises
Pros
x Excursions and guided tours are included.
x Authentic insight into Fiji culture and way of life
x Intimate on-board environment
x Crew has a reputation for being friendly and warm,

according to online reviews.
x Great overall value compared to similar small-ship cruises
Cons
x Alcoholic beverages can be pricey due to high local tax.
x The Reef Endeavour can feel tired and outdated, according to online reviews
x Fewer on-board and late-night entertainment options than larger cruise lines5

3 https://www.worldometers.info/world-population/fiji-population/
4 https://www.fbcnews.com.fj/business/fiji-sets-record-in-visitor-arrivals/
5 https://www.finder.com/captain-cook-fiji-cruise-review/

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Blue Lagoon Cruises - operate MV Fiji Princess. This is a 55m long vessel with 34 suits in 11-13m2
size. Total of 68 passengers and 30 crew - similar to preferred Vessel 4

The vessel offers 3,4 and 7 night packages with all meals included.

4 nights for two people is approximately VT359,750 – VT401,214
7 nights for two people is approximately VT576,310 – VT648,282
Marketing they use cruise boat specialist sites along with travel agencies. Some examples are:
Liveaboard.com, Specifica; Wild earth travel, Helloworld, Flight Centre NZ ; Hotfiji deals;
Ourpacific.co.nz; Mycruises.com

Why you should — or shouldn’t — cruise with Blue Lagoon Cruises

Pros

x Unique itineraries truly showcase Fiji’s beauty.
x All activities are included in your fare.
x Spend less time sailing — more time on the islands.
x Free of single-use plastics, as of April 2020.
x Beer and wine bottles are recycled with a cool

machine that crushes them into sand.

Cons

x Alcoholic drinks are not included.

x Ships have fewer amenities than larger cruise lines.

x Cabins can feel old and outdated.

x Limited on board entertainment options6

2.4(b) New Zealand / Australia

Coral Expeditions is an Australian based company that operates in Australia and New Zealand.
They operate 3 vessels with a 4th being built, the Coral Explorer.

The vessels carry between 72 to 99 guests and 24 to 48 crew. The age of the vessels is from
2005 to 2019 and 2021. Drafts range from 3 to 4.5m.

Trips in New Zealand are 8, 12 and 14 night trips. Prices are not released at the present time
due to Covid.

6 https://www.finder.com/blue-lagoon-cruises-review/

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Trips around Australia on average are around 13/14 nights and priced from A$9,000 (Vt758,00)
to A$21,000 (Vt1,768,000) twin share per person.

Alcohol is available for purchase on board and not included. 7

Island Escape Cruises offers a brand new small boutique vessel and operates through New
Zealand and Australia. The vessel carries 32 guests and 14 crew and is 53.5m long.

Tour length within NZ is generally 8 nights and prices range from NZD$9,000 (Vt723,000) to
NZD$15,000 (Vt1,205,000) per person twin share.

Tour length within Australia is generally 12 nights and NZ$15,000 (Vt1,205,000)to NZD$21,000
(Vt1,687,000) per person twin share.

Island Escape Cruises are truly all inclusive.
x All meals including breakfast, lunch, dinner, morning and afternoon tea.
x All beverages including selected wines, spirits and beer, juice and soft drinks, water, tea and espresso coffee.
x Tours where mentioned in the itinerary.
x Helicopter flights where mentioned in the itinerary.
x Jacuzzi
x Unlimited Wi-Fi
x Luxurious Bulgari Amenities
x Two Passenger Tenders
x Two Zodiacs
x Double/Single Kayaks
x Paddle Boards
x Snorkel, Mask and Fins
x Fishing Equipment
x 100% Egyptian Cotton Linen
x Towels
x Hairdryers
x On Demand Movies
x Turndown service
x All taxes and port charges

Gratuities are at guest discretion.8

7 https://www.coralexpeditions.com/au/destinations/new-zealand/
8 https://islandescapecruises.com/

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Silversea operates the Silver Explorer expedition ship in Australia and New Zealand.
The vessel carries 144 guests and 118 crew. It is 108 m length.
Tours for 10 days start at US$9,750 per person and drinks are included.
Royal Caribbean completed the acquisition of Silversea Cruises in July 2018. After a discussion
with executives of Royal Caribbean they have no interest at this stage in a small expedition cruise
ship industry in Vanuatu. They are however always interested in new ventures and would
certainly keep an eye on how this progresses should it go ahead.9

2.5 SHARE OF MARKET

Because there are many products available to expedition cruise ship passengers, which are very
well marketed by larger and more affluent operators such as Silversea (A Royal Caribbean
subsidiary), Oceania, Norwegian, Disney (leading in sustainability factors), and others Vanuatu
must compete on a similar footing, and rely heavily on the uniqueness of what Vanuatu has to
offer.
Note that our larger example vessel still requires 1,300 passengers on a yearly basis in order to
break even, or 27 passengers per week for 48 weeks (see p.29)
The smaller example vessel will require 740 passengers per annum to break even or 16
passengers per week for 48 weeks, but will take 2-3 years to reach profitability.
It must be remembered too, that the vessel is not worth touring when fewer than say, 15
people in the larger vessel or 10 people on the smaller vessel have booked.
On the other hand, we have, in our financial analysis, presumed an average take up of available
berths and that the vessel will travel with passengers each week for 48 weeks of the year.
We have also assumed that in a post-Covid environment, and in a similar manner as pre-Covid,
flights from two cities in Australia, from Auckland, from Noumea and Fiji, can arrive on the same
day, and passengers can be taken directly from the airport to the vessel without overnight stays

9 https://www.silversea.com/destinations/australia-new-zealand-cruise.html

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in hotels. However, we also recognise that this is not always possible, and have allowed for the
contingency that 10% of air arrivals would be paid for by the cruise operator.

2.6 CUSTOMER FEEDBACK/SATISFACTION

Customer feedback is one of the most important analytical tools used to establish what their
customers really want.
The choice of destination is always going to be a decision-driver, but travel advisors also
recommend taking a careful look at the planned experiences in each destination: how the cruise
will bring their clients into close touch with the best-known hallmarks of a locale, as well as take
them to areas beyond the norm and foster genuine immersion in local life.
Timing, too, can make a huge difference in providing clients with the best possible experience.
When is the best time of year to visit any given destination? Thoughtful itineraries will ensure
that cruises are timed to follow animal migration patterns, arrive during local festivals or
celebrations, take advantage of prime weather conditions and maximize other factors that
provide the kind of excitement that leads to repeat bookings and word-of-mouth
recommendations

2.7 CONCLUSION

Our overall conclusion is that provided:
x the venues are unique and properly developed for the market demographic;
x adequate marketing budget is available;
x airlines cooperate with the flights inwards;
x assistance from VTO and Department of Tourism Is available to the operator;

then sufficient tourists can be attracted to the product.
This does not ignore the “local” market. We are confident that up to 200 “local” residents would
be attracted to such a product each year. That figure is a guess, but will supplement and help
enable the vessel to operate efficiently. We believe that discounted costs can be attractive to
the local market if it appears that firm bookings from overseas are insufficient.

12

3. ENVIRONMENTAL CONSIDERATIONS
Vanuatu, as an archipelago of over 83 islands, provides a rich source of delicate environmental
and cultural diversity, and it is essential that if expedition cruising is to succeed in the long term,
the environment must be preserved as best it can be.

3.1 THE CRUISE INDUSTRY AND SUSTAINABILITY

The cruise industry is a hot topic in the global sustainability conversation, often for unflattering
reasons. Princess Cruises’ recent illegal dump of plastic material in the Bahamas highlights
a history of environmental violations. The cruise industry’s carbon emissions are under
scrutiny, as the average large cruise ship emits as much carbon as 22,256 cars each
year. To combat this, the industry has set itself some ambitious goals, including an industry-
wide reduction of carbon emissions of 40% by 2030, and becoming carbon free by
2050. Adam Goldstein, Global Chair of the Cruise Lines International Association (CLIA), claims
“we need to play a leadership role in sustainable tourism”.

3.2 GROWTH OF EXPEDITION CRUISING

Expedition cruising is considered the next forefront in travel. Although expedition ships are much
smaller, and pollute significantly less than bigger cruise ships, they attract a critical assessment
from a different perspective. Expedition cruise ships visit the most fragile and threatened areas
of our planet, like the Arctic and Antarctica. What do expedition cruise companies do to meet the
sustainability challenges of today’s world?

3.3 DRIVERS FOR SUSTAINABILITY

The various initiatives across the industry are:
1. Reduce carbon emissions and develop clean(er) energy
2. Reduce other footprint; garbage and waste
3. Use sustainable food sources
4. Sustainable visits to areas and communities
5. Create a decent and safe work environment
6. Promote conservation and building a legacy
7. Biosecurity issues for handicraft sales

In this regard, we are advised that most ships less than 10 years old have more than adequate
means of treatment of both human and other wastes, so the age of the vessel becomes an
important part of the ultimate choice for this project. We examine this in more detail under
“Technical - Vessel Selection” (pages 15-17).

13

3.4 REDUCING CARBON EMISSIONS

The expedition cruise industry uses cleaner light fuels, as heavy fuels were banned in Antarctica
in 2011. Therefore, most of the new build vessels in the industry can only burn “light” fuels (MGO
– Marine Gas Oil or MDO – Marine Diesel Oil).

Most new build vessels, like Sunstone Infinity class, have engines that are Tier 3 compliant,
reducing emissions up to 80% versus older ships. Hurtigruten Cruises are experimenting with
battery powered ships, like the Roald Amundsen. Hurigruten’s CEO, Daniel Skjeldam, is keen to
pursue cleaner cruising, even banning heavy fuels in the Arctic. He argues against the use of so
called “scrubbers” to reduce the emissions of heavy fuels; “It only moves the problem from
the air into our oceans. It’s the emperor’s new clothing. We push very hard for more
regulation instead of less regulation.”

There are other smaller initiatives in the industry to reduce emissions, like promoting energy-
saving LED lights and hull paints with special non-toxic coatings to reduce fuel consumption by
up to 5%.

3.5 REDUCING FOOTPRINT

Fortunately, the expedition cruise industry took the lead in removing single use plastics on their
ships. Plastic straws have been removed from most ships and most operators reduce plastic waste
by distributing refillable personal bottles and providing refill stations. More companies are using
eco-friendly bio-degradable detergents and cleaning materials.

3.6 SUSTAINABLE FOOD SOURCES

Most expedition operators now consider sustainable food sources, and while this should be
encouraged, using locally farmed food can be challenging in remote areas.

3.7 SUSTAINABLE VISITS TO AREAS AND COMMUNITIES

The expedition cruise industry is heavily self-regulated by organizations like IAATO (International
Association of Antarctic Tour Operators) and AECO (Association of Arctic Expedition Cruise
Operators). They are praised for their strict commitment to bettering the environment
with policies to protect oceans, air and wildlife, as well as the unique social and cultural fabric of
destinations. AECO Executive Director Frigg Jorgensen states “community engagement and
ensuring local benefits of cruise tourism is critical for the future of the industry”.

3.8 SAFE WORK ENVIRONMENT

In addition to mandatory compliance with international regulations, expedition cruise operators
have implemented initiatives to promote crew welfare, such as compliance campaigns focused
on occupational health and safety improvements, and on-board occupational trainings in deck,
engine and hotel disciplines.

14

3.9 PROMOTING CONSERVATION

Many expedition cruise companies support charities linked to their destinations, often by holding
auctions on board. They also encourage passengers to take charge and help protect the areas
they visit. 10

3.10 CHALLENGES IN CRUISING

To ‘build back better,’ cruise lines need to fervently address the environmental issues at the port
and at sea. Some of the environmental challenges that cruise lines need to address are air
pollution from heavy oil, wastewater discharge issues, habitat disruption, and over tourism.

3.10(a) Air Pollution

The ‘elephant in the room’ is that many cruise lines are currently using heavy oil – also known as
the dirtiest of the dirty oils. Usage of this fuel type results in significant environmental
repercussions, such as air pollution and human health issues with links to acid rain and cancer.
Respiratory issues have also been associated with these pollutants.

It is well known that fewer stringent air pollution standards are applied to the cruise line industry.
International waters and the multi-jurisdictional nature of cruise lines make regulating the
entirety of a ship’s emissions more challenging. Secondly, there are more significant levels of
demand for energy on-board such liners with growing capacities in terms of hotel rooms,
restaurants, entertainment areas, food storage, and crew and preparation areas. Furthermore,
greater demand for more luxury experiences is also driving up energy demand. Consequently, air
pollution will intensify if a cleaner alternative to heavy fuel is not found.

Potential solutions would be creating a decarbonisation strategy. This would require a cleaner
energy alternative like liquefied natural gas or biodegradable fuel. Decarbonisation in cruises
should encompass science-based reduction targets on greenhouse gas emissions. Additionally,
investing in fuel cell technology would significantly reduce vessel-related greenhouse gas
emissions. Other means through which energy can be sourced should also be looked into, such
as shore power for idle ships. Decarbonisation is the only way forward, and regulators know it.

3.10(b) Wastewater Discharge

Wastewater discharge from cruise lines has had adverse environmental impacts. The discharge
from ballast water, used for stability and maneuverability during a voyage, can lead to the
introduction and dispersal of invasive species. This could result in disrupted food chains and
imbalanced ecosystems. Bilge water, foul and oily water from machinery and other equipment
that collects in the bilges of a vessel, contains industrial fluids and needs to be treated; otherwise,
it would be highly hazardous to wildlife species and plant life. In general, wastewaters can result
in algal blooms, drive away or kill marine species, and lead to dead zones.

10 https://www.guidepoint.com/sustainability-trends-in-expedition-cruising/

15

Solutions for bilge water would involve multiple treatments before discharging overboard.
Installation of an advanced wastewater treatment system to treat wastewater discharges such as
grey and black water would be an efficient solution to a fixable problem. The option to forgo
discharge while at sea is a solution other companies are currently undertaking.

3.10(c) Habitat disruption

Noise pollution can lead to stress and behavioural responses in marine species such as humpback
whales. Physical disturbance, namely collisions with mammals, is also an area of concern. Whale
collisions are one of the main reasons for anthropogenic mortality in the species. The introduction
of invasive species can also disrupt habitats through ballast water. The presence of cruise ships
in marine protected areas can be highly disruptive to biodiversity.
The option to re-route ships away from marine protected areas or protected conservation areas
also works well as a solution. The same standards need to be maintained across the board. Such
standards can be seen in the E.U., where the Marine Strategy Framework Directive (2008/56/E.C.)
prevents noise pollution in protected areas. Mapping protected areas and threatened species
habitats along routes to understanding vulnerabilities will also assist in finding solutions to this
problem. Unfortunately, international waters also hold many key biodiversity areas that would
also be interrupted by noise pollution, but unfortunately, the regulation does not extend to those
areas providing cruise lines with ‘free-range.’

3.10(d) Over-tourism Waste Management

There will inevitably be many visitors to a dock location for boarding onto a cruise. This can
result in increased littering, and causes increased stress on water supplies due to the volume of
people passing through. Regrettably, there are limited economic benefits due to the all-inclusive
nature of cruises, but there are slight advantages for local populations.
There may be a solution in offering smaller ships to allow for more exclusive experiences. The
option to go to less popular ports or shift away from all-inclusive offers might counter the current
situation. On the other hand, this could affect demand for paying customers wanting more
popular destinations and all-inclusive experiences. This is a clear example of the need for business
transformation in cruise companies to reap the benefits of competitive advantage through
business sustainability. 11

11 https://www.linkedin.com/pulse/6-challenges-preventing-cruise-line-from-building-back-matt-esper

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4. TECHNICAL – VESSEL SELECTION

4.1 BACKGROUND

Our study began with examining the business model for a small vessel named “MV Haumania”, a
1986 Australian built aluminium catamaran, 36 m long and able to carry 20 passengers and
currently based in French Polynesia.

After that examination, we concluded that although the business model had many aspects which
are valid and well presented, there were several potentially fatal problems which we have listed
here:

x The vessel is aged 35 years and if it was to be the ultimate vessel used, it would be even older
and would require additional maintenance (say, in 2 years’ time).

x The estimates for refurbishment of the vessel to cater for the mid – to luxury market
appeared to be far too low.

x The estimates of 55% and 100% occupancy in the first 2 years seemed to us over-optimistic.
x We believe that to restrict the vessel to Vila-Luganville –Vila tour itineraries would restrict

the market for repeat passengers, and not provide the variety of ground tours expected.
x With only 20 guests, it appeared that crew cost per guest made the commercial viability of

the proposal doubtful.
x Cabin sizes were a little too small for the target market.

Positive aspects of this proposal were examined, and we are of the view that the following are
worthy and have taken these into account in our study.

x A vessel such as a catamaran or a multi-hull would be ideal for the proposed market due to
its reduced draft (<2.6m) and its ability to cross reefs (at higher tides if necessary) in order
to access more remote venues.

x The proposed marketing proposals had merit, in that social media and the use of major
players such as Flight Centre, Booking.com, Facebook, Instagram, Agoda could effectively
promote the product.

x The target market being Australia, New Zealand and New Caledonia were, and should be,
the initial target markets.

x After discussions with various others, we formed a similar view in regard to the parameters
for the size of the ideal vessel, which stated that it should be for a minimum of 25 passengers
and should cater for no more than 100 passengers.

x Our later discussions confirmed these parameters, but moved to having around 65
passengers and 30 crew as being the most economical, financial and practical vessel.

17

Ultimately, we concluded that the ideal vessel would have the following (approximate)
configurations in order to cater to the target market:

x Be less than 10 years old
x Be a multi-hull vessel
x Draw no more than 2.6m fully laden
x Have at least two tenders for 10 people, which could double as fishing boats
x Preferably have a helipad
x Luxury fittings and fixtures throughout
x 3 classes of cabins with different pricing
x High quality kitchen and chefs
x Top class crew

We shall explain below the need for the above requirements as we examine not only the
demographics of the target market, but also how we arrived at this conclusion.

Given the environmental considerations outlined previously, much thought has been given to the
selection of a vessel which is most suitable for Vanuatu expedition cruises, sustainability, and
benefits to Ni-Vanuatu.

There were several considerations which are most important, as follows:

4.2 AGE OF VESSEL

We are advised that most vessels over 10 years old will need modifications in order to reduce
carbon emission targets by 40% before 2030 (the Industry goal). Consequently, we have been
advised that it would be unwise to consider purchasing a vessel older than that.

Similarly, older vessels will not deal with human garbage or waste as efficiently as newer vessels.

Due to the current drive to promote sustainability in the industry and to reduce carbon emissions
in the future, Vanuatu needs to consider, if it purchases its own vessel, industry goals as well as
the sustainability of the ship itself. It must be taken into account that even if a 10 year old ship is
purchased, there is a real possibility that it will require major modifications to meet sustainability
goals within a relatively short time.

Consequently, it is our view that the vessel to be used for expedition cruising in Vanuatu should
be either new or nearly new. There are many vessels available to purchase at this moment, and
they can be purchased at a lesser cost than at buoyant economic times, but it must also be
remembered that Vanuatu is quite isolated, and older vessels are much more likely to have
breakdowns which will take a long time to repair or source parts for if something goes wrong. In
any case, a start-up expedition cruise product for Vanuatu must be based on reliability and
reputation, at least in the first 2-3 years. That is, of course, less likely if an older vessel is
purchased for the project.

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4.3 ADVANTAGES OF A NEW VESSEL

Purchasing a new or near new vessel for Vanuatu could overcome the challenges outlined.
However, purchasing a brand new vessel could provide several other advantages as well such as:

x The vessel can be designed to Vanuatu’s own specifications
x It would probably incorporate:

o Filtered fresh cool or heated air to all cabins with good ventilation
o An advanced water treatment system
o Will suit the mid to high end expedition cruiser
o Fuel efficient diesel-electric motors
o Catalytic convertors (which reduce toxic emissions by 90%) for cleaner fuel types
o A waste heat recovery system from engines for hot water
o Generally equipped with the best in modern engineering design to minimise the

ships footprint
x Helipads, tenders, lifesaving equipment can be added to suit.
x Access for disabled passengers

4.4 COST OF VESSELS

We are informed that whilst the “MV Haumania” may be available at EUR 2.1M, the cost of
refurbishment, delivery and upgrading to suit the expedition cruise demographic and its delivery
would be no less than another EUR4M. Even then, the age of the vessel (35 years now) would
add suspicion that hull stresses or motors could be more likely to cause breakdowns.

Whilst we cannot make a decision as to what type, what age, or what specifications may be
decided upon by a commercial investor, we have based our costs of start up on two models:

1. A new multi-hull vessel which would carry 25 passengers and 15 crew.
2. A 5 year old multi-hull vessel which would carry 65 passengers and 30 crew.

The initial costs associated with each type of vessel are summarized under “Vessel Costs” (page
29) and “Costs prior to operation”(page 25) will be mostly paid for prior to receiving operational
revenue (Refer to Financial – Section 7).

4.5 SERVICE AND MAINTENANCE

The vessel will require an annual survey. If it is less than 20 years old it will require to go up on
slip for survey every 2 years. If the vessel is more than 20 years old it will require to go on slip for
survey every year.

Vanuatu does not currently offer this service but this is being looked at being built in Santo.

19

Presently Fiji has a number of Companies that can offer this Service -
Marine & Industrial Engineering Ltd – 200 tonne floating dock at Walu Bay, Suva; Chacal Maritime,
have a 6,000 ton floating dry dock – Lautoka Fiji ; Port Denarau Marina have a 50 tonne trave lift ;
Baobab Marine is also at Port Denarau and Vuda Marina.
Costs in Vatu in Vanuatu would be VT600,000 to get the vessel in /out water, VT250,000 day for
the vessel in the yard. VT200,000 day for labour and materials to clean and antifoul the vessel.
This would take 4-5 days to complete, or about VT2.4M – VT3M.
A range of spare mechanical parts for the engines/generator will need to be kept on board. The
engineer working with the engine manufacturer would source a list of parts required to keep as
spares.
A new engine, if regularly serviced and maintained, should last 25-30 years before requiring
replacement.
After consideration of all the above, as well as both financial and marketing factors, the vessel
selection we recommend (under our conclusion on page 30) became an easy one ie our Vessel #
4.

20

5. CREW REQUIREMENTS

5.1 INTRODUCTION

Depending on the size of the vessel will depend on the number of crew required. Some crew
will be able to be sourced in Vanuatu but the more senior positions will need to be recruited
offshore due to the qualification requirements.

5.2 SMALLER VESSEL - 15 CREW - 25 PASSENGER VESSEL

Bridge/Deck Captain
First Officer
Purser Engineer
Galley Deck Watch keeper
Engineer Watch Keeper
Housekeeping Chief Stewardess
Restaurant Chef
Bar Sous Chef
Crew Chef (& Prep)
Galley Utility (dishwasher)
Housekeeper Utility/Steward
Waiter/Steward x 2
Bartender
Bar Utility/Steward

5.3 LARGER VESSEL - 30 CREW - 65 PASSENGER VESSEL

Bridge/Deck Captain
First Officer
Engineer x 2

Deck Watch keeper x 2

Engineer Watch Keeper x 2

Security Officer

Purser Chief Stewardess

Galley Purser
Chef
Sous Chef

Crew Chef (& Prep) x 2

Galley Utility (dishwasher) x 2

Housekeeping Accommodation Supervisor
Housekeeper Utility/Steward x 3

Restaurant Restaurant Supervisor

Waiter/Steward x 4

Bar Bartender

Bar Utility/Steward x 3

21

5.4 RESPECTIVE COSTS FOR CREW Based on average salary
15 crew - 25 passenger vessel

VUV Month No. Year

Bridge/Deck Captain 500,000 - 2,200,000 1,350,000 16,200,000
First Officer 300,000 - 900,000 600,000 7,200,000
Purser Engineer 450,000 - 900,000 675,000 8,100,000
Galley Deck Watch keeper 250,000 - 450,000 350,000 4,200,000
Engineer Watch Keeper 250,000 - 450,000 350,000 4,200,000
Housekeeping Chief Stewardess 300,000 - 1,000,000 650,000 7,800,000
Restaurant Chef 600,000 - 800,000 700,000 8,400,000
Bar Sous Chef 400,000 - 700,000 550,000 6,600,000
Crew Chef (& Prep) 300,000 - 550,000 440,000 5,280,000
Galley Utility (dishwasher) 55,000 - 70,000 62,500 750,000
Housekeeper Utility/Steward 80,000 - 100,000 90,000 1,080,000
Waiter/Steward x 2 65,000 - 100,000 82,500
Bartender 150,000 - 200,000 175,000 2 1,980,000
Bar Utility/Steward 70,000 - 150,000 110,000 2,100,000
1,320,000

VT75,210,000

30 crew - 65 passenger vessel Based on average salary

VUV Month No. Year

Bridge/Deck Captain 500,000 - 2,200,000 1,350,000 16,200,000
600,000 7,200,000
Purser First Officer 300,000 - 900,000 675,000
Galley 350,000 2 16,200,000
Engineer x 2 450,000 - 900,000 350,000 2 8,400,000
Housekeeping 550,000 2 8,400,000
Restaurant Deck Watch keeper x 2 250,000 - 450,000 650,000
Bar 675,000 6,600,000
Engineer Watch Keeper x 2 250,000 - 450,000 700,000 7,800,000
550,000 8,100,000
Security Officer 400,000 - 700,000 440,000 8,400,000
62,500 6,600,000
Chief Stewardess 300,000 - 1,000,000 355,000 2 10,560,000
90,000 2 1,500,000
Purser 450,000 - 900,000 275,000 4,260,000
82,500 1,080,000
Chef 600,000 - 800,000 175,000 3,300,000
110,000 4 3,960,000
Sous Chef 400,000 - 700,000 2,100,000
3 3,960,000
Crew Chef (& Prep) x 2 300,000 - 550,000 VT124,620,000

Galley Utility (dishwasher) x 2 55,000 - 70,000

Accommodation Supervisor 250,000 - 460,000

Housekeeper Utility/Steward x 3 80,000 - 100,000

Restaurant Supervisor 200,000 - 350,000

Waiter/Steward x 4 65,000 - 100,000

Bartender 150,000 - 200,000

Bar Utility/Steward x 3 70,000 - 150000

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6. LEGAL AND ETHICAL PRACTICES

It is not our role to point out details of what may impact on the operation of an Expedition Cruise
vessel in Vanuatu waters, but list below the laws which would likely be relevant to a Vanuatu
Company which we would suggest is the appropriate entity to operate the planned venture.

6.1 VANUATU LAW

x The Maritime Act
x The Companies Act
x The Employment Act
x Business Licence Act
x Immigration Act
x Vanuatu Foreign Investment Promotion Act (if applicable)
x Health and Safety at work Act
x Labour Work Permits Act
x Liquor Licencing Act
x Minimum Wages Act
x Tax Administration Act
x Value Added Tax Act
x Vanuatu National Provident Fund Act
x Vanuatu Tourism Office Act

All of the above Vanuatu Acts impact to some degree on the proposed business.

6.2 INTERNATIONAL MARITIME LAW

In addition to these Acts, and because the vessel may traverse International waters, the operation
must also comply with all International Maritime Laws regulated through IMO (International
Maritime Organisation).

x SOLAS (Safety Of Life at Sea) requirements laid out in the IMO SOLAS Convention
x STCW (Standards of Training and Certification of Watch keepers)
x MARPOL (Prevention of Pollution from ships)
x COLREG, LOADLINE and ISPS are also IMO regulations which would apply to the operator.

Currently the IMO is under pressure to reduce shipping transport carbon emissions by 40% by
2030. This will mean that further regulation by the IMO is likely to impact this project and vessel
negatively.

23

6.3 INVESTOR CONSIDERATIONS

Depending on how funding of the operation may be sourced, there may be further legal
considerations such as :
1. Stakeholders may wish to enter into a shareholders agreement
2. Restrictions on operations may be imposed by major investors
3. Composition of the Board of Directors may be determined by major investors prior to

making an investment

6.4 RECOMMENDATION

We would recommend that prior to commencement of operations professional advice and
guidance should be sought.
This report needs to be read in conjunction with the Vanuatu Sustainable Tourism Strategy 2021
– 2025 which has been published by the Department of Tourism.

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7. FINANCIAL ESTIMATES

7.1 VESSEL COSTS AND SPECIFICATIONS

Our feasibility study has been based on finance for the vessel and other upfront costs being
available from either major investors or other sources. We have, however, provided examples of
possible vessels which could be considered.

In this regard, we initially focus on those major costs which will be incurred at the beginning of
the expedition cruise program:
x The cost of the suitable vessel
x Crew recruitment costs
x Marketing costs until operational
x Relocation of vessel costs
x Taxes, duties and other costs
x Berthing costs
x Administration office and staffing
x Costs (if any) of refurbishment of the vessel
x Stock of spares for all vessel amenities
x Engine spares
x Initial provisioning
x Storage facilities

These figures are representative of the investment initially needed prior to carrying passengers,
and are summarized below under “Costs prior to operation”.

We have not considered a vessel any larger than these due to the fact that we believe, and other
experts agree, that if the passengers prefer small and unique experiences, any additional
passengers over 65 would mean that the “unique experience” aspect of expedition cruising will
be compromised. In addition, we feel that ground tours would, or could, lose the feeling that as
a passenger, one is not being especially catered for.

Further, a larger vessel would automatically be more difficult to cater for the type of sustainable
and environmentally friendly tourism envisaged by the terms of this strategy.

We have also reviewed the possible ground tours and locations, and conclude that remote
locations, such as those sought by our demographic expedition cruiser, would for the most part,
be capable of handling smaller numbers, but over 65 would create logistical difficulties. Even
with 65 passengers, some venues would need to have this number split between morning and
afternoon ground tours.

We have examined both revenue and expenditure expectations for two types of vessels. In
general terms, both revenue and expenditure, with few exceptions, would be similar whether the
vessel is new, or say, 5 years old. The two vessel types only vary between their number of
passengers and crew carried and of course, their initial costs.

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7.2 REVENUES AND EXPENDITURE CONSIDERATIONS, PRICING AND ASSUMPTIONS

We have considered the markets that the venture would target, namely, Australia, New Zealand,
New Caledonia and Vanuatu.
Because of the uniqueness of the venues to which the vessel would travel, we consider that a 7
day tour cost should be able to be sold at approximately VT640,000 (A$8,000) per person, and
we have used this figure for our revenue calculations. This is based on our assessment of the
product, which people are generally prepared to pay for such a tour, and at a price point which
will encourage a commitment to purchase.
We also considered how long the venture would need to establish itself and that travel post
Covid-19 may make travel less attractive to some.
We also felt that a smaller vessel (our Vessel #1) would attract and be filled more easily than the
larger vessel.
We have assumed that with the cooperation of Air Vanuatu, and the resumption of flights by
Australia, New Zealand and Fiji national airlines, it would be possible to arrange for most people
using the vessel to arrive at a time when they could transfer directly to the vessel without an
overnight stay in a hotel. However, we have allowed for the cost of those overnight stays in the
figures.

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7.3 VESSEL COSTS

We thus set out below our financial estimates for the two vessel types we costed (Vessel # 1
and # 4), broken down as follows;

x Vessel Capital Costs
x Costs Prior to Operation
x Vessel No. 1 Operating Budget – 5 years
x Vessel No. 1 Return on Investment – 5 years
x Vessel No. 4 Operating Budget – 5 years
x Vessel No. 4 Return on Investment – 5 years

Vessel Capital Costs (000’s Vatu)

Vessel No. 1 2 3 4
Age New < 10 years New <10 years
Type Multi hull Multi hull Multi hull Multi hull
Draft <2.6m <2.6m <2.9m <2.9m
GRT <500 t <500 t <1,600 t <1,600 t
Length (metres) 45 45 65 65
Location (Likely) Vietnam Europe Vietnam Europe
Beam Approx 13m Approx 13m Approx 15m Approx 15m
Estimate Raw Cost (000’s) VT 1,750,000 1,060,000 2,500,000 1,760,000
Naval Architect Fee 200,000 250,000
Import Duty – assumed Exempt Exempt Exempt Exempt
VAT – Assumed Free Free Free Free
Modifications (est) 150,000 250,000
Delivery Cost (incl crew, fuel, food, 5,000 10,000 5,000 10,000
registration and port fues
Vessel Basic Costs 1,955,000 1,220,000 2,755,000 2,020,000

CONCLUSIONS Too small but Too small Too expensive Preferred and
costed below costed below

7.4 COSTS PRIOR TO OPERATION (000’S VATU)

NB. These costs could be spread over a two-year period, depending on whether a new vessel is
to be purchased, or a second hand vessel is identified early. We have assumed for this exercise
that the purchase of a larger (but used vessel) (No. 4) will be the vessel chosen.

Travel costs, both within Vanuatu and to inspect and identify the (000’s vatu)
Vessel which will be required, aboard VT 15,000
Vessel # 4 cost, say (see vessel costs) (above)* VT2,020,000
Vessel Insurance (1 year) VT 25,000
VAT and Customs Duty – assumed
Contingencies to cover unexpected delays in delivery, say NIL
* Includes crew costs, port dues, provisioning, travel costs, fuel. VT 2,000
Total Vessel Delivery Cost – Vessel #4
(NB – Vessel # 1 will cost VT65,000 less) VT2,062,000

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7.5 PRELIMINARY EXPENSES

1. Administration Office Expenses 000’s Vatu)

Recruitment of : General Manager }

IT Expert }

Sales managers (2) } VT 5,000

Island Liaison Officer (1) } VT 40,000
VT 3,000
Accountant } VT 3,000
VT 20,000
Support Staff (3) }
VT 15,000
Salaries for all staff for, say, 6 months prior to vessel arrival

Website establishment

Social Medical preparations

Advertising

Travel costs to meet agents, promoters

Cruise companies etc VT10,000

Entertainment for above VT 5,000

2. Head Office set-up Costs VT 25,000

Premises, including bond for rent, partitioning,
Furniture, fixtures, computers and servers, say

3. Storage Facilities VT 50
VT 20,000
For vessel spares VT 2,000
Spares for motors and electrical VT 200
Local additional crew recruitment costs, say VT 10,000
Crew uniforms VT 14,325
Vessel provisioning – alcohol, food, fuel, medical needs etc VT 158,000,000
Contingencies – say 10% of costs other than vessel delivery

Total

Total Estimated Preliminary Expenses VT2,219,575

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7.6 VESSEL NO. 1 OPERATING BUDGET – 5 YEARS

Expedition Cruising Vanuatu - budget 5 years (000's) VATU Year 2 Year 3 Year 4 Year 5
Year 1 2024 2025 2026 2027
Capacity 2023 25 25 25 25
Occupancy 25 65% 75% 80% 80%
48 weeks VT640,000/for 7 days 50%
Total Passengers
Income 600 780 900 960 960
Cruise Revenue
Revenue from bar sales 384,000 499,200 576,000 616,000 616,000
Revenue from tour sales 16,040 20,852 24,060 27,840 27,840
Sundry Income 14,400 18,720 21,600 23,040 23,040
Agent Gifts 4,000 5,200 6,000 6,400 6,400
Less Commission payable 15%
TOTAL CRUISE REVENUE (19,200) (12,800) (12,800) (12,800) (12,800)
(57,600) (74,880) (86,400) (92,400) (92,400)
Operations 341,640 456,292 528,460 568,080 568,080
Food (Crew)
Fuel (75kms per day for 6 days) 11,200 11,200 11,200 11,200 11,200
Food Costs (3 meals, 6 days) 80,000 80,000 80,000 80,000 80,000
Beverage costs 18,000 23,400 27,000 28,800 28,800
Tours and Transfer to Vessel 10,400 12,000 14,000 14,000
Comprehensive insurances 8,000 15,600 18,000 19,200 19,200
Wages & Salaries Crew 12,000 20,480 21,600 21,600 21,600
Annual Maintenance (avg) 20,480 75,200 75,200 75,200 75,200
Berthing fees 75,200 8,000 12,000 12,000 12,000
Contingencies including village 1,600 1,600
contributions 8,000 1,600 1,600
OPERATIONAL COSTS 1,600 4,992 6,160
250,872 5,760 269,760 6,160
3,840 264,360 269,760
238,320

GROSS CONTRIBUTION BY VESSEL 103,320 205,420 264,100 298,320 298,320

Administration & Head Office Costs Year 1 Year 2 Year 3 Year 4 Year 5
Head Office wages incl VNPF (See Note 2)
Advertising/Marketing 66,280 66,280 71,444 71,444 75,260
Computer Maintenance Costs
Accounting and Audit 80,000 80,000 70,000 60,000 60,000
Rent - Office
Electricity - Office 5,000 6,000 6,000 7,000 7,000
Bank Fees
Donations 2,000 2,000 2,000 2,000 2,000
Directors Fee
Entertainment 2,700 2,700 2,700 2,700 2,700
Officers Insurance
2,000 2,000 2,100 2,100 2,200

300 300 300 300 300

300 300 300 300 300

500 500 500 500 500

5,000 5,000 5,000 5,000 5,000

1,000 1,000 1,000 1,000 1,000

29

Printing/Stationery 1,000 1,000 1,000 1,000 1,000
Company Registration Fees 30 30 30 30 30
Work Permits/Residency
Vessel Registration 900 900 900 900 900
Sundry Expenses 145 145 145 145 145
Travel in Vanuatu 1,500 1,500 1,500 1,500 1,500
Travel Overseas 4,000 4,000 4,000 4,000 4,000
TOTAL ADMIN & HEAD OFFICE COSTS 5,000 5,000 5,000 5,000 5,000
177,655 178,655 173,919 164,919 168,835
Non Cash Items (See Note 1)
Vessel Depreciation 69,000 69,000 69,000 69,000 69,000
FF& E 1,200 1,200 1,200 1,200 1,200
Preliminary Expenses 31,500 31,500
TOTAL NON CASH ITEMS 31,500 101,700 31,500 101,700 31,500
101,700 101,700 101,700
NET PROFIT (LOSS) TO OWNERS (74,935) 31,701
(176,035) (11,519) 27,785

Note 1 - Non-cash items of Expense

Depreciation and amortisation are usually the only non-cash items. These costs must be taken into account when
purchasing a vessel for this project.

We note that most vessels are regarded as having a 30 year useful life, thus we have estimated depreciation of the
two vessels on that basis, and on boat delivery cost, depreciation would begin in year 1 of operations.

Thus Vessel # 1, (the smaller new vessel) attracts deprecation at VT69M per annum.

Amortisation of preliminary expenses also needs to be written off over a reasonable period. We feel that in Vanuatu,
this should be a 5 year period. For both vessels this is VT31.5M per annum as costs of set up for both are virtually
the same

Note 2: Head Office Staff budget – 5 years Vessel No. 1

Head Office Staff (000's) VT Smaller Vessel

General Manager Year 1 Year 2 Year 3 Year 4 Year 5
IT Support
Sales Manager 15,000 15,000 16,000 16,000 17,000
Island Liaison
Accounting 12,000 12,000 13,000 13,000 15,000
Support (2)
12,000 12,000 12,000 12,000 12,000
+ VNPF 4%
+ Severance (1/12) 8,000 8,000 9,000 9,000 9,000

6,000 6,000 7,000 7,000 7,000

6,000 6,000 6,600 6,600 7,000

59,000 59,000 63,600 63,600 67,000

2,360 2,360 2,544 2,544 2,680

4,917 4,917 5,300 5,300 5,583

66,277 66,277 71,444 71,444 75,263

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Vessel No. 1 Return on Investment – 5 years

Vessel No. 1 (000's) VT Year 1 Year 2 Year 3 Year 4 Year 5
103,320 205,420 264,100 298,320 298,320
Vessel Contribution 177,655 178,655 173,919 164,919 168,835
Administration Costs (74,335) 133,401 129,485
Cash Surplus/(Deficit) 26,765 90,181
69,000
Non-Cash Items 1,200 69,000 69,000 69,000 69,000
Vessel Depreciation 1,200 1,200 1,200 1,200
Other Depreciation 31,500
Preliminary Expenses 101,700 31,500 31,500 31,500 31,500
(176,035) 101,700 101,700 101,700 101,700
(Net Loss)/Profit (74,935) (11,519)
31,701 27,785

ROI - Cost of Vessel Delivery plus year / cashloss

VT2,229,335 (7.9%) (3.36%) (0.05%) 1.42% 1.25%

Thus, over 5 years, there is no ROI to owners (-9.1%), but improvement is possible

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7.7 VESSEL NO. 4 OPERATING BUDGET – 5 YEARS

Expedition Cruising Vanuatu - budget 5 years '(000's) VATU Year 2 Year 3 Year 4 Year 5
Vessel No. 4 2024 2025 2026 2027
Capacity 65 65 65 65
Occupancy Year 1 50% 60% 75% 80%
48 weeks VT640,000/per 7 day 2023
Total Passengers 65
Income 35%
Cruise Revenue
Revenue from bar sales 1092 1559 1870 2337 2500
Revenue from tour sales
Sundry Income 700,000 997,760 1,196,800 1,495,680 1,600,000
Agent Gifts 29,200 38,400 46,080 57,600 61,440
Less Commission payable 15% 26,208 37,440 44,912 56,128 59,840
TOTAL CRUISE REVENUE 7,280 10,400 12,480 15,600 16,640
Operations (25,600)
Food (Crew) (25,600) (149,664) (19,200) (12,800) (12,800)
Fuel (75kms per day for 6 days) (105,000) 908,736 (179,520) (224,352) (240,000)
Food Costs (3 meals, 6 days) 1,101,552 1,387,856 1,485,120
Beverage costs 632,088
Tours and Transfer to Vessel
Comprehensive insurances 27,200 27,200 27,200 27,200 27,200
Wages & Salaries Crew 88,000 88,000 88,000 88,000 88,000
Annual Maintenance (avg) slipway and 32,760 46,800 56,100 70,080 75,000
survey costs 14,600 19,200 23,040 28,800 30,720
Berthing fees 23,280 33,280 39,920 49,888 53,200
Contingencies including village 20,480 20,480 21,600 22,000 22,400
contributions 124,620 124,620 124,620 124,620 128,000
OPERATIONAL COSTS
20,000 22,000 24,160 26,640 29,280
1,600 1,600 1,600 1,600 1,600

7,000 9,976 12,000 14,960 16,000
359,540 393,156 418,240 453,788 471,400

GROSS CONTRIBUTION BY VESSEL 272,548 515,580 683,312 934,068 1,013,720

Administration & Head Office Costs Year 1 Year 2 Year 3 Year 4 Year 5
Head Office wages incl VNPF (See Note 2)
Advertising/Marketing 92,120 92,120 98,734 98,734 102,780
Computer Maintenance Costs
Accounting and Audit 100,000 100,000 80,000 80,000 75,000
Rent - Office
Electricity - Office 5,000 6,000 6,000 7,000 7,000
Bank Fees
Directors fees 2,000 2,000 2,200 2,200 2,300
Donations
3,500 3,500 3,500 3,500 3,500

2,300 2,300 2,400 2,400 2,400

300 300 300 300 300

500 500 500 500 500

300 300 300 300 500

32

Entertainment 8,000 8,000 8,000 8,000 8,000
Officers Insurance 1,000 1,000 1,000 1,100 1,100
Printing/Stationery 1,000 1,000 1,000 1,000 1,000
Company Registration Fees
Work Permits/Residency 30 30 30 30 30
Vessel Registration 900 900 900 900 900
Sundry Expenses 175 175 175 175 175
Travel in Vanuatu 2,000 2,000 2,200 2,200 2,300
Travel Overseas 5,000 5,000 5,000 5,000 5,000
Contingencies 7,500 7,500 7,500 7,500 7,500
TOTAL ADMIN & HEAD OFFICE COSTS 5,000 5,000 5,000 5,000 5,000
236,625 237,625 224,739 225,839 225,285
Non Cash Items (See Note 1)
Vessel Depreciation 88,800 88,800 88,800 88,800 88,800
FF& E office 1,400 1,400 1,400 1,400 1,400
Preliminary Expenses 31,500 31,500
TOTAL NON CASH ITEMS 31,500 31,500 121,700 31,500 121,700
121,700 121,700 121,700

NET PROFIT (LOSS) TO OWNERS (85,777) 156,255 336,873 586,529 666,735

Note 1 - Non-cash items of Expense
Depreciation and amortisation are usually the only non-cash items. These costs must be taken into account when
purchasing a vessel for this project.

We note that most vessels are regarded as having a 30 year useful life, thus we have estimated depreciation of the
two vessels on that basis, and on boat delivery cost, depreciation would begin in year 1 of operations.

Vessel #4 (the larger, but 2nd hand vessel) attracts depreciation at VT88.85M per annum (on the basis that the
vessel is already 5 years old).

Amortisation of preliminary expenses also needs to be written off over a reasonable period. We feel that in
Vanuatu, this should be a 5 year period. For both vessels this is VT31.5M per annum as costs of set up for both are
virtually the same.

Note 2: Head Office staff budget – 5 years Vessel No. 4

Head Office Staff (000's) VT Larger Vessel

General Manager Year 1 Year 2 Year 3 Year 4 Year 5
IT Support
Sales Manager (2) 15,000 15,000 16,000 16,000 17,000
Island Liaison (2)
Accounting 12,000 12,000 13,000 13,000 15,000
Support (3)
24,000 24,000 24,000 24,000 24,000
+ VNPF 4%
+ Severance (1/12) 16,000 16,000 18,000 18,000 18,000

6,000 6,000 7,000 7,000 7,000

9,000 9,000 9,900 9,900 10,500

82,000 82,000 87,900 87,900 91,500

3,280 3,280 3,516 3,516 3,660

6,833 6,833 7,325 7,325 7,625

92,113 92,113 98,741 98,741 102,785

33

Vessel No. 4 Return on Investment – 5 years

Vessel No.4 (000's) VT Year 1 Year 2 Year 3 Year 4 Year 5
272,548 515,584 683,213
Vessel Contribution 236,625 237,625 224,739 934,068 1,013,720
Administration Costs 35,923 277,959 458,474
Cash Surplus/(Deficit) 225,839 225,285

Non-Cash Items 708,229 788,435
Vessel Depreciation
Other Depreciation 88,800 88,800 88,800 88,800 88,800
Preliminary Expenses 1,400 1,400 1,400 1,400 1,400

(Net Loss)/Profit 31,500 31,500 31,500 31,500 31,500
121,700 121,700 121,700 121,700 121,700
(85,777) 156,259 336,774 586,529 666,735

ROI - Cost of Vessel Delivery

VT2,219,575 (3.86%) 7.04% 15.17% 26.42% 30.00%

Thus, over 5 years, this vessel could return 74.8% of investment to owners, and
is recommended as a suitable vessel for our purposes.

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8. SUGGESTED POSSIBLE ITINERARIES

8.1 TORBA PROVINCE

DAY 1. Luganville Harbour (Santo)
DAY 2. Loh Island (Torres)
DAY 3. Moto-Lava Island (Banks)
DAY 4. Lalentag (Vanualava Island)
DAY 5. Sola (Vanualava Island – Banks)
DAY 6. Aver (Gaua Island – Banks)
DAY 7. Luganville Harbour (Santo)
TOTAL Kilometres covered approximately: 769km - 6 nights/7 days

DAY 1 -

After a day arriving in Santo or exploring
Santo we arrange transfer by Tender to
the vessel at 5pm. Here you get to
settle in and dinner is served as the
vessel heads around million-dollar point
and the beautiful coast of Santo
beckons. Overnight we head up to the
Bank Islands. Cultural expert lecture
and discussion.

DAY 2 -

Today we explore Loh Island. Visit the
cyclone hideout cave, swim/snorkel on
the beautiful white sandy beaches or
experience some of the many cultural
activities on offer. Here we can see
custom dancing, listen to the string
band.

DAY 3 –

Today we explore Moto-Lava and see
the traditional snake dance and sand
drawing. Cultural activities specifically
from this region. Trek to the sleeping
mountain, see the unique carvings or try your hand at mud fishing. At low tide wade through to
the tiny islet of Rah for some stunning white beaches, Rock of Rah or try custom fishing.

35

DAY 4 –
Get your walking shoes on and trek to Volcano Mt Sere Ama or visit the waterfall at Waterfall
Bay.
DAY 5 –
This morning we are at Sola. On offer are many cultural activities including; bamboo weaving,
Vanualava Custom Dance, visit custom village and historical sites. Enjoy some bird watching or
tree of life display. Turtles are often in this area, go for a swim/snorkel and see if they have a
play with you. Some beautiful snorkeling in this area.
DAY 6 –
Aver in Gaua Island has a magic show on offer. Take a walk under the big banyan tree, visit the
custom village and historical sites. But be sure not to miss the water music and custom dances
at this location.
Back on board for the Captain’s dinner and a chance to swap addresses with your fellow travellers.
DAY 7 –
We have you disembarking at 9am. Depending on your flight arrangements, we either transfer
you to the airport or have arranged for you to be transferred to your resort.

36

8.2 SANMA PROVINCE

DAY 1. Luganville Harbour (Santo)
DAY 2. Mavea Island
DAY 3 Riri River (East Santo)
DAY 4. Devils Rock (West Ambae)
DAY 5 Wala Island (Malekula)
DAY 6. Malo Island
DAY 7. Luganville Harbour (Santo)

TOTAL Kilometres approximately covered: 319km - 6 nights/7 days

DAY 1 -

After a day arriving in Santo or
exploring Santo we arrange
transfer by Tender to the vessel at
5pm. Here you get to settle in and
dinner is served as the vessel
heads around million-dollar point
and the beautiful coast of Santo
beckons.

DAY 2 -
Today we explore Mavea Island .
Mavea Island is a small island in
Vanuatu across a small channel
east of Luganville. The population
is about 200, with only 34
speakers of the Mavea language
which is dying out as it is not
usually spoken outside of the
home.

37

DAY 3 –
After a morning swim/snorkel we will venture up the Riri River in a dugout canoe to discover the
miraculous blue holes – deep, clear freshwater springs that bubble up from the river. You’ve
never seen the colour blue quite like this. A refreshing swim is almost compulsory! The rest of
the day you can include as much or as little activity as you wish; sightseeing from the tenders,
exploring the shoreline; perhaps a trip with one of our fishing guides. Or simple relax and enjoy
island time.

DAY 4 –
Devil’s Rock on West Ambae. Ambae is an active volcano. It is possible to climb to the top of it
to view the two lakes - Manaro, which is a clear rainwater lake and Vui which is a blue lake in
the crater of the volcano. When the volcano becomes active, the waters of Vui can turn blood
red. To climb the volcano you will need a guide.

DAY 5 –
Small but beautiful island of Wala. This remote, densely vegetated island will excite anyone with
an interest in anthropology. Cut off from their larger neighbour, Malakula, by a deep channel.
Wala is remarkably untouched by modern culture – astounding considering its welcoming
inhabitants, wondrous environs, world class snorkelling and fascinating ancient traditions. Visit
the local market to pick up some handicrafts, then cool off with a swim or snorkel off one the
beautiful beaches.

DAY 6 –
Malo Island is todays stop, has a very rich culture as well as historical connections linked to the
very first Ni-Vanuatu settlers. Malo is a perfect combination of eco-adventures ranging from river
kayaking, bush trekking, diving, snorkelling and cultural experiences. Malo has white sandy
beaches, great snorkelling and easy walks. An easy place to spend the day.
Avunatrai Mission is a lovely escape and is a typical example of Vanuatu village life.
Back on board for the Captain’s dinner and a chance to swap addresses with your fellow travellers.

DAY 7 –
We have you disembarking at 9am. Depending on your flight arrangements, we either transfer
you to the airport or have arranged for you to be transferred to your resort.

38

8.3 SHEFA PROVINCE

DAY 1. Port Vila Harbour (Efate)
DAY 2. Lelepa Island
DAY 3. Lamen Bay (North-West Epi)
DAY 4. Taloa (Nguna Island)
DAY 5. Pele Island
DAY 6. Tranquility Island
DAY 7. Port Vila Harbour
TOTAL Kilometres approximately covered 374km - 6 nights/7 days

DAY 1 –

At 5pm on Sunday, we all meet at
the Grand Hotel on Port Vila
Harbour. The crew will transfer you
by tender to the expedition cruise
ship waiting at anchor in the Bay.
Enjoy a welcome aboard cocktail
and let your crew introduce you to
the on board delights of your home
for the next 6 nights. During a
scrumptious welcome dinner we
leisurely cruise to our overnight
anchorage across the lagoon.

DAY 2 –

After breakfast, we head north
cruising towards our first
destination, cruising past Hat
Island into the beautiful Havannah
Harbour. The spectacular narrow
entrance at the Hilliard Channel
provides great photo opportunities,
and we anchor off our favourite
pristine sandy beach at Lelepa
Island. Explore Fels Cave.
Experience the stunning
snorkelling over the coral.
Overnight we will cruise to our next
destination.

39

DAY 3 -
This morning we wake up in Lamen Bay, Epi. This island is of volcanic origin, and its highest point,
Mount Pomare, which reaches a height of 833 m above sea level, is a quaternary volcano

An unforgettable experience, that of swimming with Bondas, the local dugong (sea cow). You will
find him waiting for you at Lamen Bay, his place of abode.
DAY 4 -
Today we get to explore Nguna Island. Home to the two extinct volcano craters where Mount
Taputoara is the highest at its peak of 593 meters (1,946 ft). Beautiful walk through the island is
highlighted by astonishing view at Emae Island and Shepherd Islands.
For the adventurist, you can walk to the top of the volcano.
DAY 5 –
Another leisurely start to the day, the landing craft will make trips to the amazing coral gardens
off Pele Island. During the day the tenders run a shuttle between the ship and the shore so you
can explore this remote village and get to know the friendly Chief and the people at your leisure.
At low tide it is a 3 hour walk around the island.
This area is known as one of the best snorkelling spots in Vanuatu. The ship’s tenders will be the
perfect for exploring such a large area and underwater highlights will include spectacular drop-
offs and stunning cool gardens.
DAY 6 –
We are now located at Tranquillity Island, a turtle sanctuary which you can explore. Great diving
and snorkelling are available here too. You may even catch sight of the dugongs that hang around
this area or see the dolphins swimming. Captain’s cocktail party for your last night on board.
DAY 7 -
We wake up in the Port Vila harbour and after your breakfast, we are ready to tender you to
shore at 9am. There are numerous activities available in Port Vila for your stay. The dining is
varied and reasonably priced with selections ranging from Asian, Pacific and French with
numerous café style restaurants around the bay. Enjoy some duty free shopping and local crafts
to finish your trip.

40

8.4 TAFEA PROVINCE

DAY 1. Port Vila (Efate)
DAY 2. Ipota (Erromango)
DAY 3. Port Resolution (Tanna)
DAY 4. (Aneityum)
DAY 5. Lenakel (Tanna)
DAY 6. Dillon’s Bay (Erromango)
DAY 7. Port Vila (Efate)

TOTAL Kilometres approximately covered: 712km - 6 nights/7 days

DAY 1 –

At 5pm on Sunday, we all meet at the
Grand Hotel and Casino on Port Vila
Harbour. The crew will transfer you by
tender to the expedition cruise ship
waiting at anchor in the Bay. Enjoy a
welcome aboard cocktail and let your
crew introduce you to the on board
delights of your home for the next 6
nights. During a scrumptious welcome
dinner we leisurely start to cruise
south.

DAY 2 –

This morning you wake up in
Erromango, a largely unpopulated and undeveloped island. The main source of income is from
growing sandalwood supplemented by lobsters and coconut crabs.

The island is also known for its mountainous terrain, so for the adventurous, there are guided
tours to historical sites dating to the 1920s which are marked by monuments and Kauri Forest
walks to view 1,000 year old Kauri trees. All hiking trips offer many photographic opportunities
with many species of Orchids (both ground and tree), wild horses grazing, butterflies and flying
foxes. You can also check out the Cave of Skulls then back on board to relax and unwind.

41

DAY 3 -

Overnight we have travelled to Port Resolution on Tanna Island. The drawcard of Tanna is Mount
Yasur (361m) volcano, the world’s most accessible active volcano. Over the centuries, ash rain
from Yasur has built up huge black sand dunes, creating a stark moonscape. Visitors can with a
guide climb up the crater rim, there they are treated to a magnificent fireworks display.

Besides the amazing Mt Yasur Volcano to experience, the east side is rich in its variety of things
to explore; Hot Springs, Snorkelling, Port Resolution Bay, Trekks, Ash Plains, Waterfalls, Custom
Villages & John Frum Villages

DAY 4 -

Today’s location is Aneityum, the furthermost island on our trip, a playground for nature lovers
with birdwatching, forest walks, waterfalls, orchid and flower walks and mountain top views of
the coast and interior of the island. Just 10 minute boat trip from Aneityum is Mystery Island. A
leisurely stroll around the island will take you 40 minutes and you can enjoy pure white sand,
palm trees and coral reefs, the perfect place to unwind. Mystery Island is a pristine marine
ecosystem that has been a marine protected area for over a decade. Swim with the fish turtles
and stingrays and explore some of the healthiest marine life in the archipelago.

DAY 5 –

This morning we are back in Tanna, this time on the west coast at Lenakel. Here you have the
options to explore the Blue Cave. At low tide you can swim right under the rock ledge that takes
you into the cave. The cave is quite large and has a hole in the roof that provides a beautiful light,
which shines into the cave highlighting the blue water and creating great photo opportunities.
At high tide you will need to swim underwater for a very short distance.

You can also visit the giant banyan tree, said to be one of the largest in the world.

Yakel Custom village is where the villages live in a traditional lifestyle from day to day and western
ways are discourages.

In central Tanna you can do the Black Magic Tour, known for its magic and mystery. You will also
see horsemen, the coffee plantation and colourful Tanna face painting on this excursion.

If the timing of the tour coincides with the dates, then the Nekowiar Ceremony, brings together
neighbouring villages for 3 days of gift giving ceremonies, custom dances and feasting. The men’s
Toka ceremony is considered its most impressive traditional dance.

DAY 6 –

Our last day is back in Erromango, this time on the West side. This side of the island you can
explore the rivers. There are traditional outrigger canoes with guided tours of the area for use
either in the river or along the coast. Further bush walking can be done today to explore more
of this beautiful island or enjoy the beautiful beach area at Dillon’s Bay.

42

DAY 7 -
We wake up in the Port Vila harbour and after your breakfast, we are ready to tender you to
shore at 9am. There are numerous activities available in Port Vila for your stay. The dining is
varied and reasonably priced with selections ranging from Asian, Pacific and French with
numerous café style restaurants around the bay. Enjoy some duty free shopping and local crafts
to finish your trip.

43

9. SWOT ANALYSIS

9.1 STRENGTHS

x International profit leakage is minimised
x Unique venues to go to as ground tours – the product is what people want
x Successful entertainment is assumed and different
x 6 x Provinces would benefit
x Very Low carbon footprint, sustainable, low density tourism
x Not too far to travel between islands
x Vessel < 10 years will provide clean human and engine waste disposal
x Local employment on board for most of crew and ground tours
x VTO and DOT can assist with destination marketing and promotion
x Wedding and business functions/private charters may be possible alternative uses
x No income tax considerations if locally owned

9.2 WEAKNESSES

x Weather-cyclones rough seas plus temperature/humidity for age of guests in summer
months

x Some tours limited by numbers
x Custom Owner issues may interfere with smooth operations
x Long and expensive lead time before operations begin
x High set up costs require top class crew and promotion
x Client demographic is limited
x Crew costs are quite high by comparison to larger vessels
x Delivery costs – expensive and lengthy from overseas
x Catering for numbers at remote locations may be problematic
x No oil disposal facility in Vanuatu at present
x Private charter – weddings/functions/team bonding – limited due to pre-planned

itineraries
x Difficult in utilization of vessel for 48 weeks per annum
x Air lifting passengers may be problematic
x Maintenance and slipping must be done overseas at present
x May be difficult to attract commercial investor (s)

9.3 OPPORTUNITIES

x New markets to explore in Vanuatu (not limited to initial itineraries)
x Ability to grow quickly
x Ability to find new remote and exotic venues
x Wedding and Conference facilities are possible in low season
x Ultimate sale if established and successful
x Supply of locally produced food and beverage goods

44