9.4 THREATS
x Costs are high by comparison to larger operators
x Insurance adequacy and availability
x Seasonal Threats – cyclones and rough seas
x State of Vessel/age/hull – breakdowns and consequences
x Crew (especially skilled crew) difficult to replace in a timely manner
x Any breakdown may cause unacceptable delays
x Possible Income Tax could be imposed or worse, a turnover tax
x Larger operators may flood the marketplace with more efficient operations
x Airlines not connecting with pre-planned itineraries
x Australia and New Zealand airlines fail to return to service Vanuatu
x New IMO regulations to reduce carbon emissions may be costly.
45
10. FINANCING THE PROJECT
Whatever happens, we have estimated that the project will require funding of approximately
VT2.4 bn Vatu.
We have not been able to identify any ready-made potential investors, but have been in contact
with Royal Caribbean Cruises and have been advised that the venture contemplated with this
project is not something they or their subsidiary Silverseas would contemplate. To some extent,
it is encouraging in that the venture would not be attractive to the large corporates and thus
suffer unwanted competition from them.
We are of the opinion that this project, given the desired investment, will only be attractive to
persons and companies who know the industry well, and can provide both marketing and
financial expertise. We would not necessarily assume that that expertise is available locally, but
would anticipate that recruitment of suitably qualified people to fill key roles would be possible.
If this can occur, we believe that it would be possible to raise sufficient capital from a selection
of the following:
1. A Public Company IPO (for local investors)
2. The Government of Vanuatu
3. The Vanuatu National Provident Fund
4. Asian Development Bank via Pacific Investment Trust Fund (adb.org)
5. International Finance Corporation – the project meets IFC lending criteria
6. New Zealand Government
7. Venture Capitalists – Private
8. Debenture Funding
9. Pacific Development and Conservation Trust, especially for development of venues
10. Pacific Islands Development Forum via Global Green Growth Institute
As we have not been requested to seek interest, we can at least say that based on the financial
analysis we have carried out, there should be at least some interest in assisting the project
progress.
Obviously, local banks may be attracted to finance the project if Government guarantees could
be put in place, but we cannot assume that is likely.
46
APPENDIX A - ACKNOWLEDGEMENTS
Jerry Spooner, Brenda Andre and Geoff Hyde from the Department of Tourism.
Simon Troman and Jorg Schwartze @ BAP Offices 12th July at 3pm.
OMR – Lloyd Fikias, Norris Pakoa, Barry Laau at OMR offices 19th July at 2pm
Captain Ben Johnson, 22nd July at 11.15am at B&P offices
John Tonner, South Sea Shipping, 22nd July at 2.30pm at B&P offices
Trek Vanuatu – Kathy Nako and Geraldine, 5th August at 11am at B&P offices
Rob MacAllister, Director Vanuatu Ecotours, email exchange
David Cross, Tourism Management and Consultancy business Santo, email exchange
Richard Coleman, Maritime College, Monday 9th August at B&P Office at 9.30am
Carrissa Jacobe, Managing Director, South Sea Services Ltd, Friday 27th August at B&P Offices 11am
Olivet Dorothy and John Anmath – Torba Tourism Dept, Wednesday 8th September at B&P Offices at 9.30am.
James Boink, Alfredo Suravez, Jason Mayes from Royal Caribbean Cruises, Thursday 23rd September at 8am via
Zoom at B&P Offices
Simon Troman @ BAP Offices 23rd September at 11.40am.
Captain Paul Mabee, retired skipper of Island Escape Cruises by email/telephone
Peter Bissett, past owner of Island Escape Cruises Limited.
Narelle Crawford, Vanuatu Insurance Brokers
Stuart Ballantyne, Naval Architect (NZ)
Robert Bohn, Vanuatu Maritime Services Limited.
48
APPENDIX B - MARKETING
STATISTICS
Population of Australia is 25,810,406, New Zealand 4,863,082 and New Caledonia 288,368 as at
13th July 2021
MARKET RESEARCH
Prior to Covid-19 the cruise boat industry was booming.
Number of cruise passengers carried worldwide from 2010 to 2019 – in millions12
Current statistics suggest that 1 in every 17 Australians takes a cruise (over 5% of the population)!
That reflects an increase of 0.9% between 2017 and 2018. In real terms, for 2018, 1.35 million
Australians took a cruise. Comparatively, only 4% of the USA’s population took a cruise and 3% of
the UK’s population
On average, Australians prefer to cruise between 8-13 days (accounting for 39% of the cruising
population
12 https://www.statista.com/statistics/270605/cruise-passengers-worldwide/
49
The tag #cruise forms part of over 3% of Australian tweets. The hashtag appears in approximately
38 tweets every hour on a global scale and reaches 10.6k users worldwide hourly.
Other platforms such as Instagram and TikTok, are set to have a significant impact on the future
of the industry, particularly with onboard wireless internet allowing cruisers to post at sea.
Demographics - cruising Australians tend to be between 42-70 years in age13
New Zealanders are taking to ocean cruising faster than any other country, breaking through the
100,000 barrier for the first time - reaching a total of 112,000 passengers a year in a spurt of
world-leading growth.
The record result in 2018 was a 14.6 per cent increase on the previous year, well ahead of the
growth rate of the world's largest and more established cruise markets, including the United
States (9.4 per cent) and Europe (3.3 per cent). 14
FUTURE OUTLOOK
Cruise visitor numbers to Vanuatu is expected to grow once the Covid-19 crises has ended.
Vanuatu cruise ship visitors in 2019 represented 3% of the tourism market. Given the location
and size of Vanuatu islands, expedition cruising is the most effective way for tourists to get a
glimpse of Vanuatu by visiting the islands and getting cultural experience firsthand.
CURRENT SITUATION
As the world is working its way through the Covid-19 pandemic, the cruise industry is a long way
from fully re-opening. The vast majority of ships are not being used, and the cruise firms are now
advertising heavily to drum up business, and move on from the reputation they gained at the
start of the pandemic as super spreaders.
Cruise lines are setting their sails once again. The Centers for Disease Control and Prevention
(CDC) recently gave the cruise industry the green light to begin cruising again on the condition
that they attest to 98% of crew members and 95% of passengers being fully vaccinated against
COVID-19. The decision allows companies to skip simulated voyages and embark on open water
sailing with passengers once again—a bit of slack the industry has been patiently awaiting. 15
Cruise boats started operating in the UK in May 2021 with passengers having to wear masks,
masks could only be removed for eating, drinking or swimming. Limited guest numbers, one ship
could hold 6,334 guests only took 1,000 guests. 16
13 https://www.cruiseagency.com.au/news/australian-cruise-industry-statistics
14 https://www.nzherald.co.nz/business/kiwis-cruising-in-record-numbers-according-cruise-lines-international-
association/GINRZSDJNSVIHSR3MUM6CAZXKY
15 https://www.linkedin.com/pulse/6-challenges-preventing-cruise-line-from-building-back-matt-esper
16 https://www.bbc.com/news/business-57482017
50
Celebrity Cruises in June became the first major cruise line to operate a sailing in the
Caribbean since the COVID-19 pandemic began, and several other major lines — including Royal
Caribbean — are in the midst of starting back up in the Caribbean, too.
A growing number of cruise ships also are restarting operations in Europe and other destinations
around the world, and small vessels have resumed operations on U.S. rivers and intracoastal
waterways.
Still, only a very small fraction of the world’s cruise vessels are currently back to sailing. It could
be many months before a majority of cruise vessels are operating, and some lines already have
said it could be well into 2022 before they return to normal service. 17
TRENDS IN INDUSTRY
2019 CRUISE TRENDS & INDUSTRY OUTLOOK
1 INSTAGRAMMABLE CRUISE TRAVEL Instagram photos are driving interest in travel around the
world. With on-board connectivity, cruise passengers are filling Instagram feeds with diverse
travel experiences both on-board and on land from several cruise destinations.
2 TOTAL RESTORATION Stressed out from fast-paced lives, travellers are seeking ways to check
out from daily responsibilities and rejuvenate more than ever before. Cruise lines are responding
by offering total wellness in the form of restorative spa experiences, on-board oxygen bars,
healthy menu choices for a wide variety of diets, and the latest in fitness innovations.
3 ACHIEVEMENT OVER EXPERIENCES Experiential travel has evolved into achievement travel as
vacationers are looking for experiences beyond sightseeing. Bucket lists have become goal-
oriented and cruise lines are meeting these demands. Passengers can conquer Machu Picchu or
complete culinary workshops hosted by Le Cordon Bleu chefs.
4. ON-BOARD SMART TECH Travelers use tech in daily lives and are expecting smart tech when
vacationing as well. Cruise lines have adopted technology for cruise travellers—including
keychains, necklaces, bracelets, apps and more—in order to provide a highly personalized travel
experience while on and off the ship.
5. CONSCIOUS TRAVEL Travelers want to see the world in a conscious, mindful way. The cruise
industry is more conscientious than ever, working to local destinations to local cultures,
landmarks and minimize environmental footprints.
17 https://thepointsguy.com/guide/when-cruise-ships-lines-resume/
51
6. ACCESS TO THE NEW LUXURY Travelers are setting sights on destinations that were previously
out of reach – some only accessible now by cruise ship – from the Galapagos Islands to Antarctica.
7. GEN Z AT SEA Generation Z is set to become the largest consumer generation by the year
2020—outpacing even Millennials. This generation like the one before, prefers experiences over
material items and is seeking out travel. The appeal of multiple destinations and unique
experiences, such as music festivals at sea, is attracting this new category of cruisers.
8. OFF PEAK ADVENTURES The off-peak season is rising in popularity whether travellers want to
escape the cold in a tropical locale or embrace the chill in a new destination. Cruising offers some
once in a lifetime experiences during colder months including excursions to see the Northern
Lights, visiting a penguin colony and touring European Christmas markets.
9. WORKING NOMADS Combining work with leisure time is on the rise. Straying far from the
notion of device-free travel, many modern travellers or “digital nomads” are opting for trips
where they can work remotely which cuts down on time off and lost wages. With Wi-Fi, desks
and work-friendly cafes, travellers can keep up with work while enjoying a cruise vacation.
10. With the number of female travellers growing, many tourism and travel companies are
creating female-centered itineraries based on interests and connecting women with other
women. Female centered cruises can create a female empowerment community at sea while
allowing travellers to experience the world around them, as well as famous feminist landmarks.
11. GOING SOLO With more Google searches for “solo travel” and “traveling alone” than ever
before, solo traveling is rising in popularity. Cruising allows for solo travel without the worry of
arranging a ton of details while visiting even the most far-reaching destinations and connecting
with other travellers, forming community bonds and once-in-a-lifetime experiences. 18
MARKETING
A good website with an online booking ability will be the first step in marketing the expedition
cruises. This would then be linked to a Facebook Page and Instagram for boosting and
advertising.
Google doesn’t share its search volume data. However, its estimated Google processes
approximately 63,000 search queries every second, translating to 5.6 billion searches per day and
approximately 2 trillion global searches per year. The average person conducts between three
and four searches each day. 19
18 https://cruising.org/-/media/eu-resources/pdfs/CLIA%202019-Cruise-Trends--Industry-Outlook
19 https://blog.hubspot.com/marketing/google-search-statistics
52
Digital Marketing Vs Traditional Marketing
Comparison Digital Marketing Traditional Marketing
Concept The concept is to market the product or The concept is to Market the product or service
service mainly through digital platforms through platforms like Radio, advertisements in
which are more often used by the newspaper etc.
consumer
Targeted The audience in this case is mainly people The audience in this case is mainly people who are
Audience spending time on social media platforms not that active on digital platforms including social
and on other digital platforms. media platforms.
Cost of Digital Marketing is generally cost Traditional Marketing can sometimes be costly
Marketing efficient and can be done on digital because it includes marketing on platforms like
platforms for little or no money. newspapers, radio, television, billboards and
magazines
Advantages The main advantages are cost efficient The main advantage is the reach to the target
model and more reach to the general audience which don’t use digital platforms and
audience which is overall good for social media platforms.
marketing.
Disadvantage The disadvantage is the inefficiency to The disadvantage is the inefficiency to reach the
reach the target audience on social media audience on social media and digital platforms due
and digital platforms due to which there is to which there is loss of some potential buyers. 20
loss of some potential buyers.
20 https://askanydifference.com/difference-between-digital-marketing-and-traditional-marketing/
53
Most popular social networks worldwide as of July 2021, ranked by number of active users(in millions) 21
Chart Title
Youtube 500 1,000 1,500 2,000 2,500 3,000
Instagram
Facebook Messenger
Tiktok
Douyin
Sina Weibo
Kuiashou
Reddit
Quora
-
Facebook demographics
Who makes up the billions of Facebook users? They hail from countries around the world and are represented in all
of the age ranges.
Users ages 25–34 years are the largest demographic
In the distribution of global Facebook users, 19.3% were male users between 25 and 34 years
old and 13.1% were female users in the same age range. While Facebook users can be found at
all ages, 72.8% are within the 18–44 years old range.
The highest engagement days on Facebook are Tuesday, Wednesday, and Friday between the
times of 9am – 3pm. The peak is Tuesday between 11am to 2pm.
21 https://www.statista.com/statistics/272014/global-social-networks-ranked-by-number-of-users/
54
Through user data, Sprout has identified the best times to post on each social network. But
because 2020 was a year that had some significant usage changes that are expected to stay for
2021, the best times for engagement have been updated.
Facebook has the most ads & highest CTR
Facebook Ads Manager offers four different ad placements: Facebook, Instagram, Messenger
and Audience Network. Of these four, Facebook dominated at 45.2% of ads placement
preference with good reason. The click-through rate (CTR) on Facebook is 3.90%, much higher
than the next placement of Audience Network at 0.99%. 22
22 https://sproutsocial.com/insights/facebook-stats-for-marketers/
55
Instagram
There were 13 010 000 Instagram users in Australia in June 2021, which accounted for 50.1% of its entire population.
The majority of them were women – 58.6%.
People aged 25 to 34 were the largest user group (3 800 000).
The highest difference between men and women occurs within people aged 35 to 44, where women lead by 450
000. 23
Booking agents would then be utilized to market the product, some of these are listed below.
Commission is generally 15 – 20% of the sales price. The most important thing to note is that the
online calendar is live so that bookings can be made instantly for guests.
With Flight Centre in NZ and Australia, contracts need to be entered into by October/November
to allow inclusion in the April release of tours.
https://www.liveaboard.com/
https://www.mycruises.co.nz/
https://www.expeditioncruisespecialists.com/
https://www.ourpacific.co.nz/
23 https://napoleoncat.com/blog/instagram-users-in-australia/
56
https://spacificatravel.com/
https://www.agoda.com
https://www.booking.com/
https://www.flightcentre.co.nz/cruises
https://www.flightcentre.com.au/cruises
https://travel.padi.com/s/liveaboards/all/
Travel Expos
There are a variety of cruise global sites that hold virtual meetings, have Facebook forums where
you can get information regarding the cruise out in the cruise community.
Seatrade Cruise Global
Seatrade Cruise Events galvanize the cruise industry, foster innovation, strengthen
relationships, and above all else, generate incredible business opportunities. Our events range
from trusted annual exhibitions and conferences spanning every sector and region, to intimate
experiences tailored to specific communities. 24
Flight Centre Travel Expos
You would want to ensure that the Flight Centre Travel Expos in New Zealand and Australia have the product
marketed to get maximum exposure.
24 https://www.seatradecruiseglobal.com/en/home.html
57
APPENDIX C - JOB DESCRIPTIONS
Captain - A captain is responsible for all activity on-board, crew and passenger safety and well-
being and the experience offered to guests. They are the main point of contact on the vessel for
the owner. The range in salary normally depends on experience and length of vessel. Generally,
larger vessels will carry more guests and staff, therefore the Captain will have higher
responsibilities, budget and potential issues to deal with.
First Officer - First Officer also known as Chief Officer or Chief Mate is always second in command
to the Captain. They will assist the Captain in a wide range of duties and tends to be responsible
for the safety of the vessel and everyone on board. Furthermore, the role of the First Officer also
includes bridge watches and navigation.
The First Officer in conjunction with the Captain and Chief Engineer ensure that essential spares
for the vessel are near at hand can be utilised when required.
Fuel can be brought in your own fuel tanks from NZ or Australia with 23,000 litres of high quality
fuel each. Would need approx. 6 month’s supply. This would save 45VT per litre by bringing in
yourself rather than purchasing from another provider.
Engineer – The Chief Engineer is in charge of the engineering department of a vessel and is
responsible for its safe and proper functioning. They manage and train the other Engineers, and
oversee contractors, and reports directly to the Captain. The Chief Engineer looks after the
engine room operations, supervises engine repairs and carries out engineering inventories. The
Chief Engineer must have expert technical and troubleshooting experience, advanced knowledge
of engineering on board (engines, fuel, generators, water makers, air conditioning, electrical,
refrigeration, AV systems and computers), be able to handle preventative malfunctions and
multitask.
Deck Watch Keeper – The Deckhand is responsible for the exterior of the vessel and tasks will
typically involve cleaning, painting, sanding, varnishing and all general maintenance of the vessel.
The deckhand’s job is to assist in the maintenance, cleanliness and manoeuvring of the vessel and
tenders, and to help other crew wherever needed – whether in the interior, galley or engine room.
Engineer Watch Keeper - Assistant to the Chief Engineer. Follows instructions from the Chief
Engineering with regards to the operation of the Engine room.
Security Officer- A Security Officer ensures the safety of the area. Their duties include assisting
with embarking and disembarking personnel, monitoring, responding to emergency situations
and keeping track of all incidents on-board.
Chief Steward/ess – The Chief Steward/ess is in charge of supervising the interior management
of the vessel, and training interior crew. She/he is responsible for the budgeting and planning of
the interior, all with the aim of creating the best possible service for the guests and has
58
impeccable attention to detail, the ability to think ahead and to remain professional and
unobtrusive when serving guests in a luxury, high-quality manner. Guest oriented tasks include
food and drink service, overseeing cleaning, cabin preparation, and arranging transport and trips
for guests. They are also responsible for the crew communal areas, as well as making sure crew
are looked after in regards to uniform, toiletries, drinks, meals and snacks.
Purser – The purser is responsible for all operations in the interior department. That includes
inventory, purchasing and provisioning, accounts for the entire vessel, organizing guest activities
and assisting the Captain with ship’s paperwork. The purser handles daily queries from the
passengers including conducting money exchange transactions. The Purser would be responsible
for the Tour operation including all Tour arrangements.
Chef – The chef’s role is an extremely important one because guests will always remember the
food they had, regardless of the size of the ship. It is very challenging position and a chef’s typical
work day is extremely long. They are in charge of planning meals and purchasing ingredients,
preparing food and cleaning up to ensure the galley is kept in pristine condition.
The Chef would be responsible for provisioning. Port Vila and Luganville would be the two main
stops to re-provision the vessel. One would look to buy as much local as possible. Consider
the hydroponic farm in Teouma for vegetables, fish farm/prawn farm, crops in season and adjust
the menu accordingly. In season fresh fruit and vegetables can be purchased from the islands as
the vessel travels. Seafood can also be bought to include lobsters.
Having a site in either Port Vila or Luganville or both with storage facilities for both cold and other
produce whereby you could order supplies in from offshore and hold to ensure that adequate
food supplies are always on hand.
Sous Chef – The Sous Chef assists the Head Chef in producing and delivering the best possible
culinary experience while at sea. It’s the Sous Chef who performs much of the hands on
management. A good sous chef is able to train and supervise the kitchen staff and then help
them carry out the executive Chef’s intentions for cooking and plating the meals to the expected
standards.
Crew Chef – Crew Chef is in charge of preparing meals for the crew members. They might also
act at Sous Chefs or simply be the crew’s personal Chef. They report to the Head Chef.
Galley Utility – Consistently cleaning and sanitizing specific galley equipment and service
locations, including but not limited to cleaning and stacking of dishes, glasses, pans, flatware and
other galley equipment. Current Covid-19 protocols would need to be adhered to.
Accommodation Supervisor – the Accommodation supervisor ensures the highest levels of
housekeeping, service, sanitation and maintenance in passenger and crew areas. To ensure the
interior of the vessel is clean, well maintained and attractively presented. Ensure that company
standards for guest services, decor and housekeeping services are met or exceeded.
59
Housekeeping Steward – The Housekeeping Steward cleans cabins, guest public areas, such as
restrooms, corridors, lobbies; clean crew areas such as crew restrooms, corridors and staircases.
Assist with handling guest luggage on embarkation and disembarkation days.
Restaurant Supervisor – Restaurant supervisors oversee all restaurant operations to ensure that
restaurants run smoothly including seating arrangements and compliance with all current Covid-
19 restrictions and protocols (if any).
Restaurant Steward – The Restaurant Steward is responsible for setting up table, linen, glassware,
silverware and china as well as presenting food and beverage menus to passengers with the
assigned area of the restaurant. Taking orders from the passengers and take a personal interest
in passengers, anticipating their needs, responding promptly and appropriately to their service
requests, and presenting food and beverages with care to ensure a smooth and gracious dining
experience.
Bartender - Oversee the smooth running of the bar operations and handles customers
complaints. They oversee the stock and financials for the operation of the bar and its stock. The
main duties of the Bartender consist of preparing the bar with the supplies they require to make
beverages the passengers request and making the beverages on order in a timely fashion and to
standard.
Bar Steward – The main duties of the Bar Steward consist of suggesting and serving alcoholic and
non-alcoholic beverages. They are responsible for cleanliness of seating areas and re-stocking
bar supplies.
QUALITY ASSURANCE OFFICER
The role of quality assurance will include facilitating meetings such as Safety, Management
Review, and develop training as required. This person is a conduit and is a liaison between the
ship and the main office. This position reviews procedures, policies and other regulatory
requirements. Other functions will include training, communications, reporting, recordkeeping
and compliance. The person should be an independent thinker who can perform assignments
with limited supervision.
That person would:
x Create, update and distribute safety system manuals
x Maintain logs to ensure documentation properly recorded and maintained.
x Motivate and direct the education of shipboard and shore side staff as it relates to Safety
x Completes new employee safety orientations; and completes other safety training as
required.
x Facilitate Safety Committee meetings and assist with the Management Review meetings.
x Compile, analyse, interpret and report inspection results and incident reporting for key
performance indicator (KPI) tracking and reporting.
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x Monitors safety and accident investigations to complete, or assist in the completion of,
investigations of accidents, injuries and vessel incidents.
x Review incident/injury reports and Corrective Action Requests (CARS) and perform root
cause analysis.
x Ensure all services meet internal and external customer needs and expectations to fulfil
company objectives.
61
APPENDIX D
ISSUES PAPER: WORLD BANK DISCUSSION BRIEF
Preliminary Findings on Vanuatu Tourism Demand
and Investment Landscape
Improving Competitiveness for a Pacific Possible January 2019
62
Table of Contents
A. Introduction.......................................................................................................................................... 2
B. Demand Landscape .............................................................................................................................. 2
C. Market Development........................................................................................................................... 7
D. Investment Climate ............................................................................................................................ 11
E. Private Sector Activity........................................................................................................................ 14
F. Air Access/Infrastructure ................................................................................................................... 15
G. Other Infrastructure........................................................................................................................... 18
H. Product Development ........................................................................................................................ 19
ANNEX 1: Synopsis of Vanuatu Market Studies ....................................................................................... 21
References .................................................................................................................................................. 28
63
A. Introduction
This issues paper has been produced by the World Bank through the “Improving Competitiveness for a
Pacific Possible” project, which is funded by the Competitive Industries and Innovation Program (CIIP).
The project aims to help develop more competitive and resilient tourism sectors in several Pacific Island
Countries, but with a primary focus on Vanuatu. This issues paper presents findings from a preliminary
analysis of Vanuatu’s tourism sector. It is based on a desk review and interviews conducted with key
stakeholders during two missions. It will later be supplemented by findings from an investor survey and
additional fieldwork, after which the World Bank will produce a more extensive Investment Needs
Assessment and Plan. This plan should help guide government efforts to prioritize key public sector
assessments and facilitate strategic private sector investments. It will also serve as a key input into the
next iteration of the Vanuatu Sustainable Tourism Action Plan (VSTAP).
This issues paper includes sections that are based around seven relevant themes: Demand Landscape,
Market Development, Investment Climate, Private Investment Activity, Air Access/Infrastructure, Other
Infrastructure, and Product Development. These contain sub-sections on the Current Situation, Expected
Near-Term Developments, and Potential Opportunities (with the exception of the Demand Landscape
section). Finally, Annex 1 contains a synopsis of selected third-party Vanuatu market studies. This
synopsis was conducted by the World Bank team in November 2018 in preparation for the most recent
mission.
B. Demand Landscape
International air arrivals have not grown significantly over the past decade. In 2017, Vanuatu received
109,108 international air arrivals, a 14.7% increase over the previous year1. This increase represents a
partial recovery from a significant downturn caused by Tropical Cyclone Pam in 2015 and then runway
maintenance issues at Bauerfield Airport in Port Vila in 2016. The recovery has continued into 2018, with
preliminary figures from the first half of the year showing a 11.1% increase in international air arrivals.2
Yet, as can be seen in Chart 1, growth over the past decade has been erratic and only averaged 2.3% per
year3.
1 Vanuatu National Statistics Office (2018), Statistics Update: International Arrival Statistics – January 2018
Highlights, Port Vila
2 World Tourism Organization (2019), World Tourism Barometer: Statistical Annex (Volume 17, Issue 1), Madrid.
3 Vanuatu National Statistics Office (2018), Statistics Update: International Arrival Statistics – January 2018
Highlights, Port Vila
64
Chart 1: International Air Arrivals (2008-2017)International Air Arrivals 20 Percantage Growth
15
120,000 10
100,000 5
0
80,000 -5
60,000 -10
40,000 -15
20,000 -20
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
International Air Arrivals Growth rate
Source: Vanuatu National Statistics Office (2018)
Over the past twenty years, Vanuatu’s market share relative to regional competitors has increased
slightly. In 1998, Vanuatu’s market share of international arrivals was 6.1% when considering the
competitive set of Fiji, French Polynesia, New Caledonia, Palau, Samoa, and Vanuatu. In 2017, that figure
increased to 7.1%. Of the six countries, Vanuatu held the lowest market share both in 1998 and 2017,
although in 2010 and 2013 its share narrowly surpassed those of Palau and New Caledonia. Fiji, the
country with the largest number of international arrivals, is also the country whose market share has
increased most during this period: from 43.2% in 1998 to 54.7% in 2017 (see Chart 2 below).
Market ShareChart 2: Vanuatu’s Market Share Compared with Regional Competitors (1998-2017)
60%
50%
40%
30%
20%
10%
0%
Vanuatu Fiji French Polynesia
New Caledonia Palau Samoa
Source: World Tourism Organization (2019)
Most air arrivals are leisure tourists from the three core source markets of Australia, New Caledonia,
and New Zealand. In 2017, leisure tourists accounted for 76% of air arrivals. Approximately 8% percent
came for “Business, meeting, and conferences”, another 8% came to “visit friends and relatives”, and 7%
came for “education and sports”. In 2017, there were 57,384 international air arrivals from Australia. This
65
represented over half of all air arrivals (53%), although that figure was down from 60% in 2013 (see Chart
3 below). New Caledonia is the second largest source market (15,826 arrivals or 15% of the market),
having surpassed New Zealand (11,554 arrivals or 11% of the market) in 2017. Other Pacific countries
accounted for 7,147 arrivals (7%) while 6,801 (6%) came from Europe. China only accounted for 3,612
arrivals (3%), but has posted the strongest average annual growth rate (36%) during this period.4
Chart 3: International Air Arrivals by Source Market (2013-2018)
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Australia New New Other Pacific Europe North China Others
America
Zealand Caledonia
2013 2014 2015 2016 2017
Source: VNSO (2018)
The number of cruise visitors is considerably higher than tourists arriving by air. Official statistics
indicate that 268 cruise calls yielded 223,551 visitors in 20175. That figure was actually lower than in 2016
(when 254,489 visitors came through 296 cruise calls), but has increased significantly over the past
decade, from 106,138 visitors in 2008.6 Projections from South Sea Shipping7 indicate that the number
of cruise calls and visitors will begin to increase again as of 2020. Most cruise calls are from 7 to 10-day
short-haul trips originating in Australia.
These air arrivals and cruise visits contribute significantly to Vanuatu’s economy. According to the
Reserve Bank of Vanuatu, international air arrivals and cruise visitors generated VUV 27.1 billion (around
US$238.9 million) in 2017. This was equivalent to 30% of national GDP and 64.3% of total exports in 2017.
Based on estimates from the International Visitor Survey (IVS), international tourists arriving by air spent
US$172.7 million in Vanuatu in 2017. Respondents spent on average US$195 per day and stayed an
average of 8.1 nights, implying a relatively-high average expenditure figure of US$1,583 per visit. Figures
4 ibid
5 These figures are not considered to be reliable, as they are based on the assumption that all cruise ships operate
at 100% occupancy and that all cruise visitors disembark to take tours in Vanuatu. In fact, they may be inflated by
30% to 40%. However, agreements have recently been signed with the cruise ships to obtain more precise data on
how many passengers are actually visiting each port of call.
6 Department of Tourism (2018b), Vanuatu Tourism Cruise Factsheet, Port Vila.
7 South Seas Shipping is the shipping agent that handles all major cruise calls and therefore is in a strong position
to make projections.
66
varied by market, with long haul visitors spending the most (US$2,039 per visit). Australians (US$1,554)
and New Zealanders (US$1,538) spent near the average, while New Caledonians spent less than the
average (US$1,171).8
However, tourist visitation and spend is not well distributed across the islands, with Efate receiving the
lion’s share. Nearly all (97%) of those arriving by air in 2017 visited Efate, in large part because it is primary
gateway into Vanuatu. Tanna (18%) and Santo (15%) are the next most visited islands, while no other
island receives more than 2%9. Anecdotally it seems that while some visitors combine Efate and Tanna
or Santo, few visit all three islands due to the time and cost required. While visitation to the outer islands
is limited, it should be noted that it has increased an average of 19% per year over the past four years10.
In fact, with the introduction of an Air Vanuatu flight between Brisbane and Santo in 2017, Santo is now
serving as the main entry point for 5.2% of air arrivals. In terms of cruise visitors, Efate received 52% of
cruise calls in 2017, followed by Mystery Island with 38% and Santo with 21%.1112 While port calls to Santo
have decreased in 2018, they should increase significantly as of 2020 when the new cruise terminal in
Brisbane is completed13.
Chart 4: Average Occupancy Rates by Type of Accommodations (2013-2017)Occupancy Rate
80
70
60
50
40
30
20
10
0 2014 2015 2016 2017
2013 0-62 Rooms Luxury Average
Majors (above 62 rooms)
Source: VHRA (2018
Hotel occupancy rates are relatively low and have struggled to recover from pre-Cyclone Pam levels. In
2013, average hotel occupancy rates were 59% whereas in 2017, they were at 52% (see Chart 4). It should
be noted, however, that data is based on only 40 members of the Vanuatu Hotel and Resort Association
8 New Zealand Tourism Research Institute (2018), Vanuatu International Visitor Survey: January – December 2017
9 ibid
10 This comes from the Vanuatu Trade Policy Framework Review (need reference)
11 The figures exceed 100% because cruise ships often make multiple calls in Vanuatu.
12 Department of Tourism (2018b), Vanuatu Tourism Cruise Factsheet, Port Vila.
13 This is because it is quicker and more efficient for ships departing from Brisbane to stop in Santo rather than Port
Vila. Also, this allows for visits to Vanuatu during the shorter seven-day cruises.
67
(VHRA) that voluntarily report their figures. As such, this data is not entirely representative of the
accommodation sector. VHRA’s occupancy rates are further segmented by type, which includes “Majors”
(above 62 rooms), “0-62 Rooms”, and “Luxury”. As can be seen in Chart 3, “Majors” have not fared well
over this period, with average occupancy rates dipping from 65% in 2013 to 49% in 2017. Performance of
accommodations in the “0-62” category, meanwhile, has increased considerably, from an occupancy rate
of 49% in 2013 to 58% in 2017. Yet the top performers continue to be the luxury hotels, with an average
61% occupancy rate in 201714. It is worth noting that luxury hotels are performing below 2014 levels,
however anecdotal evidence suggests that this is at least partially explained by supply increases. Overall,
VHRA estimates that there were 2,307 rooms in total across Efate, Santo, and Tanna.
The IVS has yielded useful information regarding visitor profiles and preferences. The majority of
visitors are relatively old--the most common age group is 50-59 (23%), followed by 40-49 (21%), and 30-
39 (19%). The largest percentage of respondents indicated they were traveling with one companion
(38%). Most visitors (58%) were visiting for the first time, while 23% had already visited once or twice.
Around one in ten visitors had been to Vanuatu previously on a cruise. Most (78%) indicated that would
want to come back, while 86% indicated that they were satisfied with their experience. The highest-rated
aspects of the destination were the local people (48.5%), activities & attractions (32.4%), and environment
(30.9%). The aspects that were most often cited as unappealing were the public services, facilities, and
infrastructure (38.7%); cleanliness (18.7%); and prices of goods and services (14.4%).
Further insights have come from the market research conducted in Australia and New Zealand through
Roy Morgan Research. The Australian data came from Roy Morgan’s annual holiday tracking survey,
through which over 50,000 Australians are interviewed15. In New Zealand, a customized survey gauging
Vanuatu’s brand health and positioning was completed by 1,150 consumer panel members.
Chart 5: Australians’ Preference and Intention to Visit Vanuatu Compared to Other DestinationsPercentage of Respondents
30
24.5
25
20 16.3
15 13.9
9.8
10 6.4
4.5 4 4.7 3.2 5.2
1.9 1.7 1.3 1.9
5 1.8 2.3
0.6 0.8
0
Vanuatu Bali Thailand Fiji Singapore Other New Europe US &
South Zealand Canada
Pacific
Preference Intention
Source: Roy Morgan (2017)
14 Vanuatu Hotel and Resort Association (2018), Resorts and Hotels Occupancy – December 2017, Port Vila
15 Roy Morgan Research (2017a), Vanuatu Tourism Australian Holiday Tracking Survey Insights, Melbourne.
68
One of the key findings of the Australia research is that awareness, preference, intention16 to visit and
visitation figures are extremely low. Vanuatu comes in last among nine holiday destinations in terms of
preference (1.8%) and intention to travel (0.6%) among all respondents, as can be seen in Chart 5. It also
ranks last in visitation (0.7%) and second-to-last in awareness (8.7%)17. These figures have been
essentially the same over the previous five years, with the exception of awareness (increased from 7.1%
in 2013 to 8.7% in 2017); but even the latest figure indicates there is still much work to be done to
familiarize Australian travelers with the destination.
Vanuatu is also at risk of being pigeon-holed in the mind of Australian travelers. Vanuatu is most widely
viewed as a destination for cruise, luxury, family, and honeymoon tourism. These perceptions persist with
the relative scarcity of information about the country. This is in part due to the fact that promotion from
traditional and online sources seem to have a limited reach. The largest proportion of visitors and
preferrers hear about the destination from friends and relatives.
Key untapped Australian segments are those that are younger, single, and living in Victoria. Current
visitors are mostly couples living in metropolitan areas on the east coast of Australia. They tend to be
middle-aged, employed, and from higher socio-economic quintiles. Younger and single travelers do
indicate a preference for Vanuatu but are not being converted, likely in part due to perceptions of high
costs. Furthermore, a lack of direct flights from Melbourne likely stifles demand from Victoria.
In New Zealand, interest in visiting also seems to be very limited. Only 6% of New Zealanders indicated
an interest in visiting Vanuatu. This places the country second-to-last among 17 destinations included in
the survey and behind all South Pacific competitors. Interest is particularly limited among young New
Zealanders—especially in the 18 to 24-year-old segment. This is consistent with findings from Australia.
Common perceptions that may be deterring visitors are that Vanuatu is not “distinctive from other
South Pacific destinations”, does not offer “a variety of things to see and do”, and does not offer “more
than resort-style holidays”. Another area of relative weakness is the sense that it lacks a “feeling of
adventure”. One of the most positive perceptions of Vanuatu is as “a place to unwind and relax”.
New Zealanders visiting Vanuatu tend to be a little older and more affluent than the general population.
The 35-49 years-old category is overrepresented at the expense of the 18-24 years-old category. A
relatively high proportion are retirees. The largest proportion of those with interest in visiting are in the
35-49 years-old category.18
C. Market Development
16 The term “awareness” refers to Australian residents aged 14+ who have read, seen, or heard about the
destination as a holiday and leisure location. The term “preference” refers to Australian residents aged 14+ who
would like to travel to the destination in the next two years. The term “intention” refers to Australian residents
aged 14+ who are planning to travel to the destination for their next trip within two years.
17 “Other South Pacific” places slightly below Vanuatu in awareness, but this is likely because it is not one specific
destination.
18 Roy Morgan Research (2017b), Vanuatu Tourism Research New Zealand, Melbourne.
69
Current Situation
The marketing efforts of Vanuatu’s Tourism Office (VTO) over the past two years have helped re-
establish the country in its core short-haul source markets. The most substantial effort has been made
in Australia, its largest source market. The investment is paying dividends, as air arrival figures have
recovered from pre-Cyclone Pam levels and projections for coming months look strong. Much of the work
in Australia is being carried out by GTI, its in-country marketing representative. Vanuatu also has
representatives in its other core markets of New Zealand and New Caledonia. VTO’s market budget of
approximately VUV 90 million has been bolstered by approximately VUV 70 million from MFAT (New
Zealand) and VUV 107 million from DFAT (Australia). Last year, it also received approximately VUV 30
million from the Tourism Market Development Fund (TMDF), which is collected by a selection of private
sector operators and channeled into marketing activities coordinated by the VTO.
In its draft Vanuatu Tourism Market Development Plan (2019-2030), VTO signals its intention to solidify
core source markets while diversifying source and niche markets. As such, the majority of the effort and
budget would be focused on Australia, New Zealand, and New Caledonia. The primary long-haul targets
would be Europe, China/Hong Kong, and Japan. Additionally, key target segments would be “Global
Adventure Seekers” and the Meetings, Group Travel, and Incentives (MICE) market. Summaries of each
target market are provided in Table 1.
Table 1: Summary of Marketing Plan Targets 2017 Air 2030 Target
Country/Market Geographic Focus Segments Arrivals Air Arrivals
57,384 125,000
Australia Sydney, Brisbane Priority:
x Experience collectors 11,554 32,500
New Zealand Auckland Growth:
x Chinese in Australia 15,826 25,000
New Caledonia Noumea x Extend Geographic Markets 6,801 15,000
Europe France, Germany, x Adventure Seekers 3,612 30,000
China/Hong Kong Netherlands, Priority: 1,076 12,500
Japan Nordic Countries x Experience collectors
Shanghai, Hong x Niche segments (weddings,
Kong, Guangzhou
Not specified Chinese diaspora, diving)
Growth:
x Extend Geographic Markets
x Adventure Seekers
Priority:
x Experience collectors
Priority:
x Experience collectors
Priority:
x Experience collectors
Priority:
x Experience collectors
70
Adventure Global Islands, Priority: Unknown 15,000
Seekers New x “Thrill seekers”, “nature Unknown 45,000
Pacific
Meetings, Group Australia, lovers”, and “culturally
Travel, Incentives Zealand inclined” travelers
Source: VTO (2018) Priority:
x Meetings, sports, events,
trainings, etc
x Small corporate meetings
(20-40 pax) and business
conferences (100-150 pax)
Within the core markets, though, the messaging would focus on attracting the “experience collectors”
segment. To date, the marketing focus has been primarily on the wider leisure market, with messaging
related to relaxation and beach products. “Experience collectors” tend to be well-traveled, open-minded,
active, outdoorsy, culturally-minded, and adventurous.
The marketing plan sets out fairly ambitious targets of 165,091 international air arrivals by 2023 and
300,000 by 2030. This entails annual average growth rates of 6% in short haul markets. For long haul
markets, the targeted growth is 10% during the first five years and 15% during the following five years.
Other targets include having 30% of all visitors travel to the outer islands and maintaining a minimum
yield of VUV163,000 per visit.
The overall budget attached to the plan represents a significant increase from past years. The authors
note, however, that funding for Vanuatu’s marketing efforts has been well below that of its regional
competitors for many years. They also highlight how the additional marketing funding should have a very
high return on investment.
The marketing strategy will be supported by the Vanuatu Destination Brand Positioning Strategy. The
draft strategy was produced by the Brisbane-based Engine Group in August 2018. It was developed after
a considerable amount of research that included conducting a customized online survey of Vanuatu
visitors, holding a series of stakeholder meetings in Vanuatu, reviewing previous market research, and
scanning social media postings.
Through their research, Engine was able to garner important insights. They found that Vanuatu appeals
particularly to South Pacific enthusiasts looking for a new experience in the region. Those that are
accustomed to destinations such as Bali and Thailand indicate that Vanuatu does not compete well in
terms of price, product, and infrastructure. Vanuatu’s key attractors are the friendly people, relaxation,
lack of crowds, safety, proximity, culture, pristine nature, and culture. Many visitors in fact pursue a
combination of relaxation with nature/culture-based activities.
In line with the marketing strategy, the brand strategy targets “experience collectors” with a brand
positioning of “real, life-changing adventure”. The brand platform, which may also serve as a tagline, is
“Answer the call of Vanuatu”. The strategy recommends the following brand attributes: Culture/Kastom,
Ni-Vanuatu people, Natural Wonders, Real, Raw, Adventure, Connection, and Freedom.
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Marketing support is also being provided by the IFC, with a focus on capturing the Chinese independent
traveler (FIT) market. A key element of its support has been the development of the extensive “China
Vanuatu Benchmarking Report”, which provides a series of practical guidelines on how to access this
market. It will apply findings from the report to upcoming support initiatives.
In parallel, some operators are undertaking efforts to attract the Chinese group travel market. These
are tourists that come through tour packages, often involving charter flights. Part of the reason some
operators are targeting this market segment is because it tends to be organized by travel trade
intermediaries and therefore slightly easier to capture. It involves tourists of relatively lower socio-
economic strata and is typified by heavy negotiation in which margins are very tight. This is not one of
the strategic markets outlined in VTO’s marketing strategy and some key stakeholders have expressed
concern about the lack of compatibility of this mass group segment with other target markets and more
niche segments.
Expected Near-Term Developments
x Engine Group will soon initiate a second phase of its work in which it will develop the creative
component of the brand. This will include the logo, tagline, and brand imagery.
x To help capture the Chinese FIT market, IFC and VTO are currently preparing a digital marketing
program. It will create compelling and informative content on online platforms, identify and highlight
China-ready tour products, promote the destination through bloggers and social media, and sponsor
a workshop to build operators’ capacity to service this market.
x Critical decisions on VTO’s 2019 marketing budget should be made shortly. One of VTO’s key learnings
from the past few years is the importance of having a consistent presence in the market. However,
the committed marketing budget for next year is quite low and will need to be replenished to maintain
momentum in core markets. Additional funding has been requested from the government and
donors.
Potential Opportunities
1. Increase Funding for Experience Seekers in Core Markets
There seems to be fairly wide consensus among stakeholders that this market is highly attainable,
produces strong yields, and is consistent with sustainable tourism goals. Yet only a small amount of
marketing funding has been dedicated to this segment thus far. Additional funding can be well
leveraged through creative digital-based marketing efforts.
2. Place Focus of Long-Haul Market Development Efforts on France and Japan
VTO’s marketing strategy lists a number of long-haul targets in Europe, Asia, and North America.
However, with a limited marketing budget, prioritization is necessary. Conversations with the travel
trade, paired with IVS data, seem to confirm that the two top long-haul targets should be France and
Japan. Although there has been little formal study of these markets, there seems to be a strong
72
market match between Vanuatu’s offer and demand from these countries. Also, air access to both
countries is relatively convenient. France also makes sense due to historical cultural linkages with
Vanuatu, and the ability to offer multi-destination packages with New Caledonia. Building market
awareness in these countries will be costly—especially in the first several years—but both are large,
high-yield markets with strong growth potential. Budget permitting, VTO may want to begin by
contracting modest market representation in each of these countries.
3. Develop and Implement MICE Tourism Action Plan
VTO’s primary focus in the past few years has been regaining core short-haul market share. Yet in its
marketing strategy it signals MICE tourism—in particular, the meeting, group travel, and incentives
segments--as a priority. Most stakeholders agree there is indeed strong potential in this market, but
very little research has been conducted. This should be undertaken as part of the development of a
MICE Tourism Action Plan. Implementation of the action plan would likely involve contracting a
person or firm over the short to medium term to help facilitate initial outreach efforts with key
professional conference organizers (PCOs) in Australia, New Zealand, and other Pacific Islands while
building capacity of VTO staff in the process. Eventually, a Convention and Visitors Bureau (CVB) could
be formed to take on these functions.
4. Consider Legislation Requiring Full Private Sector Participation in the TMDF.
Certain members of VHRA are currently contributing (0.5% of revenue) to the TMDF. Yet, as this is
voluntary, many private sector operators do not participate. If made mandatory, it could raise
considerably higher sums. Yet the government has rejected such proposals in the past.
D. Investment Climate
Current Situation
Investors generally perceive the investment environment to be favorable. One of the primary
advantages for investors is Vanuatu’s taxation regime, which features no income tax, withholding tax, or
capital gains tax. Another benefit for investors is the lack of capital controls in Vanuatu. Additionally,
tourism investments are eligible for some import duty exemptions. According to the Import Duty Act
(2006), the Director of Tourism may recommend exemption of “a rate of not less than 5% on all plant,
machinery, equipment and materials (including spare-parts) imported exclusively for the construction and
establishment of a new tourism development project, or the upgrading, refurbishment or extension of an
existing tourism facility”. Tourism development projects with a capital investment of at least VUV 10
billion (US$ 90 million) can receive a total exemption from customs duties.
However, the government has signaled that it will soon be introducing legislation for an income tax.
Some investors have indicated that this could significantly deter investments into the tourism sector.
However, the government apparently intends to set a low initial rate that it would then escalate gradually.
It has also indicated that it may lower the recently-raised VAT as a partial offset. These provisions may
help assuage some investors’ concerns.
73
One of the most formidable challenges cited by investors is the land policy. Acquiring land rights,
particularly for custom land in rural areas, tends to be a very lengthy and complex process. This seems
to have deterred some potential investors. Also, it has been reported that the Minister of Land and
Natural Resources is not signing off on any land deals until an amendment to the current legislation is
passed. This has created a large backlog of requests.
The private sector also feels that the investment climate would worsen if the draft Investment
Promotion and Facilitation Act (IPFA) is passed. The bill, currently in draft form, replaces the current
Vanuatu Foreign Investment Promotion Act. One of the primary complaints lodged by the Vanuatu
Chamber of Commerce and Industry (VCCI) is that the Vanuatu Foreign Investment Board would not have
a single representative of the private sector, whereas it currently has only one. Other concerns cited by
VCCI include some of the types of investments that are off limits to foreigners, insufficient investment
incentives, and the lack of investment promotion activities.
Another weakness of both the current and proposed systems is the lack of sector representation in the
investment approval process. Tourism investment approval decisions are made without consulting key
stakeholders such as VTO, Department of Tourism, Department of Environmental Protection and
Conservation, or private sector associations. It is therefore very difficult to ensure that new investments
are consistent with the sector’s overall vision and strategy.
Several other constraints have been mentioned by investors. One is high operating costs, particularly
for power and transport of goods to the outer islands. Also, some have cited the Vanuatu Investment
Promotion Authority’s (VIPA) limited capacity to promote, manage, and monitor investments. Limited
air capacity and infrastructure is also listed by many investors as a top concern—this will be discussed in
greater detail in Section F.
Expected Near-Term Developments
x VIPA, through ADB support, has recently contracted an international consultant to help draft a revised
National Investment Policy Statement (NIPS). This will provide recommendations for promoting,
facilitating, regulating, and monitoring foreign investments. A draft document should be submitted
by late February 2019.
x The recommendations from the NIPS should in theory be considered within the IPFA, which will be
debated further during consultations in coming months. The current aim is to send a revised version
of the IPFA to Parliament in Spring 2019.
x A recent report indicates that the government intends, through upcoming legislation, to transform
VIPA into VIFPA (Vanuatu Investment Facilitation and Promotion Agency). The objective is to create
a more attractive business environment for foreign investors. The focus of the agency would be on
74
vetting new investment applications and monitoring existing ones. The legislation may also increase
private sector participation on the Board.19
x Meanwhile, the sector awaits further information regarding revisions to the current tax code,
including the possible introduction of an income tax.
Potential Opportunities
Widescale investment promotion efforts abroad are likely not necessary. This is for several reasons. First,
there is a fairly dynamic group of current investors that would likely be interested in additional
investments under favorable market conditions. Second, additional investments are already being made
in certain areas. Third, the smaller-scale accommodations generally preferred by target markets would
primarily be built by individual investors rather than the large international businesses typically targeted
in investment promotion campaigns. As such, while some investment promotion activities can be
undertaken, there is a more urgent need to focus on ensuring that new tourism investments are in line
with the vision and underlying principles of the country’s tourism market development strategy and
tourism policy. Some possible opportunities are described below.
1. Re-engineer the Investment Approval Process
The current process can be cumbersome and may not work well to prevent undesirable investments.
The process should be streamlined, but also incorporate checks on investments that are not aligned
with the country’s tourism vision. Changes to the process may include the following elements:
a) Ensuring that Relevant Stakeholders Have Input into the Approval Decision
Representatives from bodies such as VTO, the Department of Tourism, the Department of
Environmental Protection and Conservation, and private sector associations should be part of the
approval process—either as voting members of a committee or at least to provide technical inputs
regarding the proposed investments. This may not be feasible for all tourism sector investments,
but should at least apply to sizeable investments.
b) Developing a Harmonized Set of Regulations/Guidelines for Tourism Investments
These regulations/guidelines would be particularly relevant for accommodations. They could
cover issues related to the construction dimensions (number of units, density, and height), style,
placement (setbacks from water, proximity to others, etc.), and environmental footprint. Some
would be applicable to the whole country whereas others just to specific islands or
municipalities20. Another important issue that could be addressed through the
regulations/guidelines is quality assurance. This is not always easy to regulate but is critical for
ensuring competitiveness and sustainability. One option to consider would be to require large
new developments to carry a recognized international brand.
19 Daily Post (2018), “VIPA to be Replaced”, 15/12/18. http://dailypost.vu/news/vipa-to-be-
replaced/article_1810a86b-d46a-5373-9335-edbe2a9ca97a.html
20 A good example is Seychelles, where large resort investments were allowed on the two principal islands of Mahe
and Praslin, whereas only small-scale accommodations were permitted on the island of La Digue.
75
c) Increasing Coordination and Capacity of Municipal and Provincial Bodies
The precise role that central authorities have in tourism investment approvals will need to be
better defined. Regardless, the municipal and provincial bodies are key stakeholders in the
process. Therefore, it is essential to create mechanisms to enhance coordination between them
and central level authorities. It will also be important to work with the municipal and provincial
authorities in the development of the new regulations/guidelines and ensure they have the
capacity to apply them.
2. Build VIPA Capacity to Promote Investments and Improve Aftercare Services
Currently, VIPA is primarily focused on its regulatory functions. However, as an investment promotion
agency, it should also be promoting investments aligned with relevant sector strategies. Perhaps
even more importantly, it should dedicate resources to providing critical aftercare services for
investors. In order for VIPA to better carry out these roles, training and technical assistance for
relevant officials would be useful. It would also be advantageous to include seasoned investors on
the Board, which is one of the key issues being debated in the context of the new IPFA. Some of these
issues may be resolved if VIPA is in fact transformed into VIFPA.
3. Review Current Investment Restrictions
The draft IPFA contains a list of restrictions for foreign investment. It will be important to review
these to make sure they are in line with the market reality. In particular, it would be important to see
if any are constraining strategic investments while not actually creating real opportunities for ni-
Vanuatu.
4. Improve Tourism Supply Statistics
Understanding the current supply of tourism businesses, both in terms of capacity and characteristics,
is critical for investment decisions. It is particularly important for the accommodations sector, where
the coverage of current statistics is limited to VHRA members. A proper inventory of all
accommodations providers should be done across the country and repeated at least once per year.
E. Private Sector Activity
Current Situation
The stock of accommodations has been slowly increasingly. While comprehensive accommodation
inventory figures are not available, stakeholders report a slight increase in stock. This is one of the primary
reasons that occupancy rates have not increased in line with international air arrival figures. The new
establishments include large and small-scale hotels on Efate and boutique resorts on Santo and Tanna. In
fact, the investments that are performing best are high-end boutique establishments.
Growth in vacation homes seems to be outpacing that of formal accommodations21. This is a trend that
is being seen in many destinations worldwide, particularly as digital portals such as Airbnb make it easier
21 This has not been officially documented, but is based on anecdotal accounts with several investors and
investment facilitators.
76
to connect to prospective renters. However, the government is not regulating this activity and does not
collect data on how many vacation homes are in the market.
Chinese investors have manifested strong interest in both formal accommodations and vacation homes
lately. Around a half dozen have purchased existing accommodations establishments (small to medium
sized) while several major new developments are being initiated or contemplated: several 200-400 room
hotels, a golf course, and high-end second residences (including several large residential communities that
are being planned).
Some key stakeholders have registered concern with some of these new investments. More specifically,
their concerns relate to construction materials and designs that may not be up to quality and safety
standards. There is also fear that these types of developments, if aimed predominantly at Chinese group
travelers, may alienate core markets.
There are also seems to be interest among some current investors to expand or build new properties.
This will, however, depend upon some key decisions by the government in relation to tax policy, air access
investments, marketing support, and investment vetting. There seems to be increasing interest in
projects on Santo and Tanna.
Expected Near-Term Developments
x Several new projects from investors based in China/Hong Kong look likely to get underway soon. This
includes the large MG Global property in Port Vila (over 200 rooms) and a major vacation home
project on Santo.
x New investments are also being made by individuals and businesses from New Caledonia as they look
to shift and diversify some of their home country risk, given emerging political uncertainties on their
island.
x The largest inbound tour operator, Adventures in Paradise, is currently being sold. Some negotiations
seem to be underway and new owners could take over the business relatively soon.
Potential Opportunities
1. Support the Creation of an Apex Tourism Association
The tourism sector is currently very fragmented, with a large number of different associations that have
formed over the years based on factors such as business type, geographical location, and citizenship of
owners. It will be important for members of the tourism private sector to collaborate more regularly and
better coordinate messaging to the government on key tourism policy matters. This would be helped by
the creation of an apex body in which each of the tourism associations has one representative. The group
could meet quarterly or twice per year, depending upon available budgets.
F. Air Access/Infrastructure
77
Current Situation
Many stakeholders have indicated that insufficient international air access has been the largest
constraint to tourism sector growth. This relates both to the number of international flights being
operated, as well as airport infrastructure in Vanuatu. These shortcomings limit the country’s ability to
properly service its core international markets, as well as to open access to new markets.
The most pressing issue over the past several years has been the poor state of the runway at Efate’s
Bauerfield Airport (VLI). Lack of proper maintenance has meant that it no longer complies with
international safety standards. This has spurred carriers to limit flights, while Air New Zealand ceased
commercial flights completely. The latter has had a dramatic effect on arrivals from New Zealand (see
Section B), which had been the country’s second most important source market.
After considerable delays, the upgrading of the VLI runway has recently commenced. The work has
been financed through World Bank’s Vanuatu Aviation Investment Project (VAIP) but suffered delays due
to complicated procurement issues. The work on the runway, taxiway, and apron is targeted to finish by
late January 2019. VAIP funding also covers approach lighting and navigational aids.
The VAIP project has also made improvements to the Whitegrass Airport on Tanna (TAH) and Pekoa
Airport (SON) on Santo. At TAH, the project treated the runway surface. However, further work will be
required within two to three years. At SON, the runway, taxiway, and apron were all resurfaced.
Recognizing the critical need for further air infrastructure upgrades and expanded air lift capacity, Air
Vanuatu, Airports Vanuatu Limited (AVL), and VTO have developed the “Shared Vision for Aviation and
Tourism in Vanuatu”. The ambitious ten-year strategy outlines the specific investments required to
significantly increase tourism to and within Vanuatu, while establishing Vanuatu as the aviation hub of
the South Pacific. The entire tourism sector in Vanuatu seems to have coalesced around the plan and is
lobbying government to provide the necessary financing.
Achieving this vision will require significant investment in medium and long-range aircraft. Air Vanuatu
has very few planes and they are not the right planes for its current needs (in terms of capacity, range,
and fuel efficiency). It wants to purchase four A220s (while replacing its 737) to increase frequency on
existing routes and add new service to Melbourne and perhaps Christchurch. The cost will be around
US$160 million. As of 2021, the idea is to begin acquiring a fleet of long-haul Boeing 787 Dreamliners that
will ultimately reach eight and 12 aircraft, respectively, by 2028.
To improve domestic service and support the outer island dispersal strategy, Air Vanuatu also wants to
invest in smaller aircraft. Domestic service is current very limited, also largely due to an inadequate fleet.
Air Vanuatu wants to purchase five new Caravans, allowing them to expand and improve service to all 26
islands that have landing facilities. Part of the strategy would be to have domestic hubs on Efate, Santo,
and Tanna.
The strategy also calls for hefty airport Investments of US$200 million over the next 10 years. The
largest investment is US$140 million for VLI, followed by US$40 million for SON and US$20 million for TAH.
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For VLI, the priorities are for a new terminal and a runway extension. The existing terminal is only one
third the recommended size for current traffic. While it is now undergoing a minor expansion, a much
larger terminal will be required to accommodate the anticipated increase in flights. There is also an
interest in extending the runway from 2.6 to 3 kilometers to allow larger aircraft to land. The work would
take an estimated four to six months to complete.
For TAH and SON, the top priorities are to lengthen and strengthen the runways. Lengthening the TAH
runway from the current 1.2 km to 2 km would allow it to receive Code C (737) aircraft. It also needs new
lights and navigational equipment. For SON, the lengthening the runway from 2km to 3km would allow it
to take Code E (787) aircraft. This would help enable the strategy of having it receive more international
flights. It would also need a larger terminal, upgraded air traffic facilities, and new navigation equipment.
Air Vanuatu also lists as a high priority the construction of a hangar at VLI. This would allow maintenance
to be done in Vanuatu rather than Australia, thus saving a considerable amount of time and money while
helping avoid schedule interruptions.
Expected Near-Term Developments
x The VLI runway should be finished by early 2019. This may attract new flights. Stakeholders are
anxious to know whether Air Zealand will re-initiate its non-stop service to Auckland.
x The government of Vanuatu is now deliberating on how it may support the aviation and tourism
strategy. Initial reactions have seemingly been positive, with some indications that it has agreed in
principle to purchase a few new planes. Further information should be forthcoming soon.
x With a new aircraft, the key short-term target for new air route development would be Melbourne,
which seems to have strong demand (there are already 20,000 pax/year coming from Melbourne via
Sydney and Brisbane) and market alignment with Vanuatu. Air Vanuatu estimates that it can start
flights three times per week with the current demand.
x The aviation and tourism strategy calls for initiating marketing efforts six to 24 months before new
routes are launched/expanded to build up demand. VTO has indicated that it would, in principle,
start campaigns in Melbourne and New Caledonia in 2018 and Christchurch in 2019. Mid to long-
terms targets are for Adelaide, China, and Europe in 2020; Canberra and Hobart in 2021; and North
America in 2022.
x Meanwhile, the government of Vanuatu has been in discussions with several donors regarding funding
for the required air infrastructure work. The Chinese and Japanese governments have purportedly
expressed some interest in supporting the proposed VLI terminal and runway expansion projects. For
the proposed upgrades at TAH, the government of Vanuatu has apparently approached the French
and Australian governments for funding.
Potential Opportunities
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1. Support the Aviation and Tourism Strategy
The strategy appears to be well conceived, with strong technical input reflecting international best
practices. However, it will be important to scrutinize the business case for the investments in
infrastructure and new aircraft to ensure viability. Additionally, as the proposed budget is likely
beyond the government’s means, it will be important to prioritize the investments based on expected
yields.
G. Other Infrastructure
Current Situation
Important strides have been made in recent years with respect to transport infrastructure. This has
included a significant amount of road work, particularly on the islands of Tanna and Santo. The ADB/DFAT
Port Vila Urban Development Project (PVUDP) has included work on roads and pedestrian pathways.
There has also been a large investment in wharfs, which is critical for cruise tourism. The Port Vila and
Port Luganville (Santo) wharfs have been upgraded to accommodate larger vessels.
Yet some key transport infrastructure gaps remain. Roadwork is still needed on Tanna and Santo. The
existing road infrastructure on Efate is still insufficient, especially to handle increases in tourists and cruise
passengers. The PVUDP project has ended without completing all of its planned work. There is also a
need for upgrading wharf infrastructure on most of the outer islands. The current infrastructure and
vessels, paired with long travel times, do not allow for feasible intra-island sea transport for tourists.
However, with better infrastructure and faster, more modern vessels, there may be potential in the
future—particularly within the rectangle of relatively close central islands of Santo, Malekula, Ambrym,
and Pentecost.
Another critical gap that is becoming increasingly apparent is sewage and waste management.
Contamination has recently been reported in Port Vila Bay, which has the country’s highest concentration
of accommodations. Swimming is no longer considered safe. Septic tanks are old and overtaxed, while
road construction has introduced new pipes bringing runoff into the water. A new treatment plant may
be needed.
Expected Near-Term Developments
x The World Bank is planning to finance a US$62 million (half grant, half credit) project on Santo that
will pave 60 kms of road. This will support the agriculture and tourism sectors. The aim is to obtain
project approval by October 2019.
x There may be a second phase of the PVUDP project, but it has yet to be announced.
x There have been discussions about public sector investments in wharfs and private sector investments
in shipping vessels on some outer islands. While this would not initially be geared towards
transporting tourists, it could improve financial viability of accommodation and other-tourism related
investments on these islands (due to improved cargo shipping times and costs).
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Potential Opportunities
1. Conduct Analysis of Sewage Treatment Systems and Infrastructure
The sewage problems currently affecting Port Vila are of great concern and must be studied better to
understand causes and potential solutions. Solutions may involve stricter regulations, better
enforcement of regulations, and/or increased sewage treatment infrastructure investments. Systems
in other tourism areas on Efate, Santo, and Tanna should also be studied to avoid environment
problems that can affect the health of locals and tourists, as well as the destination’s image.
2. Prioritize Infrastructure Investments
Based on the needs that exist, it will be important to prioritize those that can have the strongest
impacts in terms of local well-being, tourism sector development, and stimulation of other sectors.
In relation to tourism sector development, it will be important to align these decisions with an
understanding of the types of products that are most desired by strategically-selected target markets.
H. Product Development
Current Situation
There is already a fairly wide range of tourism products and activities on offer—particularly on Efate.
More are being developed by tour operators, the VSTAP project, cruise companies, community-based
enterprises, and others. There is a sense among many stakeholders that the offer is not an impediment
to tourism growth and that in fact it will expand organically in response to increased visitation rates.
On Santo and Tanna, there seems to be strong demand for adventure products. This fits well with the
government’s outer island dispersal strategy as well as the shift of marketing focus to adventure seekers.
While the product is expanding, some constraints are high costs, low frequencies of flights, and a lack of
information to tourists prior to bookings. There is considerable interest in ecotourism products (hiking,
biking, kayaking, community tours, etc) but development of these products requires relationships with
communities that only a few operators have successfully forged. There is also strong potential to develop
more cultural tourism products on the outer islands, including Malekula.
Substantial investments into developing cruise tourism products are being made. These are being
developed by both of the two major cruise lines that operate in Vanuatu: Royal Caribbean and Carnival.
Royal Caribbean’s project on Lepa Island is said to be one of the country’s largest tourism sector
investments. In general, there is a need to have higher-quality, better organized products for cruise
tourists. In Port Vila, only 60-80% of passengers come off the cruise ship and of those, at least half return
within an hour. Only about 25-30% of their tours are pre-booked. On Santo, around 70% of passengers
are getting off the ship. According to industry experts, cruise ship trips to Tanna are likely 5-10 years away
due to current limitations in terms of wharf infrastructure, roads, vehicles, and guide training. There are
also questions about the destination’s capacity to sustainably handle large volumes of tourists.
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Little effort has been made to promote festivals and events. Many such festivals exist across the various
islands, yet few other than the land diving on Pentecost Island are well known. Cultural festivals can be
difficult to promote, as exact dates are not always known ahead of time.
Expected Near-Term Developments
x On Tanna, the company that operates the volcano tours (Entani) plans to scale up the product in
January 2019 by adding a café, museum, and crafts market. They are also studying the possibility of
subsequently adding in waterfall, hot springs, and horseback riding tours in the area.
x A five-year cruise tourism strategy is currently being developed, with South Seas Shipping (SSS) taking
the lead and working in close collaboration with the two major cruise companies. The document will
include product development plans.
Potential Opportunities
1. Develop Events to Fill Low Season and Solidify Brand
Organization of festivals and events can be a highly effective mechanism for filling beds during the
low season and strengthening the country’s brand. Sports, music, and culinary festivals may be the
easiest to organize and promote. The country already has many fascinating cultural festivals that
would be of strong interest to experience-seeking tourists, but the challenge is that on many islands
it is hard to fix dates ahead of time. Advancing the festivals/events agenda will require a concerted
effort from VTO, for which capacity building and financial resources will be necessary.
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ANNEX 1: Synopsis of Vanuatu Market Studies
1. Roy Morgan Consumer Surveys in Australia and New Zealand
Roy Morgan, Australia’s largest research company, was contracted by VTO to conduct tourism market
studies in Australia and New Zealand. The size and scope of the two studies were quite different. This
makes them difficult to compare, but their findings generally seem to be consistent. The Australian survey
was conducted in June 2017 and included a wide range of tourism-related questions. The New Zealand
study, conducted in October 2017, was far narrower and focused primarily on gauging Vanuatu’s brand
health and positioning. As the two surveys’ questions varied considerably, it is easier to present key
findings separately.
AUSTRALIA SURVEY
The Australia data came from Roy Morgan’s annual holiday tracking survey, through which over 50,000
Australians are interviewed face-to-face. Among these were Vanuatu visitors (those who have traveled
to Vanuatu over the past year), Vanuatu preferrers (those that have a preference to visit Vanuatu on a
non-business trip over the next two years), overseas travelers, and the general population. It should be
noted that 67% of the “Vanuatu visitor” subset came on cruises. This is a very different segment from the
leisure tourists that stay on the islands. Unfortunately, in the study findings they have not been separated,
making it difficult to ascertain more specific information on the activities and preference of each of these
rather distinct markets. Nevertheless, the study provides some rather useful insights, which are
summarized below.
Awareness/Interest/Visitation
Vanuatu is at risk of being pigeon-holed in the mind of travelers. Vanuatu is most widely viewed as a
destination for cruise, luxury, family, and honeymoon tourism. These perceptions persist with the relative
scarcity of information about the country.
Awareness, preference, intention to visit and visitation figures are extremely low. Vanuatu comes in
last among eight holiday destinations in terms of awareness (8.7%), preference (1.8%), intention to travel
(.6%), and visitation (.7%). These figures have been essentially the same over the previous five years, with
the exception of awareness (increased from 7.1% in 2013 to 8.7% in 2013)—but even the latest figure still
indicates there is much work to be done to familiarize Australian travelers with the destination.
Yet the potential market is still fairly sizeable. An estimated 350,000 Australians have a preference to
travel to Vanuatu.
Information Sources and Media Usage
Promotion from traditional and online sources seem to have a limited reach. The largest proportion of
visitors and preferrers hear about the destination from friends and relatives.
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Visitors tend to use more traditional booking methods whereas preferrers tend to be more tech-savvy
and independent. The fact that visitors tend to book through travel agencies is not surprising, given that
they are likely to be older than average Australians. These results are likely skewed by the high percentage
of cruise visitors. To attract the younger and more technology-oriented preferrers, it will be important to
have a clear digital strategy including a strong internet and social media presence.
Visitor Demographics and Expenditure
Key segments that are missing are those that are younger, single, and living in Victoria. Current visitors
are mostly couples living in metropolitan areas on the east coast. They tend to be middle-aged, employed,
and from higher socio-economic quintiles. Younger and single travelers do indicate preference for
Vanuatu but are not being converted, likely in part due to perceptions of high costs. A lack of direct flights
from Melbourne is likely stifling demand from Victoria.
There is strong polarization in terms of visitors’ income. Most visitors either have a high income or
relatively low income. This is likely due to the distinct characteristics of the cruise visitors and leisure
tourists. Preferrers tend to be more in the middle of the road.
Visitors registered a fairly healthy daily spend of A$219/day. The largest proportion (29%) spent
between A$100-149 per day (probably mostly cruise visitors) but the averages were lifted by the nearly
10% that spent over A$400/day (probably mostly leisure tourists). Preferrers tend to spend less on their
travels (average of A$176/day).
In terms of accommodations, more than half of non-cruise visitors stayed in high-end establishments.
Beyond the 67% of visitors that stayed on cruise ships, 9% stayed in 4-star and 8% in 5-star hotels/resorts.
The accommodations type most favored by preferrers are friend’s/relative’s house (39%), 4-star
hotel/resort (20%), and standard hotel/motel (19%). This makes them somewhat less attractive in terms
of overall spend.
Adventure Travel Segment
This is an attractive target in that it is a large market (6.4 million Australians) of relatively high-income
and environmentally/socially conscious travelers. The Roy Morgan adventure travel category is broad
and includes the “thrill seekers”, “nature lovers”, and “culturally inclined” segments. They tend to be
younger than current Vanuatu visitors and preferrers.
NEW ZEALAND SURVEY
Roy Morgan was contracted by VTO to conduct this customized survey focused on brand
awareness/positioning of Vanuatu tourism. It was completed online by 1,150 New Zealanders (4.6%
response rate) that were members of the Roy Morgan consumer panel. There was no differentiation
between cruise visitors and leisure tourists. Some of the key findings are summarized below.
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Travel Metrics
Few New Zealanders visit Vanuatu. Only 8% of New Zealanders have ever visited Vanuatu. Furthermore,
only 2% have visited in the last 3 years. In terms of visitation, Vanuatu places last among 17 destinations
inquired about.
Among those that have visited, there is very little repeat visitation. Of those that visited in the past 3
years, only 0.3% visited multiple times. It would be useful to better understand the reasons, which may
include high costs, low perceived value, limited variety of activities, or other factors.
Interest in visiting also seems to be very limited. Only 6% of New Zealanders indicated an interest in
visiting Vanuatu. This places the country second to last among the 17 destinations and behind all South
Pacific competitors. Interest is particularly limited among young New Zealanders—especially in the 18-
24 year old segment. This is consistent with findings from Australia.
Market Profile
Vanuatu visitors tend to be a little older and more affluent than the general New Zealand population.
The 35-49 years old category is overrepresented at the expense of the 18-24 years old category. A
relatively high proportion are retirees. The largest proportion of preferrers are in the 35-49 years old
category. As for income bracket, the largest proportion of both visitors and preferrers are in the highest
(NZ$120,000 or more) bracket.
Vanuatu visitors are more likely to live with a partner and no children. Vanuatu preferrers are more
likely to live with a partner and children in family households.
Perceptions and Barriers
The most common perception of Vanuatu is as “a place to unwind and relax”. This perception is held
equally among visitors and preferrers. Cultural heritage also ranks favorably.
The weakest perceptions relate to Vanuatu not being seen as “distinctive from other South Pacific
destinations”, not offering “a variety of things to see and do”, and not offering “more than resort-style
holidays”. These perceptions were held more among preferrers, but also to a large extent among visitors.
Perceptions in these three areas seem inter-related and speak to a lack of product diversification and
differentiation. This, however, is not entirely consistent with results from the IVS. Another area of relative
weakness is in a “feeling of adventure”, which is relevant for the special adventure segment study
conducted as part of the Australia survey.
Also notable is the significant discrepancy in perceptions between visitors and other respondents across
nearly all statements. This would seem to indicate that there is much work to do to build awareness of
Vanuatu’s tourism offerings within the New Zealand market.
The principal barriers among those that want to visit are financial. These include both the expense to
get there as well as the expense to stay there. Among those not interested in visiting, the primary barrier
85
is not knowing enough about the destination. This again points to the limited reach of
promotional/awareness building activities.
2. Draft Vanuatu Destination Brand Strategy & Positioning
Key Points
The draft strategy was produced by the Brisbane-based Engine Group in August 2018. It was developed
after conducting a considerable amount of research that included creating a customized online survey of
Vanuatu visitors, holding a series of stakeholder meetings in Vanuatu, reviewing previous market
research, and scanning social media postings. Some of the key findings from this research included:
x Vanuatu appeals particularly to South Pacific enthusiasts looking for a new experience in the
region.
x Those that are accustomed to destinations such as Bali and Thailand indicate that Vanuatu does
not compete well in terms of price, product, and infrastructure.
x Visitors had limited information about the destination prior to arrival and in general their
expectations were exceeded.
x Key attractors are the friendly people, relaxation, lack of crowds, safety, proximity, culture,
pristine nature, and culture.
x Many visitors in fact pursue a combination of relaxation with nature/culture-based activities.
x Interestingly, 84% indicated that they felt it was quite different from other destinations. This is
not entirely consistent with findings from the Roy Morgan research.
Key elements of the proposed brand strategy include:
x Target Audience: “Experience collectors”
x Brand Positioning: Real, life-changing adventure
x Brand Platform: “Answer the call of Vanuatu”
x Brand Attributes: Culture/Kastom, Ni-Vanuatu people, Natural Wonders, Real, Raw, Adventure,
Connection, Freedom.
After largely positive feedback on this initial work, Engine has just been contracted by VTO to initiate a
second phase in which it will develop the creative component of the brand. This will include the logo,
tagline, and imagery associated with the brand.
Observations:
Based on market research and the current product offering, the “experience collectors” target makes
sense—both for short and long-haul markets. This market in fact would seem to have a very high degree
of overlap with the very broad “adventure travel” segment discussed in the Roy Morgan Australia market
survey. One difference is that “experience collectors” would likely skew a bit older, but this would seem
to be a better fit with Vanuatu’s offerings and cost structures.
86
Also, the strategy indicates that most tourists tend to be inclined towards soft adventure rather than thrill
seeking and that their first priority is relaxation. It therefore indicates that adventure should be presented
in a way that does not appear taxing. Interestingly, the brand positioning uses the word “adventure” but
in theory it would be supported by brand architecture that reinforces the points mentioned above. The
brand attributes seem to be well-aligned with market research and customer feedback.
3. Draft Vanuatu Tourism Marketing Development Plan (2019-2030)
Key Points
The plan has fairly ambitious targets of 165,091 international arrivals by 2023 and 300,000 by 2030. This
entails annual average growth rates of 6% in short haul markets and in long haul markets, 10% the first
five years and 15% the following five years. Other targets include having 30% of all visitors travel to the
Outer Islands and maintaining a minimum yield of VUV163,000 per visit.
It reiterates that “experience collectors” should be the primary target. According to the description
provided, they tend to be well-traveled, open-minded, active, outdoorsy, culturally-minded, and
adventurous.
The plan calls for focusing on core short-haul markets while also aiming for market diversification in
terms of source-markets and segments. As such, the majority of the effort and budget would be focused
on the traditionally strong short-haul markets of Australia, New Zealand, and New Caledonia. The primary
long-haul targets would be Europe, China/Hong Kong, and Japan. Additionally, key target segments would
be “Global Adventure Seekers” and the “Meetings, Group Travel, and Incentives” market. Summaries of
each target market are provided in the Table 1 within the main report.
The plan also signals the need to conduct air route development activities in parallel to marketing
activities. It calls for the development of an “Aviation Route Development Marketing Fund”. This would
provide resources to help stimulate demand in markets where a new route will be launched. It calls for
spending 100 million Vatu per year (divided equally between short and long-haul routes) from 2019-2023
and 120 million Vatu per year from 2024-2030.
The plan also proposes the “Vanuatu Ready Program” to build marketing capacity. It would involve
training industry players in areas such as digital readiness, upgrading skills within the VTO team, improving
data collection, and developing market intelligence capabilities.
The overall budget attached to the plan represents a significant increase from past years. The authors
note, however, that funding for Vanuatu’s marketing efforts has been well below that of its regional
competitors for many years. They also highlight how the additional marketing funding should have a very
high return on investment.
Observations
87
Further prioritization of long-haul markets would be useful but difficult without more data. Given
inevitable limitations of the marketing budget, it will be important to concentrate resources on a relatively
small number of the long-haul markets. Yet, data other than arrivals figures is seemingly unavailable for
these markets. To make strategic decisions, it will be important to better analyze each market’s
compatibility with Vanuatu’s product, visiting and spending patterns in competitor countries, ease of
access, opportunities for multi-country itineraries, etc.
It will also be important to consider social and environmental impacts of each market. The Sustainable
Tourism Policy and several other key tourism sector document call for an increased focus on mitigating
negative impacts of tourism. This discussion is also relevant for the marketing strategy. While precise
measurement can be quite complicated, sustainability issues associated with each market should also be
taken into consideration during the prioritization process.
Data to support the Meetings/Events market focus should also be bolstered. No data regarding this
market has been presented in the plan and may not exist. Further study would seem to be warranted.
This should include collection of current demand figures, inventory of event venues and compatible
accommodations, analysis of events management capacity, review of the regional competitive landscape,
etc.
“Experience collectors” and “Adventure seekers” are presented as distinct markets, but in fact there is
a high degree of overlap between them. The description provided for “experience collectors” above
applies to most “adventure seekers”, particularly in the rather broad manner that they have been defined
in the Roy Morgan study. As mentioned earlier, a few small differences would likely be that “experience
collectors” would skew a bit older and likely not include “thrill seekers”. Yet these differences would likely
not warrant their treatment as separate markets.
Also, there are also some markets that are not included in the plan but that may warrant consideration.
One niche market that would seem to be a good match would be SAVE (Scientific, Academic, Volunteer,
and Educational) tourism—particularly the voluntourism sub-segment. This is a fast-growing market that
is associated with strong social, environmental, and economic benefits—especially at the community
level. Also, while cruise tourism will apparently be covered in a separate strategy document, it may be
worth considering mechanisms to promote the destination to cruise visitors—particularly through low-
season packages that include the Outer Islands.
4. A Shared Vision for Aviation and Tourism in Vanuatu Presentation
Key Points
This presentation was developed by the Vanuatu Aviation Sector Task Force, consisting of Air Vanuatu,
VTO, and AVL. Given the PowerPoint presentation format, some points were not entirely clear. However,
for the most part key ideas were conveyed and are summarized below:
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The task force has set out an ambitious vision of having Vanuatu be the primary aviation hub in the
South Pacific by 2028. The Vision 2028 statement reads “Vanuatu will be the aviation hub of the South
Pacific, driving tourism growth, creating business links and supporting exports of goods and services”.
Achieving this vision will require significant investment in aircraft. The proposed strategy is to acquire
two new Embraer 190s (100-120 passengers) in 2019 and an additional one in 2020. As of 2021, the idea
is to begin acquiring a fleet of medium-haul A220s (130-135 passengers) and long-haul Boeing 787
Dreamliners (240-330 passengers) that will ultimately reach 8 and 12, respectively, by 2028.
The plan also calls for hefty airport Investments of US$200 million over the next 10 years. The largest
investment is US$140 million for Port Vila’s Bauerfield Airport (VLI), followed by US$40 million for
Luganville’s Pekoa Airport (SON) and US$20 million Tanna’s Whitegrass Airport (TAH). The World Bank-
funded VAIP project is already providing considerable support such as pavement and apron expansion to
receive Code E (787) aircraft, approach lighting, navigational aids, and an upgrading of the international
passenger terminal at VLI. The next priority projects include pavement upgrades at SON and pavement
upgrades and a new passenger terminal at TAH.
The idea is to align route expansion efforts with VTO marketing campaigns. VTO projects starting
campaigns in Melbourne and New Caledonia this year; Christchurch in 2019; Adelaide, China, and Europe
in 2020; Canberra and Hobart in 2021; and North America in 2022. Another component of the route
expansion strategy is having international flights into Santo (starting with Brisbane). Additionally, the plan
recommends increasing the frequency, reliability, and affordability of domestic flights to support the
visitor dispersal strategy.
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References
Daily Post (2018), “VIPA to be Replaced”, 15/12/18. http://dailypost.vu/news/vipa-to-be-
replaced/article_1810a86b-d46a-5373-9335-edbe2a9ca97a.html
Department of Tourism (2018a), Vanuatu Sustainable Tourism Policy: 2018-2030, Port Vila.
Department of Tourism (2018b), Vanuatu Tourism Cruise Factsheet, Port Vila.
Engine (2018), Vanuatu Destination Brand Strategy & Positioning – Draft, Brisbane.
Ministry of Tourism Industry Commerce and Ni-Vanuatu Business (2014), Vanuatu Strategic Tourism
Action Plan 2014 – 2018
New Zealand Tourism Research Institute (2018), Vanuatu International Visitor Survey: January –
December 2017, Auckland
Roy Morgan Research (2017a), Vanuatu Tourism Australian Holiday Tracking Survey Insights, Melbourne.
Roy Morgan Research (2017b), Vanuatu Tourism Research New Zealand, Melbourne.
Vanuatu Hotel and Resort Association (2018), Resorts and Hotels Occupancy – December 2017, Port Vila
Vanuatu National Statistics Office (2018), Statistics Update: International Arrival Statistics – January 2018
Highlights, Port Vila
Vanuatu Tourism Office (2018), Draft Vanuatu Tourism Market Development Plan: 2019 – 2030, Port Vila
Vanuatu Tourism Office/Airports Vanuatu Ltd/Air Vanuatu (2018), A Shared Vision for Aviation and
Tourism in Vanuatu (Power Point Presentation)
World Bank (2017), Pacific Possible – Tourism – Long Term Opportunities and Challenges for the Pacific
World Tourism Organization (2019), World Tourism Barometer: Statistical Annex January 2019 (Volume
17, Issue 1), Madrid.
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APPENDIX E - TERMS OF REFERENCE
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