CEO BRIEF

24 December 2007

SOLOMON ISLANDS TOURISM SECTOR REPORT, 2007

Visitors Arrivals

The tourism industry in Solomon Islands has continued to show positive growth over the past four years. In the first six months of 2007, total visitors’ arrivals increased by 13 per cent to 6,671.  This increasing trend is expected to continue in the second half of 2007.

Similarly, total tourists arrivals increased by 25 per cent to 2,799 during the first nine months in 2007.  Australia and New Zealand region accounted for nearly half of total tourists’ arrivals; however, there have been strong growths from the PICs, SE Asia, and UK & Europe regions during the period. This increasing trend is expected to continue for the rest of the year.

The current strength of the Australian dollar against the currencies of its major trading partners including the US is expected to increase Australian outbound travelers to holiday destinations including Solomon Islands over the next three years.

Prior to 2007, the tourism industry made a positive turnaround in 2003 following the arrival of RAMSI and the restoration of law and order in the country in that year. By the end of 2003, total visitors’ arrivals increased by 48 per cent to 6,565.  The total visitors arrivals was estimated to grow in 2004 (11,116) and in 2005 (12,533). In 2006, total visitors arrivals dropped slightly to 11,482 following the riot in Honiara in April 2006.

The earthquake and tsunami which in April 2007 devastated the Western Province where most of the tourism activities are located was expected to create a major setback to the tourism growth, however, the hotels and tourism activities in the capital Honiara and other parts of the country were unaffected which allowed the industry to recover quickly by the middle of 2007. This is confirmed by the positive growth in total visitors and tourists arrivals in the first six to nine months of this year.

The increasing trend in visitors and tourists arrivals is expected to continue over the next three years.

Room Capacity

During the period 2006-7, there has been an increase in capacity building in the tourism industry.  In Honiara, the rebuilding of the premier hotel, Pacific Casino Hotel, which was burned down during the riot in April 2006 has been progressing well. By the

middle of 2007, the Hotel’s first wing and restaurant was reopened for normal business. The rest of the wings and adjacent facilities are expected to be completed and fully operational by the middle of 2008.

In Honiara too, the construction work for a new five star hotel at the site of the old Government House near the Solomon Kitano Mendana Hotel is progressing well. The Hotel is expected to be completed and opened for business in 2008-9. There has also been upgrading work done at the Honiara Hotel and Quality Inn in 2006-7.

In the provinces, a number of new eco-lodges and village stays have been built in Western, Malaita, Central, Renbel, and Makira during the period 2006-7.

According to statistics compiled by Solomon Islands Visitors Bureau, total accommodation establishments including hotels and motels, village stays and guesthouses increased by 10 per cent in 2007. The numbers of rooms increased by 25 per cent to 1,238 while the number of total beds increased by 9 per cent to 2,533 in 2007.

Western Province has the highest number of accommodation establishments at 37 followed by Honiara (24), Renbel (10), and Central (10) in 2007.

The increasing trend in accommodation establishments, rooms, and beds is expected to continue over the next three years.

Visitor Spend

An increase in visitors or tourists arrivals into the country will bring an increase in visitors spending on goods and services which will in turn contribute significantly to the country’s foreign exchange earnings.  

During the first six months of 2007, total visitors arrivals increased to 6,671 compared with the same period in 2006. According to the International Visitors Survey conducted in 2006-7, overseas visitors spent an average of SBD $10,000 per visitor on goods and services in the country. Based on that information, it is estimated that Solomon Islands received an average of SBD $66.7 million from visitors spending in the first six months of 2007.

Using the same information, it is estimated that Solomon Islands received an average of SBD $114.8 million from visitors spending on goods and services in the country in 2006.

The increase in the country’s foreign exchange earnings from the increase in visitors spending in the country is expected to continue over the next three years.

Solomon Islands Visitors Bureau

During the past three years, Solomon Islands Visitors Bureau has consistently carried out its role and functions as outlined under the SIVB Act 1996: to encourage, promote, and develop tourism in Solomon Islands. Under-resourced, the Visitors Bureau has focused more on marketing and promoting Solomon Islands as a viable, attractive and alternative destination for holiday travelers to the South Pacific.

The negative effects of the ethnic tension in 1999, the riot in Honiara in 2006, and the earthquake and tsunami in the Western Province in April 2007 has not made things easier for the Visitors Bureau in carrying out its marketing and promotional activities during the period.

In spite of these setbacks, the Visitors Bureau’s marketing and promotional activities has contributed positively to the growth in visitors and tourists arrivals into the country over the past four years. Since 2005, the Visitors Bureau has been able to improve its bed levies collections and control its spending compared with previous years.  The increased revenue and cost-savings has enabled the Visitors Bureau increase its marketing and promotional activities in 2006 and 2007.

Strategic Plan 2007-2010

Under its Three Year Strategic Plan 2007-2010 launched in September 2007, the Visitors Bureau aims to achieve its visitors' arrivals target of 20,000 by 2010. If achieved, this will bring estimated revenue of SBD $200 million into the country’s economy.

As part of its new direction, the Visitors Bureau will improve the country’s brand name, standardize its positioning statement, and adopt a trade name in the first year.

One of the Visitors Bureau’s key strategies to achieve its visitors' arrivals target by 2010 is to upgrade its website and manpower skills in order to increase the use of its website for marketing and promotional activities over the next three years.   The International Visitors Survey conducted in 2006-2007 revealed that internet is the most important source of information for visitors to Solomon Islands.

Similarly, the Visitors Bureau saw the need to conduct public relations campaigns in Australia in order to increase consumer awareness and improve Solomon Islands image following the negative publicity on events of the recent past. A PR company in Australia has been identified and will be carrying out PR and media campaigns in Australia in the first and second year.

Furthermore, the Visitors Bureau will continue to advertise in print, radio, and television. In 2007, it has successfully launched a TV commercial with BBC World targeting its

Asia Pacific feed of over 14 million households and nearly 600,000 hotel rooms.  It has an option to renew its BBC World TV commercial in the first year.

Moreover, the Visitors Bureau will continue to promote Solomon Islands destinations and the tourism products and services the country offers at international and regional trade, travel and holiday shows in Australia, Fiji, Asia, and Europe over the next three years.

Airline services

While the Visitors Bureau has set its visitors arrivals and revenue targets it wants to achieve by 2010, it is faced with real challenges from outside. Adequate and reliable international and domestic flight connections with major tourism source markets are very important for tourism growth in Solomon Islands.

At present, Oz Jet and Our Airline provide a total of four international flights per week to Honiara from Brisbane, Australia. In addition, Air Niugini operates two flights per week to Honiara from Port Moresby and Nadi. The current frequency of international flights to Solomon Islands appears to be adequate, however, higher airfare and tariffs, and unreliable domestic airline services is making Solomon Islands quite an unattractive destination for holiday travelers.

Nonetheless, the recent media reports that Sky Air World and Pacific Blue will be operating to Solomon Islands is increasing the prospect for Solomon Islands to become a more competitive and attractive destination for holiday travelers over the next three years.
 
Tourism Infrastructure

Poor conditions and inadequate tourism infrastructure throughout the country is another real challenge facing the Visitors Bureau in working towards achieving its visitors' arrivals and revenue targets by 2010.

At present, the Honiara International Airport is the only port of entry for international flights. While the airport runway and facilities at the Honiara International Airport are adequate, most of the airport runways and facilities in over twenty airline destinations
throughout the country including the Honiara domestic airport terminal are poorly maintained and equipped.

Because of the poor conditions, some of these runways are often closed temporarily causing cancellation or rerouting of domestic flights.

Product Development

Inadequate tourism products and services the country currently offers is another real challenge facing the Visitors Bureau in working towards achieving its visitors and revenue targets by 2010. According to the results of the International Visitors Survey conducted in 2006-7, there is unmet demand for a range of culture and nature-based activities.

At present, Solomon Islands appears to have adequate accommodation facilities to meet the current demand, however, the shortage of activities such as village tours, bush walking, traditional fishing, bird watching, traditional dances and music, kayaking, and wind surfing for visitors is noticeable in Honiara and also in the rural areas.   

During the period 2006-7, funding assistance from Government through the Department of Tourism has concentrated on the development of more accommodation facilities but very little funding assistance was directed towards the development of tourism activities for visitors.

Nonetheless, it is encouraging that the Department of Tourism has taken stock of the situation and is determined to improve the disbursement of Government funding assistance towards priority areas in 2008.

Foreign Investment

Since the introduction of the new Foreign Investment Act in 2006, Solomon Islands has received an increase in the number applications from foreign investors to set up small to medium enterprises (SMEs) in the tourism industry in 2006-7.  The new Foreign Investment Act has significantly reduced the waiting period for applications to be processed and this has attracted more foreign investment into the country during the period.

Most of the applications from foreign investors in the tourism sector that has been approved by the Foreign Investment Board are in the areas of accommodation, restaurants, transport, and associated activities.

The increase in foreign investment on SMEs in the tourism industry in Solomon Islands is expected to continue over the next three years. 

Written By:

Michael Tokuru
General Manager
Solomon Islands Visitors Bureau