Koror- Palau President Tommy Remengesau Jr. said the tourism industry is facing challenges ahead but it will stay on course its policy to moderate mass tourism in favor of high-value tourism that focuses on niche markets.
“We must stay the course and implement our vision of a high-value tourism model,” said in his State of the Republic Address delivered on Tuesday\.
Under its five-year Tourism Strategic Plan, Palau is targeting eco-based, cultural, sports, and wedding and honeymoon markets.
“If we are patient, this re-set will allow us to catch up to our governmental responsibilities to tax all tourism businesses and to ensure that our foreign investment laws are being complied with,” the president said.
Remengesau said tourist arrivals in FY2017 totaled 122,050, a decline of 16.8 percent over the previous year, with mainland China maintaining its position as Palau’s top market comprising 45.5 percent of overall arrivals.
Despite the decline in tourism arrivals, tourists are spending more in Palau.
He said there was a reduction in overall tourism revenues of about 12.3 percent in 2017, but total tourism revenue per arrival and total tourism revenue per visitor night has increased by 5.4 percent and 1.9 percent, respectively.
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“This development highlights the importance of a tourism policy that promotes high-value tourism rather than mass tourism, which is the key attraction for tourists.”
In 2015, tourist arrivals mainland China reached 91,000 in 2015 and has been steadily decreasing since that high watermark.
“Because of this unexpected rise in numbers, it was necessary to take action to bring down the number of tourists from mainland China because our over-arching tourism policy is to focus on a diversified tourism base, which allows us to remain within the carrying capacity of our natural environment,” Remenegsau said.
Palau’s economy grew in FY2014 to FY2015, owing to the recovery of tourism and developments of infrastructure activities, Remengesau said in his address.
Despite the drop in tourist arrivals in FY2016, he said the economy continued to grow more slowly by 1 percent.
In FY2017 growth is estimated at -3.7 percent, primarily due to reduced tourism activities and delayed construction activities related to supply constraints of aggregate materials.
“While the decline in construction-related activities is temporary, the reduction in tourism activities reflects a serious restructuring of our tourism industry, as we continue to emphasize market diversity and high-value tourism through the “Pristine, Paradise. Palau” brand,” Remenegsau said.
There are other factors that can be attributed to tourism numbers decline, a trend that is anticipated to continue due to the overall restructuring of the industry and tourism policy, strong competition within the Asian tourism markets, political turmoil in the European and North American tourism markets, increasing fuel prices and their impact on air services to Palau and price competition with other destination markets.
Remengesau said the “most important factor affecting visitor arrivals will continue to be the strength of the US dollar and its effect on the relative costs of other destination markets in our region.”
Palau’s heavy reliance on tourism creates important challenges as tourism can be highly susceptible to global political, economic and financial conditions,” he said.