Palau builds foundation to attract new markets
Koror — Palau has the makings to become a top world tourist destination. That’s the view being promoted by its president, Tommy Remengesau Jr. through both rhetoric and government policy. While other countries squander their resources, Palau is committed to protecting theirs. While others focus on profit rather than sustainability, the island nation wants to attract tourists with high spending power who also back sustaining its environment.
"It is important to remember that our high-value brand is about showcasing the beauty of our natural environment, of experiencing the unspoiled beauty of our lands and our pristine seas and our rich cultural heritage,” Remengesau said in his State of the Republic Address on April 17.
Palau has identified the niche markets it seeks to tap to suit its projected new brand as a high-end destination. Under its five-year Tourism Strategic Plan, Palau is targeting eco-based, cultural, sports, and wedding and honeymoon markets. Last month, Remengesau signed an amendment to Palau’s foreign investment law to require quality investment and quality tourism facilities. The new law offers tax credits of up to 40 percent to foreign investors that will develop 5-star lodging facilities — worth at least $5 million — to support “high-end, high-value, low-impact tourism.”
Palau is a diving mecca. Divers who have repeatedly visited Palau will tell you that most dive sites in the island-nation are world- class and unique.Palau is usually part of the sailing itineraries of luxurious yachts owned by billionaires who enjoy the pristine beach and other water activities.
While diving tours and snorkeling will always be Palau’s main attractions, the country is ready to further develop other potential tourism resources. “It is about realizing more for each dollar spent, not just through the various niche products offered but also through quality locally produced products from the food visitors consume to the gifts they bring back home. It is not about limiting Palau to only those that can afford to come,” 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. 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, according to Renengesau’s State of the Republic address.“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 from mainland China reached 91,000 in 2015 and have been steadily decreasing since that high watermark. Palau’s economy grew from 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.
Ngiraiblas Tmetuchl, Palau Visitors’ Authority Chairman of the Board in earlier interviews echoed the president on a potential tourism reset. “Diving is the number one attraction we have in Palau. So divers around the world know Palau. What PVA has been doing in the last few years is to try diversifying the products, because we continuously depend on diving,” he said.
He said PVA is working with state governments and non-government organizations to explore other attractive markets for tourists and develop other states as well for tourism. “We are focusing on quality. We’re trying to diversify our products, so we can spread the tourism around. We have a big island, but everybody’s concentrated on Koror. We have to figure out a way to spread it,” Tmetuchl said.
Palau will not only try to attract divers, but also look into providing tourists with nature-based activities. Tmetuchl said PVA is working with the Japan-based Ebiil Society to attract tourists to come to Palau and study Palauan fishing techniques, medicine and stargazing.
Tmetuchl said Palau is trying to create a unique product. “Tourism is a big market. We get everything in Palau. We get people from mega-yachters to backpackers. It’s a big spectrum,” he said.
But as has been articulated by the president, more tourists don't always seem better. “We are not mandated to go out and just solicit anybody. We’re trying to create a unique product,” he said.
In the 2017, Private Sector Assessment for Palau: Policies for Sustainable Growth report, Palau was warned that the rapid growth of low-end tourism could damage Palau ’s natural environment and World Heritage sites, which are pivotal to maintaining tourism as the country’s leading source of revenue. “To sustain economic growth and build on the success of earlier business environment reforms, Palau should seek to reduce overall tourist numbers while increasing individual tourist spending,” the report states.
Minister of Natural Resources, Tourism and Environment, Umiich Sengebau agrees with the policy of diversifying Palau’s products. “I think there’s a lot of potential for Babeldaob, the big island, to really offer a unique experience for the tourists that are coming in, but not necessarily divers,” he said, emphasizing Palau should not sacrifice its environment to big bucks. “Palau takes pride in actually protecting and conserving and managing its environment. And so we have to always remember that we should not let pure pursuit of getting our revenues up wreck our environment. We depend on our environment for our livelihoods that also the tourists come here to see. So we have to make sure that we always put that at the forefront.
The challenge, however, is getting all at the same table—the 16 states—to look into their attractions with the help of the national government. "What we’re trying to do is develop a plan, a one-stop shop where the PVA essentially is given the right to market and manage the tour sites. What we’re trying to do is get everybody to the same table,” Tmetuchl said. “So when we do grow, everybody gets to benefit and we can manage it properly. That’s our strategy, to get everybody to talk about tourism as a whole. There’s a lot of bureaucracy and we really don’t have the authority to tell them what to do. That’s the stage we’re at now."