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Challenges To Watch. Especially Contribution

Challenges To Watch. Especially Contribution
John Ross
May 20
11:00 2017

 

There is excitement in the air in the west because there is so much activity in the building and construction industry and the demand for workers is huge. This activity is generated basically by tourism industry related construction, reservation and development projects. Almost anyone who wants a job can get a job and contractors are scouring the bushes for more men.

As a consequence of this activity the average wage has gone up considerably and there are stories of builders and contractors who are working on projects in the outer islands roaming around mainland building sites and offering really interesting deals for anyone who is prepared to move off shore.

There are a lot of takers as the benefits, such as free accommodation and meals, add to the value of the deal.

The mainland contractors are retaliating with some degree of success.

 

Construction Equipment

Another issue is the availability of construction equipment.

There is such a dearth of equipment that even machines, like excavators, which were abandoned as not worth repairing a year ago are suddenly with mechanics and on offer for sale of lease.

No matter what the age, these are being snapped up simply because there are no other options.

A number of people are buying second hand equipment out of Australia and New Zealand and shipping it in on pre-sale orders.

Operators for this equipment remain a real issue and in a number of cases executives have been dragged into operating on site.

Another issue that has not yet hit the building industry but will become a problem as more projects come on line  and the demand for things on short notice grows rapidly will be shortages.

Already, there are delays with some lines that are imported from offshore but there are currently alternatives available.

Many of the prices have risen on the growth in demand and contractors who have signed fixed rate contracts are now concerned about the viability of the work they need to do.

There are also a number of people who are placing orders now for future delivery dates and so far most suppliers are accepting these, but there is doubt in the industry that these suppliers will honour the agreement and deliver on due date.

There is no legal reason why they need to do so, as a local purchase order is not a contract and it will be hard for the suppliers to resist the temptation to sell when it arrives, especially as the price will on many cases, be higher than that on the LPO.

A number of large contractors are also buying and importing from overseas, or considering doing so.

In the long term this is not good for the local economy, but may well be necessary.

Already there is evidence of contractors supplying fill to civil sites diverting deliveries to other sites with a later contract at a higher price, creating issues for the developers.

The food retailers and stores in a number of non-essential retail segments in the west are reporting that generally business in not as good as it was.

Taxi drivers, a good barometer of the discretionary spending of the country, also say that business is not as good as it had been.

 

Hotel and Resort business

There are complaints amongst the hotel and resort operators that business is down, but one of the best indicators of room occupancy rates, the commercial laundries, does not support the reduced level of occupancy cries.

The tourist numbers out of Australia, Fiji’s leading source market, have been in very slow but steady decline over the past year or so and this is an area of concern for the operators, but that fall is somewhat balanced by significant increases in new or developing source markets such as China, India and Singapore.

The real problem in the hospitality industry is not so much absolute numbers but yield (the profit per person) which has been an issue for quite some time.

The reduction in yield has its causes in the marketing that has taken place over the last two years or so. With the negative impact on the industry due to events outside their control, such as Cyclone Winston, the odd flood and economic constriction in source markets, particularly in Australia, have called for immediate action to boost short-term numbers.

To achieve this, the industry in Fiji decided that the price had to be cut to entice greater numbers and they did this quite successfully by seeking help from the national airline in reducing fares and also reduced their own room rates, thus creating a very attractive package rate.

However, it was inevitable that the category of tourist attracted by these activities were the lower end of the market and their spending in Fiji led to reduced dollars per individual.

To recover some (if not all) of the money they lost because of the room rate reduction, the industry increased the food and beverage costs and worked hard to ensure that guests stayed mostly in the resort.

They were somewhat successful in this, which led to reduced business for the independent restaurants, cafes and bars.

The hardest hit were the Denarau operators, some of whom are reporting business down by thirty percent’

These issues are what you would expect in a rapidly growing sector of the economy and the government has taken steps to minimise the problems associated with such growth but it will still need careful and constant management until all of the factors settle down.

While there is clearly a boom happening in the tourism industry in Fiji, the benefits are not evenly delivered and there is concern in a number of areas, particularly the Australian market, but at this stage there appears to be no real answers are being put forward.

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"I wouldn't want to miss this opportunity. I want to make sure that I am by her side when my first child is born."
Jasa Veremalua
Fiji Rugby 7s rep
May 2017
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