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Modelling Fiji’s Tourism Arrivals

The tourism industry plays an important role in the Fiji­an economy and constitutes activities in a number of sectors including agriculture, transport, wholesale and retail, accommoda­tion and food services and
22 Sep 2018 11:04
Modelling Fiji’s Tourism Arrivals
Reserve Bank of Fiji economist Isoa Wainiqolo, Reserve Bank of Fiji economist Seron Shivanjali

The tourism industry plays an important role in the Fiji­an economy and constitutes activities in a number of sectors including agriculture, transport, wholesale and retail, accommoda­tion and food services and arts, entertainment and recreation.

The industry contributes around 40 per cent to Fiji’s Gross Domes­tic Product and 37 per cent of total employment.

Over the years, the tourism in­dustry has grown to become Fiji’s number one foreign exchange earner, overtaking earnings from our traditional industries such as sugar, fisheries, garments and for­estry.

In 2017 tourism earnings amount­ed to $1,924.3 million, – an increase of 5.5 per cent compared to 2016 – and are expected to reach the $2 billion mark in 2018.

With the growing role and im­portance of tourism in the Fijian economy, it is vital to pay more at­tention to factors that affect visitor arrivals in Fiji, not only from the two major markets of Australia and New Zealand but also from other key markets.

As such, Reserve Bank of Fiji’s Economists Isoa Wainiqolo and Seron Shivanjali recently com­pleted a working paper titled Modelling Fiji’s Tourism Arrivals.

The paper utilised econometric modelling to estimate the deter­minants of tourist arrivals from Fiji’s major short haul (Australia and New Zealand) and long haul (United States (US), Canada, Ja­pan, United Kingdom (UK), Con­tinental Europe and South Korea) tourism source markets.

Combined, these markets account for approximately 85 per cent of to­tal tourist arrivals in the country.

The paper also benefitted greatly from expert comments provided by Dr Jen-Je Su and Dr Parmen­dra Sharma of Griffith University, Australia and Iris Claus from the Pacific Financial Technical Assis­tance Centre, Suva.

Findings

The key findings and recommen­dations of the paper include the following: –

  • Most long haul tourism source markets are price sensitive.

This suggests that tourism au­thorities must monitor price com­petitiveness in Fiji, and ensure that we do not out-price Fiji as a destination.

Maintaining competitiveness is critical given the fact that in this era of technological advancement, searching and booking for holi­days and comparing prices and reviews has become much easier.

  • Results also suggest that tour­ists from US and UK markets do not come solely to visit Fiji but also our neighbouring countries of Australia and New Zealand. Hence, increasing collaboration among various tourism stakehold­ers in Australia, New Zealand and Fiji as well as offering multi-coun­try tour packages for international long haul routes will be beneficial to Fiji.
  • With the exception of Japan, all other source countries were found to be income sensitive.

Monitor

This means that policy makers in the tourism industry should con­tinuously monitor the business cycle or activities in the source markets as it impacts visitor arriv­als into Fiji.

Closer source market surveil­lance and research for develop­ment of flexible and efficient promotional tools, additional mar­keting activities and an expansion of source markets are necessary, in order to ensure the sustainabil­ity of the tourism industry going forward.

The study provides a basis for further studies on the tourism industry and also proposes addi­tional areas for future research in this topic.

The RBF working paper can be viewed from the following link:-

https://www.rbf.gov.fj/Publica­tions-(1)/Working-Papers/Reserve-Bank-of-Fiji-Working-Papers.aspx

Source: Reserve Bank of Fiji

Feedback: maraia.vula@fijisun.com.fj

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