With fewer than 50,000 visitors travelling to Papua New Guinea each year for leisure, according to figures from the PNG Tourism Promotion Authority (TPA), the country is far from a mainstream tourism destination. The sector remains largely undeveloped and is a relatively minor contributor to the overall economy. PNG is a challenging destination to travel to and within.
Yet the more intrepid traveller who is willing to overcome some of the associated concerns and costs will be rewarded with a sense of adventure and authenticity that is difficult to match elsewhere. PNG boasts a diversity of attractions bundled together. And while not catering to the mass holiday market, enthusiasts in pursuit of any combination of distinct local cultures, history from the Second World War, unique flora and fauna, and some of the world’s best hiking, surfing and dive spots will not leave disappointed.
Overall Health
PNG’s economy, buoyed by new hydrocarbons projects, is currently attracting significant inbound investment and a foreign business presence. As a result, for the time being, the tourism sector is dominated by corporate travel, but this is set to expand, with the economy pegged to grow in excess of 15% in 2015 and around 5% a year thereafter.
Regional and international exposure should be enhanced as a result of the Pacific Games, which took place in July, followed by the Asia-Pacific Economic Cooperation (APEC) summit in 2018, providing a business case for allocating capital expenditure on hospitality infrastructure and travel services that are currently undersupplied. In time, as improved infrastructure and competition lead to reduced costs, and government promotion efforts show signs of becoming more coordinated, the inbound leisure segment should expand. A burgeoning cruise industry is also providing a platform for short-haul visitors to arrive onshore in more remote parts of the country.
Arrival Figures
Of the 182,188 inbound visitors recorded by the TPA in 2013, less than a quarter, or 41,000, were categorised as leisure travellers. This reflects the trend of business travel in the country, which has more than tripled since 2002, outpacing the growth in visitors coming for leisure purposes, which has only increased by around 10,000 people over the past five years. The predominance of visitors coming for business and employment purposes is also reflected in the demographics of those arriving in the country. In 2013, 82.3% of all arrivals were recorded by the TPA as being in the working age group of 20-59 years, whereas only 4.2% were under 20 years and 13.5% were over 60. There is also a pronounced gender imbalance, with 78% of arrivals being men.
According to the World Tourism & Travel Council (WTTC), international tourist arrivals for 2015 are expected to fall to 172,000, with the drop-off largely due to the fact that many large-scale infrastructure and extractive sector projects, such as the PNG liquefied natural gas (LNG) plant, have been reliant on expatriate labour but are now transitioning from the construction to operational phases. However, by 2025 the WTTC projects that foreign arrivals will reach 238,000, which would mark an increase of 2.1% per annum. The forecast is an indication that economic activity, despite an intermediate lull, is set to pick up.
Economic Contribution
Also expected to increase is the contribution of the sector to the overall economy. According to the WTTC, in 2014 the direct contribution of travel and tourism was just $107.8m, or 0.7% of GDP, placing PNG 164th out of the 184 countries surveyed, far below the average contribution for the Asia Pacific region of $21.7bn. The sector’s total contribution – direct and indirect – to the economy was pegged at $340.1m in 2014, equal to 2.1% of GDP. Over the 10-year period between 2015 and 2025, the sector’s total economic contribution is expected to increase by 5.3% per annum, to reach $608.4m. According to the South Pacific Tourism Organisation, PNG, despite being the region’s largest country in terms of both population and landmass, had just a 10.4% market share of tourism traffic. Fiji is the undisputed leader in tourism, hosting 41.3% of all visitors to the region.
Employment
The sector’s role in national employment is also minimal, having accounted for just 16,000 jobs, or 0.5% of the total workforce, in 2014. And while this is set to fall by 8.2% in 2015 to 15,000, or 0.5% of jobs in the country, it should rise by 3.7% every year over the next 10 years to total 21,000 jobs. However, the amount of investment received was more significant in 2014 at PGK304m ($115.03m), which was a 7.5% jump over PGK282.8m ($107.01m) in 2013.
Business & Leisure
Furthermore, while business visitors outnumber those in the leisure segment, travel spending by the later grouping made up 67.8% of direct travel and tourism GDP in 2014, or PGK496.8m ($187.99m), compared to just PGK242.3m ($91.69m) spent by business travellers. And the WTTC expects the pace of spending growth by both segments to be roughly the same at 5.6% and 5.5% per annum for leisure and business, respectively, leading up to 2025.
“With more hotels coming on stream in Port Moresby, I think that competition will be increasingly around meetings, incentives, conferencing, exhibitions tourism, which hopefully will spark interest to visit the rest of the country as well,” Alex Wilson, general manager at the Grand Papua, told OBG.
Not Lacking In Assets
That tourism has been a fledging sector and has had a minimal impact on the economy does not mean the country lacks marketable attributes and advantages to be exploited. To date, the government’s economic development efforts have focused mainly on extracting value from domestic mining and petroleum reserves, which has translated into huge revenues and immediate returns for the Treasury. Unlocking tourism assets, however, arguably requires more coordinated planning and time to bear fruit. “When you are a developing country like PNG, you understandably lack the luxury of giving too much thought as to which sectors need to be driven, and work with what you have. And in PNG’s case, what they have at the moment is a strong extractive resource base,” Gavin Murray, the International Finance Corporation’s country manager for Australia, New Zealand, Timor-Leste, PNG and the Pacific Islands, told OBG.
Looking forward, because the country’s natural and cultural resources have remained largely intact, PNG is placed in a strong position to grow its tourism sector, containing a raw beauty and cultural heritage that is yet to be discovered more widely and that holds appeal for those in pursuit of adventure.
Developing a niche offering also comes with the advantage of being significantly cheaper in terms of required infrastructure and related costs. It is also less taxing on the environment in the long term and, therefore, more sustainable and ultimately more profitable, as service and hospitality providers are able to operate with higher margins.
Biodiversity
The World Wildlife Fund estimates that PNG is home to between 15,000 and 20,000 species of plant life, 80% of which are unique to the country. It is one of the world’s true biodiversity hotspots, with a wide variety of flora and fauna species that are rarely found elsewhere. The country holds unique appeal for birdwatchers, who can find 38 of the 43 known species of birds of paradise within its borders. Canoeists, kayakers and fishing aficionados can take advantage of the country’s substantial river system, while hiking enthusiasts can partake in some of the world’s most famous and challenging trails, including the highly popular 96-km Kokoda Track that traverses both jungle terrain and many historic Second World War battle sites.
PNG’s territorial landmass is made up of 600 islands, and one can find unspoiled beaches that are warm enough for swimming year round. The country’s shoreline is said to contain twice the number of marine species found in the Red Sea and five times the number found in the Caribbean. In addition to a surplus of marine life, divers can navigate around a number of Second World War naval and aircraft wrecks.
History & Culture
PNG formed part of the British empire in the late 19th century and was administered colonial past can be found in the capital, Port Moresby, as well as on Samarai Island. The country served as a major battleground for the allied forces’ campaigns against the Japanese during the Second World War, and many Australians and New Zealanders in particular visit the country’s battle and memorial sites.
As with its natural attractions, PNG’s cultural offerings are also distinct, and local communities continue to preserve their traditional cultural practices. In excess of 800 languages are spoken by the country’s indigenous social groups, many of which were without outside contact until the 20th century and have maintained their customs and way of life. A common option for tourists looking to experience traditional cultures is to attend one of the many festivals and cultural shows that take place throughout the year. A Singsing is the colloquial term given to a meeting of tribes or villages, with the occasion calling for a peaceful gathering to put tribal differences aside and showcase cultural distinctness. Sing-sings are considered to be relatively authentic, as the intended audience is primarily local rather than an event being staged for touristic consumption. Village homestays have become another popular way to gain access to local tribes. Global guidebook publisher Lonely Planet even listed a PNG village homestay as being among the 26 “hottest” tourist experiences for 2015.
Costs
While PNG has plenty to offer business and adventure tourists, a major drawback for the leisure segment as compared to other Asian holiday destinations such as Thailand and Indonesia is the cost and difficulty associated with visiting the country. Most goods are imported by air or sea, telecommunications is expensive and many firms are forced to provide their own power generation, resulting in higher costs for the end-consumer. Lack of competition has also led to fewer options, as well as a demand and supply imbalance for accommodation and flights.
Better hotels in Port Moresby can run from $200 to $300 per night, and establishments in some of the ore remote cities can be more expensive. Singapore is one of the few Asian aviation hubs that offers direct flights to the capital. The national carrier, Air Niugini, is the only airline servicing the route, and round trip fares for the 6.5-hour flight cost around $1600. Domestic flights are also expensive. Port Moresby to Lae, a 45-minute journey, costs PGK667 ($252) round trip. Port Moresby to Mount Hagen costs PGK825 ($312), while Port Moresby to Buka is PGK1156 ($437).
Lonely Planet advises budget travellers to anticipate spending around PGK300 ($113.52) per day in PNG, compared to $30.60 in Thailand, $30 in Malaysia and $25 in Indonesia. Although this is largely based on costs for Port Moresby. Meanwhile, other guidebooks and travel agencies warn against independent and budget travel entirely, advising visitors to move around “expedition” style with experienced operators as inland travel requires professional logistics coordination, as well as security in some regions. The high costs associated with staying in PNG can also be seen in the per diem pay that the US Department of State allocates for its posted employees. Those stationed in PNG are provided $504 in Port Moresby and $323 outside of the capital. That compares with $219 in Suva, Fiji, $110 in the Solomon Islands, $362 in Jakarta, $408 in Tokyo and $237 in Manila.
Aviation Access
Many of the country’s attractions are difficult to access overland due to the lack of roads and a challenging mountainous terrain, placing significant importance on airport infrastructure and an efficient domestic route network. According to the CAPA Centre for Aviation, runways in PNG are often poorly maintained, terminals are not up to standard and on-time performance is low, creating a strong impetus to upgrade facilities and improve operations. The Civil Aviation Safety Authority owns and operates 21 airports across the country, with Port Moresby’s Jacksons International Airport acting as the main international gateway. The capital’s airport is having its main terminal extended in preparation for the 2015 South Pacific Games, and there are further plans to link its two terminals with a 35,000-sq-metre, three-level building by the APEC summit in 2018.
With no road links between Port Moresby and other major cities, authorities would like to see airports outside the capital handle more international traffic. To this end, Mount Hagen’s Kagamuga Airport is expected to open in the near future, with Kimbe’s Hoskins Airport also currently being redeveloped.
Of the 245,844 foreign visitors to PNG in 2013, 96%, or 235,616, arrived in Port Moresby by air. While the capital acts as the main commercial and government centre, it has a somewhat gritty and unsavoury reputation. The TPA has stated that it would ideally like for leisure visitors to be able to bypass the capital entirely and enter the country directly through some of the safer and more tourist-friendly areas, such as New Ireland, East New Britain and Milne Bay.
Lae, the main industrial centre, is also receiving upgrades to its airport, Nadzab, to create a secondary embarkation point into PNG. Short-haul flights have launched between Cairns, Australia, and Alotau, the capital of Milne Bay Province, and talks are also under way to begin flights between the Solomon Islands and the newly re-opened Aropa Airport at Kieta, Bougainville. Adding new routes involves more than just building infrastructure and arranging bilateral agreements, as Customs, immigration and security handling operations also need improvement.
Airline Competition
Flights into and within the country are expensive versus island nations nearby, an issue that CAPA attributes to a lack of competition and protectionist measures. In recent years, the nation’s flag carrier, Air Niugini, has seen its monopoly over domestic routes removed, and new private entrants, such as Airlines PNG, have entered the market to push down fares. Liberalisation of international routes has not kept pace, and while Virgin Australia Airlines, formerly Virgin Blue, and Qantas Airways compete with the national carrier in servicing the Australian market, Air Niugini is the lone airline trafficking routes to key Asian markets such as Singapore, Malaysia, Philippines, Japan, Hong Kong, Fiji and the Solomon Islands. Whenever a foreign airline has added a route into PNG – a recent example being Qantas’s launching of services between Cairns and Port Moresby – fares have been shown to reduce. And both Philippines Airlines and an airline from the Solomon Islands have shown interest in gaining access to the country.
In the meantime, Air Niugini is looking to expand its reach into other Melanesian countries from 2015 onwards. In addition, during talks with Chinese President Xi Jinping, PNG’s prime minister, Peter O’Neill, discussed the idea of the airline launching a direct service to Beijing. The state-owned carrier is also undergoing a major restructuring, under which its subsidiary Link PNG, which was launched in late 2014, will operate as a domestic low-cost carrier. Although Link PNG will conduct business under a community service obligation by operating some less-profitable routes to remote provinces of the country, private investors will also be involved, and there are plans to make some 50% of the subsidiary’s shares available to them.
A Place To Stay
As is the case with flights, a shortage of hotel stock results in accommodation costs in PNG veering towards the high side. Occupancy rates, particularly in Port Moresby, tend to be around 80-90%, and an up-surge in business and diplomatic travel to the capital means that good quality hotel rooms are often in short supply and that visitors are advised to book well in advance.
In addition, aside from the InterContinental Hotels Group, which has three properties in Port Moresby, the presence of major hotel chains is limited, meaning international visitors who are not familiar with local hotel groups can be uncertain about the property they are booking. Measures to address the issue have been taken and in 2013 a national grading and classification system, which is known as the Accommodation Accreditation Scheme, was introduced.
Due to the accommodation shortfall and the lucrative market opportunity this presents, refurbishments and new hotel developments are in the works throughout the country. As new properties come on-line and the growth in demand for hotel rooms slows down temporarily due to the construction phase of the PNG LNG project coming to an end, prices should drop, but are likely still a ways from normalising as analysts believe surplus demand will remain in the country for some time, especially for high-standard accommodation in the country’s capital. “There is need for more high-end facilities catering for business travellers in Port Moresby,” Pauline Chua, hotel manager at Laguna Hotel, told OBG. Though she explained that expansion of the hospitality sector should prove beneficial.
A burgeoning cruise industry, which allows passengers to arrive by and lodge on ship, is proving a creative way to circumvent the shortfall in flights and accommodation within the country, and a number of leading global cruise operators are adding PNG to their itineraries (see analysis).
Reputation Management
The country also suffers from something of an image problem. Whether deserved, as crime levels, especially in urban areas, are undeniably high and large gatherings and ethnic disputes have been known to turn violent, or whether down to overly negative reporting and overzealous travel advisories from the governments of some key source markets, the fact remains that PNG suffers from a poor reputation when it comes to personal safety. As much as the tourism authorities invest in branding and public relations to offset some of the negative associations, isolated events – such as the September 2013 attack and kidnapping of Australian and New Zealand hikers – can be a considerable setback for the country, undermining these efforts and negating any goodwill earned.
As mentioned previously, most travel guides advise visitors against independent travel, especially lone female travellers and those in the capital and certain parts of the highlands region. Visitors are encouraged to instead see the country through a packaged tour. However, not only does the need to travel with an operator increase the costs of a visit, making costconscious travel a challenge, but it also contributes to a tendency for the independent-oriented backpacker segment, which is so prevalent throughout the Asia-Pacific, to shy away.
Government Support
Since PNG gained independence in 1975, tourism has largely been overlooked by successive governments, which have instead focused on resource extraction. As the country matures and the initial wave of excitement over the commodity boom wanes, the value of tourism is being realised for its ability to provide clean and sustainable counter-cyclical earnings when commodity prices drop.
The government devised the PNG Tourism Master Plan 2007-17 aims to double tourist numbers every five years. In addition to visitor growth, the plan also stresses the importance of ensuring that the sector is developed in a more sustainable and integrated manner, especially as the development of other national industries like mining, logging and fishing can have a harmful effect on some of the natural and cultural tourism assets that the country is looking to maintain and protect. While visitor growth is on pace to meet the targets set out, industry participants have told OBG that corruption and inefficiencies on the part of the government have been known to hamper sector development. In early 2015 Boka Kondra, the minister of tourism, was among several government officials that were found guilty of misusing public funds, with a tribunal set for a later date to decide what kind of disciplinary action would be enforced.
Visa Scheme
PNG’s visa regime provides a working example of how in recent years the country has implemented measures to support the sector, although it still has a ways to go in matching tourism hotspots such as Thailand and Malaysia in terms of liberalisation and open market access. PNG now offers a visa-on-arrival scheme for many nationalities. However, a fee of PGK100 ($38) is charged, which can be reduced to PGK75 ($28) if the visa is attained in advance before one enters the country. The time and administrative effort associated with purchasing the visa are not likely to be a major impediment, and while this is a fairly low barrier, all else being equal, travellers with many options may choose a destination with more simple entry requirements. The visa regime can also be subject to sudden changes, adding an element of uncertainty for travellers. For instance, in February 2014 Australians were removed from the list of nationalities eligible for a visa on arrival as a reciprocal measure, as the Australian government does not afford PNG nationals similar status. However, the government had previously said the ban only applied “to anyone who is not a tourist”, adding to the confusion.
Government Efforts
The responsibility of promoting tourism falls to the TPA, an entity created in 1993. As part of its mandate it also offers advice to the government on tourism policy, provides assistance with the development of sector products and infrastructure, advises investors interested in the industry and disseminates data on sector performance.
The body has been acknowledged for having made significant strides in fostering international awareness, something that was very limited at the time of its inception. In 2013 the TPA won the Pacific Asia Travel Association’s Gold Award for its “What Tribe Are You?” advertising campaign.
The authority has opened offices in key markets, including Tokyo, Los Angeles, Sydney, Munich and the UK. In addition, it has also created a fairly strong online presence, launching a trade website specifically aimed at educating and aiding overseas travel agents that are looking to sell packages to the country.
At a federal level, since 2006, the government has unveiled a number of industry-specific investment incentives, ranging from tariff and duty exemptions for hospitality-related items to double tax deductions for marketing expenses. There is currently a proposed tax package being negotiated for new large-scale investments in tourism that would incorporate a 10-year tax concession into the legal framework.
Centre Of Attention
As part of a national plan, the government is aiming to develop four distinct economic centres across PNG, each of which will focus on an activity aligned with its comparative advantages. Port Moresby is set to continue its role as the country’s financial and administrative nerve centre. Lae, PNG’s second-largest city, is to be the focal point for manufacturing, while Mount Hagen will serve as the centre for agriculture.
When it comes to tourism, Kokopo and Rabaul, the capital and former capital of East New Britain Province, are set to emerge as major centres. The region, which contains war cemeteries and museums, a volcano observatory, diving sites, festivals and cultural activities, was selected due to the variety and strength of its tourism offering, as well as its reputation for safety and hospitality. The aforementioned twice-weekly flight service launched by Air Niugini in May 2014 between Rabaul and Cairns, Australia, is set to boost direct international connectivity from the country’s largest source market. Meanwhile, the provincial government has provided PGK1.5m ($567,600) to the TPA to promote and expand tourism to the province over the next three years.
Outlook
Although PNG has recorded impressive growth in visitor numbers, which have tripled over the past decade, the figures can be deceiving. The initial base was quite low, and most of the growth can be attributed to a rise in business travel that has been part and parcel of a broader economic expansion brought about by a resources boom and the accompanying increase in employment opportunities. Despite an abundance of marketable cultural and natural attractions, PNG is far from a recognised leisure destination internationally, and the tourism industry, much like the country itself, is still very much in its infancy.
If the country is to carve out a niche as a viable tourism destination, the very fact that it offers something far from conventional is perhaps the main attribute to leverage for generating higher and more sustainable returns. Though logistical and capacity constraints will likely prevent PNG from emerging as a mass tourism player, this is not the authorities’ ultimate objective, as its very appeal lies in the fact that it offers an authentic, more natural experience.
Slowly but surely, the cost of travel to the country is falling as competition heats up among utilities and telecommunications providers, and as demand for hotels and flights cools down with the PNG LNG project drawing to completion. The government, meanwhile, is allocating more spending and delivering better on infrastructure projects, a number of which are focused on transport and should help to bolster connectivity. At the same time, a range of tax and duty incentives are being made eligible to foreign and local investors in large-scale tourism projects. In all, tourism, after years of neglect, has been identified as a priority by the government for the positive impact it can have on inclusive and sustainable economic growth.
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