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.,
RESTRICTED
TAR:TON 24244
ASIAN DEVELOPMENT BANK This Report has been prepared for
the exclusive use of the Bank.
TECHNICAL ASSISTANCE
TO THE
KINGDOM OF TONGA
FORA
NATIONAL TOURISM PLAN
January 1991
CURRENCY EQU I VALENTS
(As of 15 November 1990)
Currency Unit
=
Tonga Pa'anga
T$1. 00
=
US$0.771998054
US$1.00
=
T$1.295340
The Pa'anga is pegged to the Australian dollar. For the purpose of calculations
in this Report, an exchange rate of US$1.00 = T$1.30 has been used. This was the
rate prevailing when the technical assistance was formulated.
]
ABBREVIATIONS
AIDAB -
Australian International Development Assistance Bureau
EC -
European Community
GNP -
Gross National Product
MLCI -
Ministry of Labour, Commerce and Industry
NTP -
National Tourism Plan
SDP -
Sixth Development Plan
TCSP -
Tourism Council for the South Pacific
TTA -
Tonga Tourist Association
TVB -
Tonga Visitors Bureau
VFR -
Visiting Friends and Relatives
WTO -
World Tourism Organization
GLOSSARY
Tourist A temporary visitor spending at least one night in a
country, whose stay does not exceed one year (WTO
definition; synonyms: visitor, arrival).
Seat Capacity The total number of airline seats on regularly scheduled
airline services available to a certain country.
Dedicated Seats Seats allocated by an airline operator to a certain
destination, either as a result of aviation agreements,
or as part of commercial deals with travel agents.
Primary Tourism The part of the economy producing basic tourism services
(mainly accommodation).
Secondary Tourism -
The part of the economy producing optional services for
tourists (restaurants, attractions, transport, shopping).
NOTE
(i) The fiscal year (FY) of the Government ends on 30 June.
(ii) In this Report, $ refers to US dollars.
1
I. INTRODUCTION
1. In December 1989, the Government of the Kingdom of Tonga requested
advisory technical assistance to help prepare a National Tourism Plan (NTP) for
the country. A Fact-Finding Mission visited Tonga from 12 to 19 June 1990 and held
discussions with Government officials and private sector representatives. The
Mission confirmed the need for the advisory technical assistancel/ and reached
agreement on both the objectives and scope of the consultant's terms of reference,
cost estimates and the financing and implementation arrangements. The technical
assistance first appeared in ADB Business Opportunities in September 1990.
!1
II • BACKGROUND
A.
General
2. The Kingdom of Tonga, an archipelago of 171 islands of which 36 are
inhabited, is located 3,500 kilometers northeast of Sydney, Australia and 1,900
kilometers north of Auckland, the capital of New Zealand. The three main island
groups are, from south to north, Tongatapu, Ha'apai and Vava'u. Nuku'alof a, the
capital, is located on Tongatapu, the largest island in the country. The total
population amounts to about 99,500 (mid-1989 estimate). It is estimated, however,
that about 32,000 Tongans live overseas, mainly in the United States (14,000) and
New Zealand (9,000). The 1986 census counted 24,000 people as economically active
in the monetary sector, or 25.7 per cent of the total population; about ten per
cent of those were unemployed.
3. The Tongan economy, providing the population with an average per caput
GNP income of US$910,2/ has been seriously affected by declining world market
prices for its major agricultural products, notably coconut and its derivatives,
bananas, fish and vanilla. This led to a decrease in exports and larger trade
deficits as imports continued to increase. Foreign exchange remittances from
overseas Tongans have met the trade deficit to a considerable extent. Also foreign
exchange earnings from tourism have grown in importance as a means to reduce trade
imbalances and balance-of-payment deficits.
4. Tourism's contribution to the national economy is not accurately known.
Estimates made for 1987 range from T$8.0 million ($6.2 million) by the World
Tourism Organization (WTO), to T$10.6 million (US$8.2 million) by the Tourism
Council of the South Pacific (TCSP)3/ and T$14.6 (US$11.2 million) by the Bank of
Tonga. For 1989, the Ministry of Finance estimated the foreign exchange earnings
to amount to T$11.5 million ($8.8 million). Comparing these figures with the 1987
1/ Under TA No. 1298-TON: Tourism Development, for $65,000, approved on 15 May
1990, suggestions for Terms of Reference for a possible National Tourism Plan
had been drafted.
2/ World Bank, September 1990.
3/ In a regional context, Tonga is a member of TCSP.
This EEC-sponsored
organization initiates, and where possible, coordinates tourism development
efforts for all its South Pacific member countries. Most overseas
representations of the South Pacific countries in the major travel markets
are financed with TCSP funds.
2
total export earnings (including re-exports) of T$9.6 million ($7.4 million), it
can be said that tourism as a source of foreign exchange is of major importance
to the economy of the country.
5. Other direct and indirect tourism benefits to the Tongan economy are
quite significant as well, More than 1,600 Tongans (about 7 per cent of the
economically active population) are estimated to have been employed directly in
the tourism industry. Further, the Government has estimated that: (i) for each
dollar spent by a tourist, an additional income of 42 cents was generated elsewhere
in the economy; (ii) for each job created in the accommodation field, 1.42
additional jobs were created elsewhere; and (iii) each tourist dollar would yield
30 cents in Government revenue, It was also estimated that between 10 per cent
and 15 per cent of the Government's estimated revenue for FY 1987/88 of T$29.4 fl
million ($22.6 million) was directly attributable to tourism.
6. Tourism revenues are derived mainly from air visitors, who numbered about
21,000 in 1989. Excluding cruise ship visitors (which unrealistically inflate
tourism numbers, but stay only for very brief periods on shore and spend limited
amounts only), tourist traffic has crept slowly upwards in the past two decades.
In 1969, only 3,300 tourists arrived. For the years between 1985 and 1989, growth
in air visitors averaged about 10 per cent a year.
7. At present, there are about 530 rooms of varying configurations and
standards available in 37 hotels and guesthouses for tourist use in Tonga. A
unique feature of the Tongan tourism industry is the almost total local ownership
of the accommodation establishments. This and the fragmented nature of the
accommodation field probably has increased the accrual of local economic benefits.
However, the absence of large-scale resorts capable of providing a promotional
focus and feeding smaller resorts has been a deterrent to more rapid growth,
utilizing the considerable tourism potential in the country.
8. Due to the relatively high incidence of small scale accommodation
attractive to young back-packers, who tend to have long length of stays (more than
two weeks), the leakage of foreign exchange into imports for tourism is relatively
small, ranging from 3 per cent for guesthouses to 46 per cent in regional hotels.
For the larger, foreign-owned and operated hotels and resorts catering to more
wealthy tourists in other South Pacific countries, imports typically absorb 60 to
80 per cent of all foreign exchange spent by tourists.1/
9, Historically, the USA, Australia and New Zealand have been the major
source markets, but their combined share of the market has declined somewhat, from
63 per cent in 1965, to 60 per cent in 1985 and 54 per cent in 1989. Increases
in arrival numbers from Europe and Asia (mainly Japan) have compensated for this
decline. As the numbers for individual countries are small or not available, and
f1uctuate widely from year to year, conclusions about arrival trends from other
markets are not warranted. The majority of all visitors arrive at Fua'amotu
International Airport, Tongatapu, recently upgraded, with Japanese assistance, to
receive B-747s. This airport is served by four international carriers, which
provide a total of 1,332 in-bound seats per week and link Tonga with Honolulu,
Auckland, Sydney and Nadi (Fiji).
j/ See, for instance: Dwyer, L. "Import Content of Tourist Hotel Food and
Beverage Purchases in the South Pacific", 1988.
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