Does Tourism Have a Future in the Pacific Islands?

The COVID-19 pandemic has hit Pacific island economies hard, especially those that rely highly on international tourism. Photo credit: ADB.

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A study of four possible futures arising from COVID-19 and climate change impacts offers policy makers guideposts for rebuilding tourism.

Introduction

Pacific island economies are highly dependent on tourism. This is fine during times of boom, but then COVID-19 came along. The closure of borders, hotels, restaurants, and visitor attractions due to the pandemic resulted in declining revenues and rising unemployment.

In 2019, Pacific island tourism generated $6.29 billion in receipts and 69,443 jobs; it was approximately 20% of the gross domestic product (GDP). COVID-19 brought these all to a halt. But as the world emerges from COVID-19 (or does it?), what is the future of the tourism industry in the Pacific?

A 2021 report by the Asian Development Bank’s (ADB) Pacific Private Sector Development Initiative (PSDI), Looking Forward Vol 1: Evaluating the Challenges for Pacific Tourism after COVID-19, provides a comprehensive analysis of the impact of COVID-19 and climate change on ADB’s 14 Pacific developing member countries.[1] It concludes that the only way forward is a sustainable and regenerative future in which the islands would not recover to 2019 levels until 2023 at the earliest. Another recent study by ADB follows a similar pathway in considering sustainable tourism decisions in a post-pandemic world, which focuses on the principle of “Build Back Better.”

But what if COVID-19 lingered on throughout this decade, or the reports’ version of a sustainable future was not the future that occurred? What if the countries want a return to tourism pre-COVID-19 rather than a future imposed by others? What if tourism did not have a future because a combination of factors, such as climate change, COVID-19, and economics, made it unsustainable?

At the heart of futures studies are the concept of plurality (Dator, 2009), which considers a number of alternative futures rather than predicting one future. This is the purpose of this paper—to consider a range of alternative futures to help governments make strategic policy decisions on investing.

What is the future of Pacific island tourism? We address this question by constructing four scenarios set in 2030. Each scenario represents an alternative future and incorporates an economic assessment, a strategic to-do list, and trends. The purpose of the scenarios is to paint a picture of the future of tourism and for users to work with the scenarios to find answers and actions.

Scenario Framework

To create a series of futures, we use a scenario matrix to provide context or a framework to understand the scenarios. The development of the scenario matrix (Figure 1) is drawn from Van der Heijden’s Scenarios: The Art of Strategic Conversation (2005) and then overlaid with Jim Dator’s Alternative Futures (2019) in order to construct a set of scenarios that are distinctive and different.

This paper considers four scenarios of Pacific island tourism for the next decade. The first scenario, Roaring Twenties, represents significant growth in demand for tourism from 2025 to 2030 based upon the principle of continued growth. The second scenario is a Regenerative Future or transformation as tourism is considered a tool for local wellbeing, revitalization, and sustainability. In the third scenario, The End of Mass Tourism, climate change and COVID-19 ended long-haul intercontinental travel, making mass tourism unsustainable for the Pacific developing member countries. This is the scenario of collapse. Finally, in the fourth scenario, Faded Resorts, the Pacific islands become second-class, second-choice destinations for many tourists. This is a scenario of continued uncertainty, discipline and living with COVID-19. Each scenario is given an economic value, which is indicative, and illustrates its consequences and impact (Henman, 2002).

Figure 1 describes the four scenarios in the matrix. At the heart of the 2x2 matrix are two drivers of change: The Future of COVID-19 on the horizontal axis and Tourist Sentiment on the vertical axis.

Horizontal Axis: The Future of COVID-19—Lingers On or Fades Away

The future of COVID-19 is the key uncertainty shaping the world presently with the highest impact on the future of tourism. Two outcomes are considered—either COVID-19 lingers throughout the 2020s, or it just fades away.

Vertical Axis: Tourist Sentiment—Hedonistic or Community

Tourist sentiment is driven by their actions, behavior, and thoughts. Two outcomes are considered—a focus on “me” and hedonism or altruistic motives and community.

Figure 1: The Future of Tourism in the Pacific Islands

Four Scenarios

The four possible scenarios for tourism in the Pacific by 2030 are described below, with different policy options that may be considered as part of recovery from the pandemic.

The central issue of the Roaring Twenties scenario is the significant growth in demand for tourism from 2025 to 2030, a relatively short period, as COVID-19 has been eliminated. Tourist expenditure has gone up from $2.69 billion to $5.44 billion and international arrivals, from 18 million to 36 million in 2030.[2] This would involve short-term measures to deal with capacity issues, mitigation, and adaption plus infrastructure investment for the long term (Henman, 2002; Yeoman & McMahon-Beattie, 2019).

Table 1: Economics of the Continued Growth Scenario in the Pacific by 2030

Tourist Arrivals (Air) Tourism Receipts ($ billion) Tourism Employment (Persons) Tourist Arrivals (Cruise)
36,363,330 5.44 140,600 650,000

Based on assumptions to describe the scenario.

Policy Decisions

  1. Government and partners make significant infrastructure investment to cope with the forecast growth, which includes both temporal and long-term measures and projects.
  2. Take a regional rather than a country approach to planning so everyone can benefit from the forecast growth.
  3. Develop an inter-country airline network.
  4. Adopt open skies policy in the region to facilitate capacity increases.
  5. Promote foreign direct investment (FDI) in tourism to facilitate the rapid transfer of skills, technology, and corporate governance standards, in addition to promoting connections with smaller supplier businesses, which benefit the host economy.
  6. Address the complex issues of land ownership in different countries to facilitate FDI, not just in tourism. A surge in tourist traffic would increase the demand for basic services, such as water, electricity, and sewage.
  7. Adopt a digital and technology-based approach to monitoring—using tracking and sensor technologies for integrated decision making.
  8. Develop a sustainable tourism, visitor management, and carrying capacity plan for Pacific developing member countries; tourism hot spots and attractions that disperses tourists more widely; and itineraries and attractions that mitigate and adapt for increased demand.
  9. Implement a “user pays” model of tourism taxation that is linked to capacity thresholds and driven by the principles of dynamic pricing (i.e., an airline yield management model of taxation). The purpose of this approach is to use price to manage demand and capacity.
  10. Establish a comprehensive research and monitoring program that determines the acceptable levels of impact on communities.
  11. Set codes of conduct and guidelines on tourist behaviour, which is policed to reduce excessiveness.
  12. Given the increase in tourism revenue and volume, this scenario represents an opportunity for diversification of the tourism products toward community tourism and from hedonistic to family activities. This creates the opportunity for a product development strategy.
  13. As the scenario creates economies of scale, some tourists will be new, and some will be returnees. This provides the opportunity to develop a bespoke segmentation model based on different motivations, behavior, values, and activities. A segmentation model drives offers and products that can be used to extend the season and thus mitigate overtourism problems.

Policy Case Study: Smart Tourism

Fiji’s smart tourism app was developed as part of its strategy to deal with capacity issues and overtourism in certain hot spots on the islands. With the assistance of big data, sensors everywhere and ubiquitous computing meant setting capacity thresholds for certain beaches, national parks, and popular tourist attractions. The pricing model was used to generate revenue, which went back into local tourism projects for mitigation and adaption purposes. With this approach, everyone won. Tourists could avoid crowds, the balance of nature was kept, and revenue generated.

The essence of the Regenerative Future scenario is "doing" tourism in a different way in which tourism can be a tool for local wellbeing, revitalization, and sustainability. A regenerative approach aligns with national self-determination, a bottom–up approach, and community focus, which balances resort development and micro-scale projects. It seeks to give back and contribute to the proactive regeneration of communities, cultures, heritage, places, landscapes, and so forth. Regenerative approaches are not about doing less damage and understanding impact but creating positive outcomes.

Table 2: Economics of the Transformative Scenario in the Pacific by 2030

Tourist Arrivals (Air) Tourism Receipts ($ billion) Tourism Employment (Persons) Tourist Arrivals (Cruise)
22,063,418 3.30 85,309 393,113

Based on assumptions to describe the scenario.

Policy Decisions

  1. Enhance the integration of local communities in the value chain, promoting engagement and problem ownership. Give importance to linking wealth creation with decent jobs.
  2. Champion a tourism leaders’ program that foster the development of the youth as champions of sustainability and climate change.
  3. Drive the message that tourism can be the solution rather than the focus of the problem.
  4. Create new tourism products and experiences that move beyond the beach and that are innovative and based on segmented tourist research.
  5. Incentivize regenerative tourism practice and penalize unsustainable practices through focused taxes and investment.
  6. Measure, monitor, and evaluate the impact of tourism to create regenerative solutions that are linked to the Sustainable Development Goals.
  7. Design a system, similar to the Science Based Targets (SBT), for all major tourism providers so they monitor, understand, and act on their carbon emissions in line with the Paris Agreement.
  8. Create demonstrations or showcase projects of regenerative tourism.
  9. Develop regenerative tourism legislation to ensure goals are accomplished.
  10. Strictly enforce rules at significant cultural and ecological sites.
  11. Pilot the principles and practices of the circular economy in communities and develop economies of scale.
  12. Improve data and evidence-based planning at the national level and use of computable general equilibrium modelling that link Tourism Satellite Accounts at a regional level to regenerative tourism variables and concepts for policy decisions.
  13. Adopt a long-term futures scenario planning perspective that focuses on future resilience and strategic planning, thus incorporating external factors into the development of tourism.
  14. Leverage the importance of emerging aviation technologies so that all internal flights within the region are electric powered by 2040 and will achieve net zero emissions.

Policy Case Study: The Blue Economy

A major problem with the Pacific developing member countries is the issue of economic leakage given their dependence on the importation of goods and services and the repatriation of profits by foreign tourism operators and owners. ADB’s Blue Economy strategy for the Pacific includes a focus on recreational fishing, which links local fisherman with high-spending hobbyists. The purpose of the strategy is to reduce leakage of local economies, alleviate poverty, and produce skilled staff and quality operational supplies.

In the End of Mass Tourism scenario, climate change and COVID-19 ended long-haul intercontinental travel, making tourism unsustainable for the Pacific developing member countries. Policy decisions focus on an exit strategy for the mass tourism markets and on diversifying the economy into other sectors.

Table 3: Economics of the Collapse Scenario in the Pacific by 2030

Tourist Arrivals (Air) Tourism Receipts ($ billion) Tourism Employment (Persons) Tourist Arrivals (Cruise)
500,000 0.12 3,300 14,939

Based on assumptions to describe the scenario.

Policy Decisions

  1. Focus on small niche markets, offering in particular luxury and exclusivity and low-impact alternatives, such as small community projects.
  2. Pass legislation that allows the development of whole islands into super luxury resorts that target ultra-high net worth individuals through license agreements and incentives.
  3. Work with volunteer service agencies to develop community-based tourism projects.[3]
  4. Incentivize businesses and communities to move away from tourism and diversify into other industries through grants.
  5. Reduce state involvement and investment gradually as part of an exit strategy to minimize dependence on mass tourism and a diversification strategy that promotes new green industries, the digital economy, financial services, farming, fishing, and migration.

Policy Case Study: Foreign Direct Investment

The Accor Aitutaki Lagoon is a five-star resort in the Cook Islands that caters to high-net-worth individuals.[4] You don’t book the resort, you book the island, thus maintaining exclusivity, privacy, and safety in this COVID-19 new tourism world. It was developed by the ACCOR chain, following changes to land regulation by the Cook Islands government that allowed FDI purchase for freehold in exchange for investment to create jobs in an island where COVID-19 destroyed an industry and government revenues.

In a Faded Resorts scenario, the Pacific islands are second-class, second-choice destinations for many tourists. Some islands and resorts in the 2020s tried to mitigate falling revenues by promoting hedonistic forms of tourism. However, COVID-19, climate change, and the high cost of production made tourism unsustainable as profit margins were squeezed and revenues fell further. Consequently, resorts suffered from a lack of investment and became uncompetitive in this new landscape. These factors were the prime reasons all the international branded providers, such as Hilton and Accor, withdrew from these destinations.

Table 4: Economics of the Discipline Scenario in the Pacific by 2030

Tourist Arrivals (Air) Tourism Receipts ($ billion) Tourism Employment (Persons) Tourist Arrivals (Cruise)
12,507,339 1.60 48,360 222,848

Based on assumptions to describe the scenario.

Policy Decisions

  1. Adopt empowering technology to provide a sense of safety in response to the epidemic, whether by digital health apps, QR codes, or biometrics for tracking tourists. This will require passports that meets international standards.
  2. Put in place health insurance protocols and guarantees.
  3. Apply a 100% vaccination policy for all tourists and all tourism businesses.
  4. Implement health and hygiene protocols for tourists and businesses to manage the COVID-19 epidemic at different levels and require health insurance.
  5. Develop regional and pathway bubbles between the Pacific islands and core markets.
  6. Focus on new tourist trends that leverage connections to Australia and New Zealand with emphasis on short breaks, low-density destinations, spacious beaches, and outdoor activities, such as walking, hiking, and swimming, delivering a core message that promotes nature and wondrous spaces.
  7. Invest in scenario planning, crisis management, and resilience planning techniques to be proactive rather than reactive.
  8. Regulate the arrival of casino and gaming tourism, whether onshore or on cruise ships.
  9. Develop tourism promotions with Australia and New Zealand that emphasize value, price, and purchasing power.
  10. Consider with caution policies to manage sex tourism that incorporates health, education, and anti-human trafficking.
  11. Establish tourism zones and containment areas for hedonistic activities, including a dedicated tourism police force.

Policy Case Study: Gambling

The decision by the banks to provide capital loans for casino and offshore gaming operations in the Pacific was a strategic turning point given the dire situation of tourism operators. To save the islands' tourism markets, a radical rethink in 2026 brought about a policy that many thought was controversial. But it was a matter of trying to extend the tourism market beyond the beach and seasonality factors and to rebuild a tourism that would be more attractive to different markets in the long term. Research indicates this strategy would allow the Pacific developing member countries to focus on tourists from the People’s Republic of China and at the same time create a new industry through casino tourism. Supporting this decision was evidence that the beach holiday market was in decline because of climate change and more disruptive weather patterns. This policy decision was seen as the only alternative in a radically changing world.

Recommendation

This policy brief should be viewed as a “living or thinking document” that may be considered in designing policies, strategies, and action plans for pandemic recovery. If any of these scenarios occur, what would be the response to accelerate or adapt to a scenario or prevent it from happening? What are the common decisions that would be taken across all scenarios? These questions for scenario planning apply to governments and other relevant stakeholders operating in this region. These scenarios have been discussed as one of the futures thinking and foresight tools to demonstrate the importance of considering several outcomes to support preparedness for future changes and in designing anticipatory decision making and policy formulation.

This policy brief was written by Ian Yeoman and supported by Bayarmaa Amarjargal, Ashish Narain, and Susann Roth. It was peer reviewed by Sara Currie, Daniela Schmidt, and Mary Jane F. Carangal-San Jose.


[1] The 14 Pacific developing member countries of the Asian Development Bank (ADB) are Cook Islands, Fiji, Kiribati, Marshall Islands, Federated States of Micronesia, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu.

[2] Based on assumptions to describe the scenario.

[3] Volunteer Service Agencies facilitate skilled help on a volunteer basis to build capacity (www.vsa.org.nz).

[4] A high-net-worth individual is somebody with at least $1 million in liquid financial assets.

Resources

Asian Development Bank. 2021.  Sustainable Tourism After COVID-19: Insights and Recommendations for Asia and the Pacific. Manila.

C. Anderson. 2008. The Long Tail: Why the Future of Business Is Selling Less of More. New York: Hyperion.

I. Yeoman. 2016. The Future Tourist: Fluid and Simple Identities. Video. Presented at Victoria University of Wellington as part of the 12th TourMIS Users' Workshop.

I. Yeoman and U. McMahon-Beattie. 2018. An Ontological Classification of Tourism Futures. In C. Cooper, ed. Handbook of Tourism Management. London: Routledge.

J. Dator. 2009. Alternative Futures at the Manoa School. Journal of Futures Studies. 1 (2). pp.1–18.

J. Dator. 2019. Alternative Futures at the Manoa School. In Jim Dator: A Noticer in Time: Selected Work, 1967-2018. Cham: Springer International Publishing.

P. Henman. 2002. Computer Modeling and the Politics of Greenhouse Gas Policy in Australia. Social Science Computer Review. 20 (2). pp. 161–173.

Pacific Private Sector Development Initiative. 2021. Looking Forward Vol 1: Evaluating the Challenges for Pacific Tourism after COVID-19. Sydney.

Ian Yeoman
Associate Professor of Tourism Futures, Victoria University of Wellington and Visiting Professor, the European Tourism Futures Institute

Ian Yeoman is an advocate for the future of tourism and a passionate writer about it. His most recent book is Science Fiction, Disruption and Tourism published by Channel View. He is co-editor of the Journal of Tourism Futures. He has a PhD in Operations Research from Edinburgh Napier University.

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Susann Roth
Advisor, Office of the Principal Director, Department of Communications and Knowledge Management, Asian Development Bank

Susann Roth launched ADB’s first Futures Thinking and Foresight Program and ADB’s first Technology Innovation Challenge and led the design of ADB’s new Knowledge Management Action Plan. She advises the World Health Organization on foresight, digital health, innovation, and knowledge management.

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Ashish Narain
Principal Economist, Public Sector Management and Governance Sector Office, Sectors Group, Asian Development Bank

Ashish Narain is a principal economist in the Public Sector Management and Governance Sector Office of the Sectors Group. Prior to joining ADB, he was a senior economist with the International Finance Corporation. He obtained his doctoral degree in Economics from the University of Maryland, College Park in the United States and master’s degree in International Economics and Public Economics from Delhi School of Economics, India.

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Bayarmaa Amarjargal
Knowledge Management Specialist, Knowledge Advisory Services Center, Asian Development Bank

Bama Amarjargal manages futures thinking and foresight, application of knowledge management, and foresight tools in climate and energy projects under ADB’s Innovation Hub. She has over 11 years of work experience in climate change mitigation and renewable energy projects. She completed her master’s degree in Nature, Society and Environmental Policy from the University of Oxford.

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