Author(s)

V. Saverimuttu & M. E. Varua

Abstract

Tourism is vital to the sustainability and development of the Pacific Forum Island economies. Australia and New Zealand are major markets for these island nations followed by the US and Japan. The region is prone to tropical cyclones, in most years, typically occurring during the months of November to April. This paper investigates the impact of tourism on economic growth and its contribution to employment in Fiji, Samoa, Tonga and Vanuatu. The paper also examines the impact of income (GDP) growth in visitor origin countries (Australia, New Zealand and the US), the inertial effect on travel destination choice, investment in travel and tourism and extreme weather conditions on tourism receipts in these countries using panel data analysis. In 2012, tourism’s contribution to GDP ranged between an estimated 14.2% of GDP (Tonga) and 50.7% (Vanuatu). The contribution to employment ranged between 13.8% (Tonga) and 44.9% (Vanuatu) of total employment. Travel and Tourism investment ranged between 11.1% (Tonga) of total investment and 28.1% (Fiji). The variable for investment in travel and tourism was not significant which was not surprising. The variable for extreme weather was also not significant, suggesting that other factors mitigate the impact of the seasonal cyclones on tourist arrivals. The impact of Australian GDP was significant but negative, implying that Australian tourists preferred to travel elsewhere rather than to Pacific Island destinations when their income increased. The impact of all other variables tested on tourism receipts was significant and positive. The paper concludes with recommendations to improve the long term sustainability of tourism in this region.

Keywords

tourism and economic growth, Pacific Islands, sustainable tourism, extreme weather patterns, tourism strategies.