A struggling tourism industry and getting to the China Ready wish list

By Alexander Rheeney 08 March 2019, 12:00AM

The front page story the other day – on an Apia hotel going on the market for over WST$14 million – would have forced those working in the hospitality industry to sit up and take note. 

Was the story “Downturn hits Minister’s family hotel hard” in the Thursday March 7, 2019 edition of the Samoa Observer an indication of the current state of the country’s tourism industry?

You have to wonder how many other locally-owned hotels, guest houses and resorts are struggling to survive – if the cost associated with running a medium-sized hotel such as the Moanalisa – are any indication. 

The Moanalisa Hotel is owned by the family of the Minister of Revenue, Tialavea Tionisio Hunt. It is managed by his wife, Elizabeth Hunt, and their daughter, Moanalisa Hunt. The Minister left no stone unturned in his interview with the Samoa Observer, detailing how his family-owned hotel’s operational costs were unsustainable, especially with repayments connected to outstanding loans from the Development Bank of Samoa (DBS) and the Samoa Commercial Bank (SCB), and regretting the decision to invest in a hotel.

“I started this business with the understanding the tourism industry is thriving, ten years later sadly that is not the case,” Tialavea said. 

“As soon as I became a Cabinet Minister my shares were given to my children. I sold the construction equipment to my son’s company, and my wife and daughter took over ownership of the hotel. 

“And I regret going into the hotel business, it was the wrong decision. I should’ve built rental homes, at the time.”

The hotel opened for business in 2009 and was placed on the market in January this year. It has 22 rooms, six villas, a swimming pool and a restaurant. Despite the hotel’s location in the Samoan capital and its close proximity to the Faleolo International Airport, it struggled to attract customers. The hotel, according to Tialavea, could only host conferences and meetings but not tourists.

Thanks to the Minister’s personal testimony in an interview with this newspaper, it appears Samoa’s tourism industry is in a crisis. And it is a concern when this is the industry which ranks second in Samoa after remittance. But how much exactly does the tourism industry contribute to Samoa’s national coffers? Conservative estimates put the figure at between WST$399-400 million. 

Naturally, we would have thought that the story on the sale of the Moanalisa Hotel the other day, would have compelled statements from industry stakeholders such as the Samoa Tourism Authority (STA) and the Samoa Hotel Association (SHA). But is there reason to be worried about these developments in the tourism sector? Yes there is reason to be concerned as information we are privy point to the sale of six hotels and resorts (including the Moanalisa Hotel) this year, unless drastic action is taken by the Government through some form of financial bailout that specifically targets and benefits companies that are directly owned by Samoans.

Interestingly the Government’s Samoa Tourism Sector Plan 2014-2019 – which was prepared by the STA – noticed and made reference to the low occupancy levels in hotels and resorts in its report five years ago. This assessment was extracted from the executive summary of the Tourism Sector Plan:

“Samoa has experienced a substantial increase in rooms supply over the last five years. Demand has not kept pace with the new supply level and average occupancy levels are low for many operators, which restricts capacity for new investment and product improvements. Whilst efforts to attract larger scale new investments to build critical mass are an important part of the mid-term development strategy, improving industry profitability will be key in the short term. Equally improving product quality is a key focus of this Plan; both through strengthening quality standards for accommodation and visitor attractions, as well as the development of new activities to broaden the appeal of Samoa in key markets.”

Perhaps now is the opportune time for industry stakeholders such as the STA to give operators an update on the plans for the next phase of the “China Ready” preparations and what it entails. There was a lot of publicity and press coverage on this Government-led initiative between June-August last year, and very appetizing figures were presented to conference participants by STA representatives. 

One of the presenters was the STA representative in China, Marcus Lee, who ran workshops in Apia in August last year. The workshop objective was to get local operators “product and service ready” in preparation for an influx of Chinese tourists. 

In an interview with Samoa Observer, Mr. Lee said: “In 2017 (last year) 130 million Chinese travelled around the world, the Chinese tourist has changed and they are interested in experiences rather than sightseeing and shopping. In order to know your target market, you must know all facets of it. China Ready is the starting point for industry players to enter China market. In this programme you will have a renewed understanding of what China outbound travel market is about. Through this programme you will understand how to reach them.”

With six local hotels and resorts (including the Moanalisa Hotel) on the verge of foreclosure due to the tough operating environment, it is only fair to the local operators that they get an update from the industry stakeholders. 

Do you work for a company in the tourism industry that is also struggling? Let us know. 

Have a lovely Saturday Samoa and God bless.

By Alexander Rheeney 08 March 2019, 12:00AM

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