Tourism plunge threatens economic shock

Samoan tourism has been hit by a major new year downturn as visitor numbers drop nearly one-quarter - a decline almost certain to send the economy into shock, economists warn. 

In the wake of the post-measles and current coronavirus downturn all eyes are turning to the broader impact of a downturn on the industry that was, last year, the main driver of Samoa's economy. 

"Given the the importance of tourism to the Samoan economy this can be expected to lead to a substantial drop in [Gross Domestic Product]," Dr. Robert Kirkby, a macroeconomist from Victoria University, Wellington told the Samoa Observer. 

"Being so dependent on tourism leaves Samoa vulnerable to large swings in visitors, as was seen last year with the measles outbreak and now again.

"Many countries, including the US and New Zealand, are upgrading their predictions of how severe and long lasting they expect the economic disruption to their economies to be. Samoa is likely to face a similar worsening decline in trade and tourism."

This January Samoa recorded a total of 10,456 visitors, newly released international arrival data from the Samoa Bureau of Statistics show.

That is a drop of 24 per cent compared to the same month the previous year, when 13,755 visitors reached our shores. 

The month-on-month on drop in visitor numbers, while not unusual between December and January for Samoa, is even more marked. More than 40 per cent fewer visitors arrived in Samoa compared to the 17,927 who arrived last December. 

The decline comes after a Financial Year in which surging tourism growth had helped lift Samoa out of previously stagnant periods of economic growth.

Nominal economic growth exceeded five per cent last year after years of lacklustre, sub-one per cent growth. Major increases in not only visitor numbers but also visitor spending were credited as the major drivers of Samoa's economic resurgence. 

As of Wednesday, more than 92,000 cases of the virus have been confirmed worldwide and the number of deaths has reached 3,110 globally.

Should the coronavirus drag on, the tourism industry will "definitely struggle," the Samoa Tourism Authority C.E.O., Faamatuainu Suifua Lenata'i, said.

Faamatuainu said Samoa is witnessing an increasing number of hotels with no guests, fewer travelers and lesser spending by visitors. 

Faamatuainu said the Authority is still trying to grasp the reality of the crisis at hand but their work continues, as they continue to advertise overseas and attract more people into Samoa.

"In the meantime we are looking at the domestic market to cover [the shortage] by utilising every possible platform to push our local hotel businesses," he said.

Asked if its current operations were enough to sustain the sector, Faamatuainu said "this is our immediate reaction," and that the Authority would keep their hopes high.

Globally, precautionary measures have led to the cancellation or reduction in flights worldwide, while other countries, such as the United Arab Emirates, announced curfews on Wednesday. 

University of Auckland Senior Lecturer, Dr. Debasis Bandyopadhyay agreed that the Samoan economy would face a systemic "shock", which was being replicated in global conditions in the rest of the world. 

The Government, Dr. Bandyopadhyay said needs to deal with the downturn swiftly and adeptly lest "they can make a mess out of it".

Fears of the coronavirus reaching the island and accompanying restrictions on inbound travellers are likely to mean that arrival statistics continue to register negative growth. 

But Dr. Bandyopadhyay said the key for the Government to absorb the shock would be to watch the economy’s winners and losers during this testing period closely. 

"Tax the winners and help the losers, and let the market function," he said.

"[The] Government should not intervene too much other than supporting people who are losing, should people be becoming unemployed, the Government should help them too”.

The statistics bureau's figures show that more than 40 per cent of the 10,456 total visitors came into Samoa to visit family, friends and relatives.

New Zealand remains to be the leading country in arriving visitor numbers, accounting for 44 per cent or 4,600 of total visitors for January, 2020.

Australia followed behind with just a 27.4 per cent share.

Meanwhile, arrival in total numbers including visitors revealed a decrease of 29.3 per cent over the previous month and a decrease of 15.8 per cent over the corresponding month of January 2019, the report reads.

The national carrier, Samoa Airways leads the way as visitors’ carrier of choice and accounts for 37.5 per cent (6,581 passengers), followed closely by Air New Zealand with 32.7 per cent (5,742 passengers).

Fiji Airways flew in 13.3 per cent (2,338 passengers) of total arrivals while Virgin Australia and Talofa Airways brought in 9.4 per cent (1,647) and 3.2 percent (558) respectively.

“Visitors, made up the largest component of all arrivals with 26.9 percent (4,719) represented by males and 26.8 percent (4,703) by females.

“Male returning residents made up 20.7 percent (3,641) of total arrivals while their female counterpart made up 19.7 percent (3,460).”