The struggling tourism sector, and the irony of the $22 million Taumeasina loan

By Alexander Rheeney, 09 May 2019

Two Samoan-owned hotels are going under the hammer on May 23.

A public notice issued by the Supreme Court — advising of the sale of the Orator Hotel in Siusega and the Moanalisa Hotel Limited in Vaitele — was published in the May 8, 2019 edition of the Samoa Observer.

A day later Taumeasina Island Resort made the headlines, over a loan which its Papua New Guinean owners secured from the Samoa National Provident Fund (S.N.P.F.), to pay for its construction.

The irony in the story of the Orator Hotel and Moanalisa Hotel and the Taumeasina Island Resort sticks out like a sore thumb, when you get to read the article published in the May 9, 2019 edition of your newspaper — on how Taumeasina Development Corporation — got a $22 million S.N.P.F. loan to assist fund the building of the resort.

Samoans, understandably, have taken to social media to criticise the decision by the S.N.P.F. board and management to give a multimillion tala loan to a foreign company. 

A Lisona Schwenke expressed concern at potential losses from the loan, in a post on our Facebook page. 

“Those negative news will tell us what is going on in our country. Those companies should have their own money to build their hotel in Samoa, but not to loan Samoan money, because if it’s not working and who is going to pay for the loss?”

Another member of the public, Oloamanu Faulio, asked for the terms and conditions of the loan agreement. 

“So the question is have they paid their loan with interest like any borrower or is S.N.P.F. just sending remind letters but no action taken”?

But it is the plight of local companies such as the Orator Hotel and the Moanalisa Hotel Limited and other affected local hoteliers, which really puts the $22 million loan assistance to the Taumeasina Development Corporation in perspective. 

Questions abound when the S.N.P.F. loan is given a litmus test. Shouldn't local hoteliers also qualify for multi-million-tala convertible loans? Should local companies be given priority over foreign investors when it comes to applying for loans from financial institutions such as the S.N.P.F.? And is it proper and good business practice to give loans to foreign investors who — as investors into Samoa — are supposed to be cashed up the moment they express interest in investing in Samoa?

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We believe the S.N.P.F. Board and Management owe the people of Samoa an explanation, for giving a $22 million loan to a foreign-owned company, especially stakeholders in the local tourism sector. 

And while we note with concern the long-term implications of such a loan arrangement and the precedent it now sets at the expense of locally-owned companies, we also cannot ignore the crisis facing Samoa’s tourism industry, despite the optimism expressed in the corridors of powers.

In fact prior to the public notices being published on the auctioning of the Orator Hotel and the Moanalisa Hotel, the Samoa Hotels Association (SHA) warned in November last year of stagnant growth affecting the sector.

“With the newer hotels coming up, the market is not growing enough, the share of the pie is not big enough, which is why some of the smaller properties are struggling to make ends meet,” said S.H.A. President, Tupa’i Saleimoa Va’ai. 

He said the national airline Samoa Airways is doing a great job, offering discount travel to tourists, but there is a need to up the ante in marketing the country globally.

“Samoa Airways is making great headways in terms of our marketing and making it cheaper to fly. We need more exposure; we need more people to decide to choose Samoa as a destination.” 

Six months after that statement was made by S.H.A. President, we are yet to see any traction on the part of stakeholders such as the Samoa Tourism Authority (S.T.A.), if recent reports attributed to the International China Investment Forum President Marcus Lee is any indication.

Mr Lee, who drives the “China Ready” programme in the Pacific Islands, said Samoa got a lot of work to do in order to make the country attractive to Chinese tourists and to catch up with regional neighbours Fiji.

At the heart of the strategy for Samoa should be marketing, which Mr Lee believes can have an impact.

“For example, Fiji made 20 roadshow trips to China to promote Fiji last year, Samoa made two trips. This year, Samoa has made zero trips to China so you see, you need to have output to have input. You have to work on it. Again, Chinese tourists don’t drop from the sky, you have to work on it step by step. It’s consistency,” he said.

The plea by Tupa’i and Mr Lee, for more marketing of Samoa as a tourism destination, should compel the S.T.A. to do a postmortem of its key performance indicators in the last 6-12 months. Obviously, the work of the STA is failing to have a positive effect on the industry and the feedback from the SHA President and Mr Lee is damning of the organisation. 

With the recent announcement by the STA Chief Executive Officer Papali’i Sonja Hunter that she will not reapply for her old job, it perhaps now opens the door for a fresh start at the organisation.

Have a lovely Friday Samoa and God bless. 

By Alexander Rheeney, 09 May 2019

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