Identifier
Created
Classification
Origin
06SUVA524
2006-11-28 22:58:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Suva
Cable title:  

TOURISM TAKES A NOSE-DIVE IN FIJI

Tags:  ECON CASC PGOV PREL FJ 
pdf how-to read a cable
VZCZCXRO0915
RR RUEHNZ RUEHPB
DE RUEHSV #0524/01 3322258
ZNR UUUUU ZZH
R 282258Z NOV 06
FM AMEMBASSY SUVA
TO RUEHC/SECSTATE WASHDC 3486
INFO RUEHBY/AMEMBASSY CANBERRA 1401
RUEHPB/AMEMBASSY PORT MORESBY 0994
RUEHWL/AMEMBASSY WELLINGTON 1182
RUEHNZ/AMCONSUL AUCKLAND 0225
RUEHDN/AMCONSUL SYDNEY 0624
RHMFIUU/HQ USPACOM HONOLULU HI
RHHJJAA/JICPAC HONOLULU HI
UNCLAS SECTION 01 OF 03 SUVA 000524 

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON CASC PGOV PREL FJ
SUBJECT: TOURISM TAKES A NOSE-DIVE IN FIJI


Summary
-------

UNCLAS SECTION 01 OF 03 SUVA 000524

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON CASC PGOV PREL FJ
SUBJECT: TOURISM TAKES A NOSE-DIVE IN FIJI


Summary
--------------


1. (SBU) Managers of several of Fiji's top hotels told us
the tourism industry is "bleeding" due to RFMF Commander
Bainimarama's repeated threats to take action against the
government. Occupancy for most major resorts in Fiji is 40%
or below, when it should be in the 70-75% range this time of
year. This has led to revenue losses of millions of dollars
for hotels, restaurants, retail shops and tour operators.
While the number of travelers from Fiji's main markets of
Australia and New Zealand are down significantly, flights
from the U.S. remain nearly full. This may reflect the fact
that, unlike Australia and New Zealand, the United States has
not advised its citizens to defer travel to Fiji. Tourism,
including from the U.S., is likely to drop much further in
the weeks ahead unless a solution to the crisis is reached
without a coup. If a coup takes place, tourism could take
years to recover. End summary.

Hotel Occupancy Low, Set to Drop Much Lower
--------------


2. (SBU) Hotel managers we talked to during a recent swing
through Fiji's west, where most large resorts are located,
were uniformly glum about near-term tourism prospects. David
Hopcroft, General Manager of the Shangri La Fijian Resort,
told us that on the day prior to our visit, November 20,
occupancy was 40%, probably the lowest daily rate since the
hotel opened in 1979. Several large groups planned for
November and December had canceled, including one mega group
of 500 persons. That cancellation alone, he said, cost the
hotel over FJ $500,000 (US 300,000). Prospects for the
future are even worse. January bookings are currently at a
minuscule 13%. Unless the military-government crisis ends
very soon, said Hopcroft, that figure won't pick up
appreciably.


3. (SBU) Other hotels are facing a similar crunch. Mark
Rice, Chief Financial Officer at the Sheraton Denarau Hotel,
told us that the Sheraton resorts in Denarau, near Nadi, had
more than 2,000 cancellations to date for the November and
December period. He insisted that the Sheraton Denarau was
holding up at over 50% occupancy, but admitted its sister

hotel, the Westin, was not doing as well. Other sources told
us occupancy at the Westin is below 30%. The Sofitel at
Denarau is reportedly doing no better. Even hotels that have
not yet opened are feeling the impact. Alex Aluwalia, the
General Manager of the Marriott being constructed at Momi Bay
in western Fiji, scheduled to open in August 2007, said
several large groups that had tentatively made bookings for
late 2007 have now delayed finalizing their plans. If the
impasse continues, he said, the Marriott will likely lose
those bookings for good. Aluwalia added that a protracted
impasse could also have a negative impact on the sale of
residential resort properties in Momi Bay, a key part of
Marriott's business plan.

Commander's Rhetoric, Travel Advisories Depress Demand
-------------- --------------


4. (SBU) Hopcroft, Rice and others said there is a direct
connection between the language used in the travel advisories
issued by Australia and New Zealand and occupancy rates.
When Australia issued an advisory suggesting that travelers
should exercise a "high degree of caution" in coming to Fiji
and should avoid Suva altogether, advance bookings plummeted.
Frequent reports of Commander Bainimarama's relentless
rhetoric against the government, combined with reporting
about Australian ships off the coast, ready to evacuate
Australian citizens, have made potential tourists even more
on edge. Dixon Seeto, the head of the Fiji Hotel
Association, told us November 27 that the upgraded Australian
and New Zealand travel advisories urging their citizens not
to come to Fiji, will put the nail in the coffin for most
near- and medium-term group bookings. Soon, he said, "our
hotels will be empty." Seeto noted that the U.S. travel
advisory (our Public Announcement on Fiji) has not called on
U.S. citizens to defer travel or leave Fiji. While this is
"very helpful," U.S. visitors are a relatively small part of
most hotels' business. (Note: The U.S. Public Announcement
on Fiji, revised November 22, urges U.S. citizens "to
continue to monitor events closely and remain vigilant in
regard to their personal security," and "to avoid any
political or military demonstrations." Australia's travel

SUVA 00000524 002 OF 003


advisory, revised November 26, urges its citizens "to
reconsider your need to travel to Fiji at this time." The
New Zealand travel advice, also issued 11/26, states that "we
recommend against non-essential travel to Fiji at this time."
)

Layoffs Coming
--------------


5. (SBU) Hopcroft and Rice said all seasonal workers have
already been let go, and employees are being urged to take
annual leave now. They insisted that their hotels are not
contemplating laying off permanent staff at this time, so
close to Christmas. Seeto told us, however, that smaller
hotels and one large hotel have already laid off permanent
staff. Other hotels will have to follow suit sooner or
later, he said. Using what must charitably be called
hyperbole, Fiji Visitors Bureau Chief Viliame Gavoka told
reporters on November 27 that 50,000 jobs could be lost due
to the tourism slowdown. According to the Ministry of
Tourism, 40,000-48,000 people are employed in Fiji's tourism
industry, including both direct and indirect tourism-related
employment.

Air Travel From the U.S. Still Holding Up
--------------


6. (SBU) John Campbell, CEO of Air Pacific, told us
November 29 that the airline's flights from the U.S. and
Canada are running at 86% capacity. Load factors in November
are only about 5% off prior projections. December
reservations are also very strong - most flights are
overbooked. Flights from Australia and New Zealand, on the
other hand, are significantly lower than prior projections,
down up to 20%, depending on the specific route. Flights are
averaging 50-60% capacity, and Air Pacific is using smaller
aircraft on many routes. In another category altogether are
flights from Japan. Demand is so low, said Campbell, that
Air Pacific has cancelled many flights and is now flying on a
very infrequent schedule. The drop in Japanese travelers was
expected, given the many choices Japanese travelers have and
their strong sensitivity to security issues. Campbell said
the relative strength of Air Pacific's North American routes
reflect a diverse customer mix of tourists and local
residents with families in North America, and the fact that,
unlike Australia and New Zealand, the United States has not
issued an advisory urging its citizens to defer travel to
Fiji. The strong Australia and New Zealand travel
advisories, he noted, have serious legal and insurance
ramifications for tour operators.


7. (SBU) Campbell said bookings for January are down
system-wide, reflecting a "wait and see" attitude from
travelers and travel agents. Air Pacific is only receiving
about 50 reservations a day for January flights, while it
would normally expect about 500 reservations a day. Campbell
said in the event of a coup, cancellations system-wide would
be "massive and immediate." He was confident that if the
situation was resolved without a coup, air travel would pick
up in relatively short order.

Could the Tourism Industry Survive Another Coup?
Opinions Differ
-------------- ---


8. (SBU) Several of the hotel managers we spoke to said the
continuing impasse is almost as bad, if not worse, than an
actual coup. Hopcroft and Rice said they want the situation
resolved soon "one way or the other," even if that solution
is a coup. Like in 1987 and 2000, the tourism industry will
recover. Seeto disagreed strongly. Tour operators have long
memories, he said, and two coups within six years would set a
pattern that could tarnish Fiji's tourism reputation
permanently. The tourism industry can only live with a
peaceful resolution to the crisis. (Note: observers tell us
it took more than two years for tourism to bounce back to
pre-coup levels after the events of 2000.)

Comment
--------------


9. (SBU) We agree with Seeto that, even if the current
impasse drags on indefinitely, that is far better than having
to deal with the after-effects of a coup. It is by no means
certain that, even with special deals, tourists will flock

SUVA 00000524 003 OF 003


back to Fiji after an undemocratic change of government. As
much as it would like to, Fiji's tourism industry can never
fully divorce itself from the political/military and social
divisions that pervade Fiji.



DINGER