With the new administration of Prime Minister James Marape committed to easing dependency on extractive industries, supporting diversification and stimulating job creation, the tourism sector offers significant potential. However, travelling in Papua New Guinea at present requires patience, perseverance and fortitude. Until infrastructure constraints, high travel costs and security concerns are addressed, PNG’s pristine coastlines and vast tropical forests will likely remain out of reach from all but the most adventurous travellers.
Structure & Oversight
PNG’s tourism sector is managed by the Tourism Promotion Authority (TPA). The statutory body is governed by a board that serves a two-year term and includes a CEO, the chairman of the parliamentary committee on tourism, the deputy head of the Department of Finance and Treasury, and seven other members representing sector stakeholders, including airlines, hoteliers, financial institutions and tour operators. Reporting to the Ministry of Tourism, Arts and Culture, the TPA is the sole government authority responsible for tourism in PNG after it was merged with the now defunct Office of Tourism, Arts and Culture in 2016. Emil Tammur has served as the minister of tourism, arts and culture since August 2017. He retained the position in the new Cabinet announced by Prime Minister Marape in June 2019, making him one of only four ministers to retain their portfolio.
Key responsibilities of the TPA include defining and implementing strategy, overseeing global marketing and visitor surveys, providing support to local businesses, and attracting domestic and international investment. The government’s latest policy framework for developing the sector – the Tourism Master Plan (TMP) 2007-17 – proposed the establishment of a new Tourism Policy Secretariat, an industry-led body, to replace the TPA. However, as of August 2019 neither of these initiatives had been implemented.
Plans & Policy
The TMP 2007-17 sought to address a number of priority areas, notably Customs and border processing, and law enforcement, to boost visitor numbers and expand the sector. However, the tourism industry is now at a crossroads, with the remit of TMP 2007-17 having expired, and the government is currently working on formulating a strategy for 2020-25.
As with the rest of PNG’s budget, tourism funding allocations were delayed as a result of the change of government in May 2019. The administration of former Prime Minister Peter O’Neill had ambitious plans to grow tourism, supported by the allocation of record funding of PGK50m ($15.2m) in 2019, a figure which, coupled with development funds from the World Bank, notionally brings the sector budget to PGK67m ($20.3m). However, as of August 2019 precise spending plans remained unclear due to uncertainty following the resignation of Prime Minister O’Neill in May 2019 and his replacement by Prime Minister Marape.
The authorities have made efforts to capitalise on the APEC Leaders’ Summit, held in Port Moresby in November 2018, to develop the industry. The event put PNG squarely in the international spotlight, attracting over 9000 international visitors, and showcasing the country as a stable environment for business and tourism. In order to boost visitor numbers from APEC countries, the government announced the expansion of an electronic visa programme to all 20 fellow members, in addition to states such as India and South Africa, in June 2019. The move is expected to boost business and holiday arrivals by removing the need for visa applicants to visit a PNG embassy or high commission.
In the same month, the government added Mandarin and Bahasa Indonesia options on the Immigration and Citizenship Authority’s website. This built on measures taken in September 2018 that allow Chinese tour groups and government officials to obtain visas upon arrival in PNG. Together, these moves should open the door to the world’s largest market for outbound tourists; Chinese travellers took almost 150m outbound trips in 2018, according to Chinese authorities. Tourist arrivals from China have so far been limited, but there is considerable scope to boost numbers, Noah Mikmik, senior statistics and research officer at the TPA, told OBG. The TPA established a Shanghai office in 2018 as part of a bilateral memorandum of understanding related to tourism marketing activities. However, hopes of opening up PNG to Chinese visitors experienced a setback in late 2018, when Air Niugini – the national airline of PNG – deferred plans to launch a direct route between Shanghai and Port Moresby to an unspecified future date. Pending the establishment of a direct route, the Chinese market remains served by indirect flights via Hong Kong and Singapore.
The airline announced a turnaround plan in March 2019 to lower costs, improve operations and customer care, develop human resources and increase revenue. This involves developing Port Moresby’s Jacksons International Airport into a regional centre for international layovers and transfers. To this end, Air Niugini is negotiating code-share agreements with airlines including Qantas, Cathay Pacific and Philippine Airlines, and is seeking to establish connections with new international destinations. However, Marc Ehler, former group general manager of domestic hospitality firm Coral Sea Hotels, told OBG that tourist arrivals to PNG’s provinces will remain constrained as long as passenger choice is limited to flying domestic airlines via Port Moresby. “Air Niugini’s monopoly is a problem,” Ehler said. “Two or three flights a week from Asian carriers – such as China Southern or AirAsia – would bring money to PNG airports from fuel and technical services.”
New Offering
Another issue is an ongoing impasse over the distribution of funds pledged by the World Bank for the PNG Tourism Sector Development Project. Launched in 2017 with $20m in funding over five years, the initiative aims to develop tourism capabilities, infrastructure and services in Milne Bay and East New Britain. These provinces were chosen as they are considered safer than the National Capital District (NCD) and therefore more attractive to potential tourists.
Four out of five of the cruise ships that visit PNG each year dock in these two provinces, providing a base number of visitors that make the development of a wider suite of tourism products viable. For example, 14,348 cruise tourists visited Rabaul and Kokopo in East New Britain during 2018, according to figures from PNG Ports. Visitors were attracted by a broad offering of nature and ecotourism attractions, including scuba diving, along with historical tours focused on the Second World War. However, considerable investment in transport infrastructure, along with greater private sector activity to expand the province’s current tourism offering, will be needed in order to build on these numbers. “Kokopo was selected as a regional centre for tourism with Bali as its model, but it needs to upgrade its airport,” Rio Fiocco, president of the Port Moresby Chamber of Commerce and Industry, told OBG. “They also need to invest in road infrastructure and incentivise mixed-use developers to invest. We need a bold plan with strong financing, but nothing has happened so far.” Part of the reason for the lack of activity is ongoing disagreements between the authorities in Port Moresby and provincial government officials over the allocation of available funds. “The idea was to develop some small tourist products to serve this market, but we have not gotten that far yet,” Allan Tobalbal Oliver, team leader for the PNG Tourism Sector Development Project at the World Bank, told OBG. “We are restructuring as the TPA needs to decentralise its operations to the provinces that are responsible for disbursing the funds.”
However, progress has been made in building a jetty to dock larger cruise ships in Alotau, the capital of Milne Bay Province, and the TPA is working to integrate its national master plan with provincial government efforts to improve infrastructure, Mikmik told OBG. Overcoming these issues and seeing that available funds are allocated towards realising these goals will prove vital in achieving the government’s broader objectives. Roads in and around Milne Bay and East New Britain remain in poor condition and are prone to flooding, limiting access to sites of natural beauty such as the Rabaul Volcano, as well as areas of historical interest like the abandoned Second World War submarine base of Isoroku Yamamoto, a Japanese admiral.
Performance
According to the PNG International Visitor Survey (IVS), released in May 2019 by the World Bank’s International Finance Corporation in partnership with the TPA, international visitors by air totalled 94,627 in 2018, up 9.5% on 2017. These figures include arrivals by cruise and visits for the purpose of short- and longterm employment. Business travellers made up 50% of the total. Holiday visitors numbered 31,227, or 33% of the total, up 7% on 2017. This represents progress towards a goal of having holidaymakers account for 53% of total visitors – an important target for the tourism industry as holidaymakers spend an average of 15% more than their business travel counterparts.
Nevertheless, overall numbers remain low by regional standards. By comparison, 6.1m international travellers visited the Indonesian island of Bali in 2018, according to the Bali Tourism Board. However, 73% of visitors to PNG were satisfied with their stay, and 93% stated that they would return, according to the IVS. Visitors spent a total of $205.9m in 2018, a 0.5% increase on the previous year, but the average spend per visitor per trip stood at $2174, down 9.1% from 2017. The IVS attributed the lower average spending to an increase in short business stays as a result of PNG hosting the 2018 APEC summit. Accommodation, airfare, food and beverage all benefitted from higher spending than in 2017, while tours, domestic travel and local transport saw spending decline, suggesting that APEC visitors confined their spending to the capital.
Australians continue to account for the majority of visitors, at 51% in 2018, though this was down from 54% in 2017. North-east and South-east Asia each accounted for 10%, followed by Europe and North America with 8% and 6%, respectively, New Zealand with 5%, and the Pacific nations and other regions of Asia made up most of the remainder. PNG typically attracts middle-aged male visitors, arguably reflecting the importance of business travel and adventure tourism. Aside from the NCD, the Central and Northern Provinces were the most visited and had the highest satisfaction ratings. This can be attributed to the Kokoda Track, a trekking route renowned for its Second World War heritage, and cultural festivals. Visitors from Australia, North America and Europe most commonly highlighted security and infrastructure issues as areas requiring further improvement. Europeans also identified costs, prices and information as issues, while North Americans sought better airline and flight experiences, and suggested improvements to tourist attractions.
The would-be tourism centres of East New Britain and Milne Bay attracted 8% and 7% of total visitors, respectively. This marks an increase in both cases, with visitor numbers up 17% in East New Britain and 25% in Milne Bay. However, total spending fell in both provinces, down 7% in East New Britain and 1% in Milne Bay.
Hotel Infrastructure
The 2018 APEC summit stimulated hotel development in the capital, capped by the completion of the Hilton Port Moresby in October 2018. This marked the arrival of the third international hotel brand to PNG following Holiday Inn in 2015 and Crowne Plaza in 2017. The new hotel offers 212 rooms and several restaurants adjacent to the Kutubu Convention Centre, which features a banquet hall for up to 800 guests. The Hilton Port Moresby and Kutubu Convention Centre form part of the first stage of the PGK1.5bn ($455m) Star Mountain Plaza development. The second phase will include 160 luxury apartments, a members club, a retail precinct and commercial offices, while the third phase will involve the construction of an additional business hotel, and retail and office spaces.
According to the TPA, occupancy rates are steady in Port Moresby, but industry players suggest that supply has exceeded demand since the completion of Stanley Hotel in 2016, and the Sanctuary Hotel Resort and Spa in 2017. The hotel offering in the capital is expected to expand further with the gradual completion of the PGK3bn ($910m) Paga Hill Estate mixed-use marina development, which will provide a luxury hotel and passenger cruise terminal. Crowne Plaza Residences opened a complex of 54 two- and three-bedroom units in Port Moresby in July 2019.
Further afield, Loloata Private Island Resort, located 20 km from Port Moresby, is being redeveloped into a luxury destination. The island was sold to developers in 2016 and reopened as a cashless resort in August 2019. The revamped resort will offer 50 hotel rooms, 16 suites and three villas. It is being developed by local firm Lamana Development with financial backing from the National Superannuation Fund, more commonly known as NASFUND. The project aims to promote scuba diving and conferences outside the capital.
Outside the NCD, occupancy rates stand around 60-70%, according to the TPA, with the redevelopment of provincial airports such as Lae Nadzab Airport, Goroka Airport and Mount Hagen Airport improving access for visitors. However, mid-range and low-budget hotel options remain limited. Efforts are already under way to cater to this market, with a group of entrepreneurs in the Wairiki 4 district of Rabaul launching a homestay programme in 2019. This allows budget travellers the opportunity to take part in aspects of traditional village life, including ceremonies, cooking, hiking and farming, while also offering competitive rates on attractions and activities in the local area.
Niche Markets
Examining the profiles of holidaymakers highlights the potential for PNG to further develop niche market tourism. According to the IVS, culture attracts the highest proportion of tourists, at 21%, and provides a high spending of $3673 per person per trip over an 11.6-night average stay. Bird-watching brought the highest amount of revenue for each visitor, with $7392 spent on average over a 16.7-night stay. However, the segment is an underexploited opportunity, accounting for 4% of total visitors. Meanwhile, 20% of holidaymakers were adventure tourists in 2018, while those travelling to PNG for historical and scuba diving purposes accounted for 6% and 12%, respectively. PNG is also attracting an increasing stream of surfers to its uncrowded waves in Madang, Kavieng, Wewak and Vanimo, though these are not yet covered in the survey. The IVS highlights that visitors from Australia – the country’s biggest source market – are primarily attracted by adventure and historical tourism, and recommends that higher value could be generated from the market by providing more opportunities for local spending. Many Australian visitors find both adventure and history on the Kokoda Track, an arduous trail where Australian and PNG armed forces battled and ultimately defeated invading Japanese detachments during the Second World War. These historical events have attained mythical status in Australia, and the trail attracts several thousand intrepid hikers each year. However, tourist numbers have declined since peaking at 5621 in 2008, according to the Kokoda Track Authority (KTA). In 2018, 3258 tourists completed the 96-km trek, with early data suggesting 2019 will see similar numbers. “The Kokoda Track has encountered issues with landowners who feel they are not participating equally in the income generated from the track,” Julius Wargirai, CEO of KTA, told OBG. However, he added that such tensions have eased in 2019.
The KTA hopes to elevate its status from a Special Purpose Authority to a semi-government body guided by its own legislation. The KTA has improved partnerships with stakeholders involved with the track, such as the TPA; the Conservation and Environmental Protection Authority; the governments of the central and northern provinces; the PNG National Museum and Art Gallery; and other relevant government agencies. Currently, the KTA is mainly funded by fees paid by users of the trail and support from its partners, including the government of Australia through the Kokoda Initiative programme. Potentially available funds include the $20m offered by the World Bank, which is being handled by the TPA. “We have to improve services along the track to attract more tourists, particularly from other countries than Australia. This requires good marketing internationally,” Wargirai told OBG. “The KTA is required to maintain and keep the track safe for trackers, support local entrepreneurs, improve the quality of their lodges, and develop new activities, including traditional culture, bird-watching and nature experiences.”
However, the TPA views the Kokoda Track as a “market-ready” product and sees greater potential in developing new tourism attractions. “We are pushing adventure tourism products, including diving, bird-watching, sport fishing and trekking, along with cultural visits, to experience PNG’s 800-plus ethnic groups and their unique activities,” Mikmik told OBG.
Marketing & Training
Aside from the pivotal role that should be played by the TPA’s Shanghai marketing office, efforts are under way to improve PNG’s tourism profile in Australia and New Zealand. In May 2019 the TPA appointed Example – a Sydney-based communications agency – to handle all public relations, marketing and trade relations, with a focus on boosting visitor numbers from the two countries. The government is also intent on bringing in more journalists, TV reporters and online influencers to share PNG’s attractions with their audiences. Other efforts to improve PNG’s international image include a revamp of the TPA’s website – launched to coincide with the opening of the 2018 APEC summit – with the goal of providing a one-stop shop for potential visitors to discover PNG. However, more could be done in terms of translating tourism content to cater to non-UK European travellers. According to the IVS, many European travellers independently research and book travel to PNG in their own language.
Developing talent is essential if PNG is to expand its tourism options while bringing sustainable growth and increased employment to local communities. The private sector has thus far taken the lead in improving human resources, with Paga Hill Estate Development Company planning to host a national hospitality and tourism training academy. Furthermore, local firm Coral Sea Hotels formed a partnership in 2018 with the Singapore Hotel Association and Education Centre to train PNG nationals in hospitality management. Offering a six-month intensive course, the initiative had trained 18 people as of August 2019, several of whom now lead operations at the company’s smaller provincial hotels or have taken up management positions in Port Moresby.
Outlook
Weak infrastructure, high prices relative to quality and the perception that travellers risk their safety all act as a brake on sector development. However, considerable scope remains for savvy local and international operators to exploit shallow product offerings in niche markets, notably adventure, cultural tours and ecotourism. In addition, many Chinese tourists have been made aware of PNG through coverage of the APEC summit. Convincing them to visit will require targeted measures, including building an effective team in the newly established marketing office in Shanghai, efforts to accommodate Chinese language speakers and the extension of visa-upon-arrival status to individuals. More broadly, ongoing improvements to transport infrastructure, code-share agreements between airlines and a coordinated effort to counter the perception that PNG is unsafe are essential.
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