Why Solomon Islands are attracting hotel investment

Image: ©iStock / viavado.

Off the coast of Australia, Solomon Islands are nearly unknown as a tourist destination. In 2016, the Islands received almost 25,000 international visitors, a tiny percentage of the 1.3 million visitors that other Pacific countries—such as the Cook Islands, Fiji, Papua New Guinea (PNG), Samoa and Vanuatu—receive.

And while the country has the core natural and cultural assets to attract visitors, it lacks the infrastructure, developed product and (especially) hotel product to be competitive. 

But this seems to be on the cusp of changing. The lack of hospitality development compared to other tourism-intense Pacific countries could present an attractive opportunity for hotel investors. 

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Room to Grow

Solomon Islands have plenty of growth opportunities. There are no internationally branded hotels or luxury hotels. Most of the hotels in the capital city of Honiara cater to the growing number of business travelers. Resorts such as Titiru, Ropiko, and the Agnes Hotel Getaway in the Western province were upgraded to contribute to accommodation capacity at the provincial level. 

In mid-July, at the “Invest to Preserve” Forum in Honiara, Solomon Islands Prime Minister Sogavare emphasized the importance of the tourism sector, saying “the ball was now in [their] court.” 

“Tourism is a key driver for the economic future of this country and there is a need to find the right package to achieve our objectives and my government is seriously committed to promoting the Solomon Islands tourism sector,” he continued. 

Chris Cocker, CEO of the South Pacific Tourism Organization, further emphasized that “there is a need in the Solomon Islands for an attractive hotel incentives package promoting construction both of new hotels and renovations of existing properties.” Attended by high-level government officials as well as representatives from the tourism and private sector, the Forum signaled a deliberate effort to capitalize on the potential of the tourism industry in the coming years.

Since 2012, international arrivals to the Solomon Islands have ranged between 20,000 and 24,000 with only 5,740 coming in 2015 for vacations. Many of the non-leisure “visitors” were on assignment for the Regional Assistance Mission to Solomon Islands (RAMSI), which ended in June 2017. Visitors are mainly coming from Australia (44 percent), followed by New Zealand, the U.S., Fiji, and Papua New Guinea (around 6-7 percent each). In the first half of 2016, total visitor arrivals (by air and by sea) continued to grow at 26.4 percent. Both arrivals by air (10.3 percent) and by sea (68.6 percent) posted double-digit growth. The growth was supported by strong ongoing promotional and marketing efforts (e.g., attendance at major travel industry events in key source markets by SIVB) and improved international flights. More than 70 percent of holiday visitors are visiting for the first time, staying an average of 13 nights. 

Next Steps

Tapping this potential is recognized in the country’s national development strategy, which targets tourism as a key sector for economic growth. Several areas of need have been identified: 

●    Higher quality accommodations and packages
●    Better marketing 
●    Conservation of potential tourist sites
●    Improved hospitality courses and training institutions 
●    Improved and higher yielding tourist activities 
●    International airport improvements

New Zealand’s development aid agency, MFAT, has been pursuing a major airport upgrade program throughout the country, which has included an emphasis on increasing capacity to accept larger aircraft. This program has assisted airports in the tourism priority destinations of Munda and Gizo. 

The Asian Development Bank also recognizes this potential. In their Asian Development Outlook (ADO) 2017 Report, they state that “tourism offers a new driver for growth, as Solomon Islands is widely considered to have world class tourism potential. Continued implementation of the government’s tourism strategy should help to unlock the country’s tourism potential and gradually provide a more sustainable source of growth.”

In the ever-crowded field of tourist destinations, being one of the least-known can give a destination a competitive edge. The Solomon Islands’ cultural, natural and historical heritage offer the ingredients for an alluring and unique holiday experience—and thus enticing opportunities for investors.

Co-author Scott Wayne, president of SW Associates, a Washington, D.C.-based sustainable tourism consultancy, and his Sydney-based colleague, Dain Simpson, have been analyzing and writing about tourism investment challenges and opportunities in the South Pacific, including the Solomon Islands, for the International Finance Corporation and the Asian Development Bank (ADB). At the time of writing in early August, the ADB President, Takehico Nakao, was due to visit the country later in the month.  

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