Major study underlines Papua New Guinea's cruise tourism potential

Cruise liner visits are becoming a solid source of tourism revenues for Papua New Guinea and are increasingly being viewed as important to the sector’s development. Travelling by cruise ship is considered an ideal way to explore PNG, as there is the advantage of on-board lodging and amenities, meaning visitors can access remote areas that perhaps lack modern facilities and infrastructure. They also bring tourists directly to their destinations, allowing them to avoid major urban centres.

Economic Impact 

In 2016 a major study was published examining the benefits of cruise ships to the economies of PNG and Solomon Islands. It was commissioned by the Australian Department of Foreign Affairs and Trade, cruise company Carnival Australia and the International Finance Corporation. The research found that cruise ships are bringing considerable wealth to the countries’ ports while also creating jobs. It also highlighted a number of improvements that could be made to improve the passenger experience, help guarantee further growth and boost spending by tourists onshore.

According to the report, which focused on five ports in PNG and used the results to arrive at nationwide figures, the country made an estimated A$5.9m ($4.3m) from ships visiting in 2015, and an average of A$94,500 ($69,600) per ship. This was equivalent to 0.01% of PNG’s GDP for that year. The visiting cruise ships have direct and indirect impacts on the economy, both of which were covered by the study. Spending by passengers and crew while onshore, and the fees paid by line operators, count as direct impacts. Beneficiaries of this spending include the government, tour operators, souvenir shops, restaurants, general retail stores and transport providers. Indirect revenues, meanwhile, are generated when those direct revenues are spent locally.

Cash & Jobs

According to the study, 54% of the direct revenues in PNG come from cruise operators themselves, with most of that total derived from port fees. The cruise passengers provide 43% of the direct revenues, most of which go to the government (30%) and tour operators (30%), while souvenir sellers take 6%, food and beverage establishments 3%, and retail stores 3%. Alotau took in an estimated A$47 ($34.61) of direct revenues per passenger, Doini Island AUD9 ($6.63), Kiriwina A$9 ($6.63), Kitava A$7 ($5.16) and Rabaul A$76 ($55.97).

Cruise tourism supported 203 jobs in the ports studied, or about 0.6% of the workforce. A total of 52 tour jobs were created, along with 135 in specialist tour-related retail establishments, five in general retail, seven in restaurants and three in transport. Of these jobs, 72 were in Rabaul, 44 in Alotau, 41 in Kiriwina, 31 on Doini Island and 15 in Kitava.

Port Traffic

Of the five ports studied, the two busiest in 2015 were Rabaul, with 16 calls, and Alotau with 15. In all, the five ports surveyed hosted 60 ships, and the report extrapolated this figure to estimate that the country attracted 136 calls nationwide in 2015. In total, more than 40 ports accommodate visits from cruise liners.

Significant differences were observed in expenditures at the busiest ports. At Rabaul and Alatou, the vast majority of direct expenditure was on tours, while at the others very little was spent on the activity. Indeed, when tour revenues were factored out, the small ports performed relatively well, generating the same amount of revenue or more than the larger ports in terms of souvenir and food sales.

Cruise lines spent an estimated A$1.5m ($1.1m) in Alotau in 2015 and A$900,000 ($663,000) in Rabaul. The study found that the fees paid by companies operating in PNG are significantly higher than those for other jurisdictions, such as Solomon Islands. It notes that the cruise business is highly competitive and that ports with fees significantly out of line with regional averages could be bypassed in the future.

Furthermore, rules and regulations in PNG make doing business relatively difficult for the cruise operators, as per the report. All ships must first enter a so-called declared port before stopping at undeclared ports, leading at times to less-than-ideal itineraries and precluding cruises from stopping only at an undeclared port, such as the Conflict Islands. The study added that the various authorities had not coordinated their efforts in imposing the regulations, resulting in a lack of consistency in charges.

Passengers

It is estimated that 93-97% of passengers go ashore in the five ports studied. Average time ashore was between 3.4 and 4.3 hours, slightly less than the global average of 4.4. In some locations, the percentage of passengers going ashore and not spending any money was high. In Kitava the number was 40%. In Kiriwina it was 39%, while the figures in Alotau and Rabaul were as low as 17% and 6%, respectively. The results highlighted that cruise passengers going to PNG destinations are not looking so much for services, but are more interested in the natural beauty of the locations and the local culture. In general, passengers did not expect to spend much money, and when they did make purchases, they were more interested in transactions that helped the local communities. Spending by tourists who did not prebook a tour was much lower than by those who did.

Onshore Experience 

Visitors were sensitive to the pushiness of vendors and tended to favour locations where retailers were less so. A lack of transport and amenities also reduced the time spent ashore. Many passengers said that the quality of information provided by both their ships and the local administrations was poor and that prices were much higher than they had anticipated.

In terms of satisfaction, Doini Island rated the highest, while Kitava was second and Rabaul third. Alotau is 30 minutes from its nearest port, so satisfaction levels were relatively low. Passengers looking for an authentic experience were disappointed when they found that some local handicrafts were imported.

Recommendations

The report identifies some options for boosting cruise tourism. These include improvements to port infrastructure, such as extending the jetty at Kitava to enable more efficient passenger transfers to and from ships; bringing freshwater supplies at Alotau to international standards so that ships from Australia can replenish their supplies there; and developing the port at Madang to enable larger ships to dock. The study also suggests installing an ATM at the Alatou port for passengers to obtain kina more easily. Furthermore, it recommends that more information on the ports be provided to passengers prior to arrival and that better coordination onshore would improve Customs and immigration procedures. The study estimates the total of cost of its recommendations to be A$1.3m ($516,000), with the potential to yield as much as A$13.8m ($10.2m) at current prices over 10 years.