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 
------- 
 
 ¶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