These days, the question on everybody’s mind is ‘Have we turned the corner?’

Are we beginning to emerge from the hole left by the back to back (to back) disasters of 2015? Between cyclone Pam, six months of severe drought and political turmoil that landed us in the airport debacle, Vanuatu’s fragile economy has been pushed nearly to the breaking point.

What’s difficult to measure, though, is much further it will have to bend. How much flex have we got left? Has the economy begun to rebound or not?

At the centre of all of this is tourism, and a key component to tourism is air arrivals. This is the number that most tourism operators are watching most closely. Air arrivals tend to spend a little less per person per day, but stay much longer, than tourists arriving on cruise ships.

The latest numbers we have from the Vanuatu National Statistics Office date back to October 2016, so they’re not perfectly indicative of the state of things today. But they’re quite useful nonetheless.

The Daily Post has conducted an analysis of the numbers, and they show some interesting trends.

Mixed results

We compared the 12-month period ending in October 2016 with the same period ending in 2014. We jumped a year because of course nearly all of 2015 was an anomaly as far as tourist patterns and economic activity are concerned.

On the top line, things still look far more dismal than we like. The raw number of arrivals, which dropped to nearly 37% below normal in March, began to rebound, but sadly, the peak season in August and September was flat. August was off by over 22% from the norm. Over the entire 12-month period, tourism air arrivals were off by just over 16%.

Silver lining

But not all the news was bad. If there’s any silver lining to the cloud that’s been hanging over us for the last couple of years, it’s that we’ve found out who really loves this country. The number of people visiting Vanuatu has dropped, but those who are coming are staying longer. It’s clear that this country has a deep appeal to those who persist in coming despite the obstacles to entry.

The average length of stay was well off the pace during the six-month period ending in March last year. But the duration numbers picked up significantly in the latter half of the period, averaging nearly 17% more each month. More encouragingly, the last three months showed improvements of 20.5, 20 and 34.6 per cent respectively.

This means that although arrivals were still off by nearly 9% in October last year, estimated overall revenues from air arrivals rose by 22.6% over October 2014. In practical terms, this represented a little over VT275 million in additional spending.

Estimated spending was off by just over 14% for the period, but without the late rally, things might have been much worse.

An increased average length of stay has to come as good news to struggling resort, tour and activity operators, many of whom rely almost exclusively on air arrivals for their livelihood. They can be confident that the trends we see in the October are continuing.

All wet

Likewise, increased rainfalls in the past months are welcome to produce farmers, restaurateurs and water sport activity operators, not to mention rural communities whose water supplies have been sorely depleted.

Nonetheless, we’re not looking at clear skies just yet. This may seem like another case of lies, damn lies and statistics, but although the average monthly spend over the 12-month period ending October 2016 is up by a tiny fraction, the total amount of revenue was down by just over VT2.4 billion compared with the period ending October 2014.

In other words, early losses have not nearly been made up by recent gains. And you can’t take billions out of the economy without someone getting hurt.

Eyes on the prize

Everyone’s eyes are on the calendar right now. On December 20th of last year, a procurement expert for the World Bank told bidders they would do their best to announce a winner on the airport runway upgrade project within a month. That month has come and gone without a word.

The Daily Post spoke with people close to the process, and was informed that a recommendation has been made, but officials in Vanuatu are waiting for a response from the World Bank’s Washington office, which must sign off before funding details can be finalised. One source said that they were nearly ready to ask the government to intervene to end Washington’s silence on the topic.

Reports are circulating that the source of the delay is disagreement with Vanuatu’s recommended selection. In the past, local officials might have deferred to Washington. But given their experience with the World Bank-designated project manager who managed to compound an already dire situation with their faulty runway damage assessment, it’s unlikely that that people in Vila are feeling quite so conciliatory this time.

Sources expressed confidence, however, that a competent and cost-effective candidate would be chosen soon.

Asked if this nearly month-long delay would affect the timing of the repair, AVL officials indicated that they were intent on adhering to the original timeline. Any delay would start to push into winter peak season, and any further punishment for tourism operators could cause business failures, even among larger operations.

‘A parlous state’

As one local businessman and investment advisor said recently, Vanuatu’s economy is in a parlous state. While these data seem to suggest that we are slowly emerging from the dark before the dawn, it’s not yet clear what the new day will bring.

Rumours are rife—and hard data is hard to find—that a number of high profile operations are in an existential struggle. The next 6-12 months are going to be make-or-break times for a number of businesses.

Balancing these concerns is a government that, despite a few missteps, has shown more competence—and more willingness to keep its head in the game—than many of its predecessors. On Friday, it celebrated a year in power at a gala function at the National Convention Centre.

A key principle guiding its work is the desire to Build Back Better. Not content simply to return the airstrip to its original condition, it has committed not just to a ‘Code E’ runway, but to an ambitious new terminal building on the opposite side of the runway. It has applied a healthy dose of pragmatism to the early stages of development, and with a little luck, its ambitions will not be circumscribed or thwarted by its development partners.

Build Back Better should be a watchword for Vanuatu over the remainder of 2017. It’s seems clear that, despite the setbacks, we’ve actually inherited a better, more engaged kind of tourist over the last year and a half. It seems clear as well that businesses are using this economic shakeup as an opportunity to get smarter and leaner. With a little luck, and hopefully not too much more perseverance, our economy may just live to see the light of day.

Farther horizons

Among the many tourism sector improvements the government and stakeholders plan to deliver is deeper penetration into the islands. Currently, tourism activity outside of Efate and Santo consists of volcano day tours on Tanna and not much else. This in spite of the countless other world-class attractions on other islands.

That may change in the coming years. Vanuatu just embarked on a project to develop a new aviation sector strategy. This, according to AVL chairman Bakoa Kaltongga, should allow Air Vanuatu to make a strategic pivot toward domestic operations as long-haul carriers and charter operations take over as the primary sources of international air arrivals.

This may seem to be a lost opportunity to some at Air Vanuatu, but its domestic operations offer much more profit potential than the brutally competitive international markets, especially once ownership of long haul, wide-body aircraft becomes mandatory in order to survive even in this market.

At a public event recently, Mr Kaltongga dreamed openly about a day when the ATRs would land on every major island in the country. If increased passenger capacity and flight frequency are accompanied by reductions in fares and fees, that could be enough to spur a renaissance in adventure tourism and a vast expansion of Vanuatu’s potential as a uniquely exotic destination.

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