From Matangi Tonga Magazine Vol. 13, no. 4, December 1998.

Tonga’s biggest hotels face closure before the year 2000.

Tonga’s four big hotels, the Pacific Royale Hotel, the International Date­line Hotel, the Friendly Islander Motel and the Royal Sunset Resort are fighting an up-hill battle to keep their doors open, and to remain in business.

Joe Ramanlal, the president of the Tonga Tourist Association and the manager of the Pacific Royale Hotel, said that after four years of decline, the tourist industry had hit the rock bottom. “If you ask me how is the tourist industry, the answer is Dead! There are no tourists.” Joe said that things were so bad that their income was not enough to cover their expenses, “so it is probably better for us to close down.”

The hotel has just made a final bid for government to intervene and bail them out. If the bid fails, he said that Tonga’s tourist industry would collapse. “The year 2000 will arrive but there will be no hosts to accommodate visitors.” Joe estimated that they would need $10 million to put the industry back on track.

Despite government’s annual report of about $16 million from tourism, and a flow of around 25,000 tourists into Tonga each year, some of the hotel owners find it hard to believe these figures.

Tourism earnings

Simote Po‘uliva‘ati, the general manager of the Dateline Hotel said that the reported annual foreign earnings from tourism of about $16 million was an inflated figure. “They are counting all the foreign currency exchange that is going on in the banks as tourist earnings, but a large amount of that money is remittances.”

Simote said that because the industry had been at a low during the past four years they had not been able to carry out some of required repairs and maintenance to their hotels. “Besides preventive maintenance, which should be carried out all the year round, every five years there should be a major renovation.

“What I would like government to do is to give us a space to breathe. I am not asking for the Tonga Development Bank to wipe out our loans, but to defer our loan repayments for a while, giving us a chance to renovate our properties.” Simote said that there was only a slight improvement this year, and he hoped that this trend would continue next year, “and it will continue to do so as we are getting closer to the year 2000. Most of us are booked out for the New Year celebrations 1999, so if we can up-grade our properties then we should be able to take advantage of the tourist in-flow.” Simote believed that they should be able to recover and eventually repay their dues to the bank.

Jobs

David Hunt of the Royal Sunset Resort supported the view that the only way out was for government to move in with a recovery package, because the alternative meant disaster for the industry. David will not even consider closing down his operation. The commitment that he has made to the island is worth more than its face value, and he has already rebuilt the resort once after it was gutted by fire. “We are putting into the village here about $7,000 a week in salaries, and to stop that would be disastrous for everyone.”

Papiloa Foliaki of the Friendly Islander Motel said that at this stage of the development of the tourist industry co-operation between government and the tourism operators was essential, “we have committed our life to it, and in our case we either get government help or we die.”

Papiloa expressed her concern that if the bank decided to take possession of their property it could mean taking the industry away from its Tongan owners and giving it to foreigners.

Loans no differerent

But tourism is not the only sector seeking a government bail out at this time. Agriculture and fisheries are also experiencing a difficult time and are seeking financial assistance.

Simione Sefanaia from the Tonga Development Bank said that he was aware of the problems faced by these tourist establishments, but their cases were not treated any differently from other borrowers. “It was a business decision of their own, and if it was successful, the profit would have been all theirs, and as far as the bank is concerned they will not be treated any differently from our other borrowers.”

Simione said that the Tonga Development Bank is solely owned by government, “and unless government tells us to do something else other than to carry out our normal banking business, the Tonga Development Bank will proceed and take action to recover its money”.

He said that when businesses default on their loan repayments the bank did not want to take over and run businesses, “We don’t know how to run hotels. What we could do would be the same as with house loans. Instead of taking possession of the House, we can sell it and try to recover our money, but we always end up selling at a loss.”