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By Mere Tuqiri

AVARUA, Rarotonga, Cook Islands (August 3, 2000 - Islands Business Magazine/PINA Nius Online)---Aitutaki. Population: 2,366. A spattering of micro coral islands encircled by a 45-kilometer/27-mile aquamarine, shark-free lagoon. Small, just as Cook Islanders prefer things, but obviously massive on tourism.

Not surprising considering that the industry is the Cook Islands' number one revenue earner, followed by commercial black pearl farming and agriculture. In-bound tourist figures are positive, indicating effective marketing strategies, appropriate infrastructure and a relatively stable political, social and economic climate.

Year 2000 was an encouraging start as tourist numbers soared from 28 percent in January to 50 percent in April. Business is expanding. But there is one-snag -- a shortage of accommodation facilities. Occupancy rates are so high that potential visitors are denied accommodation.

Edward Drollet, Chief of Staff in the Office of the Prime Minister, explains: "Aitutaki mirrors what's happening in Rarotonga because of the impact of tourism there. In the other outer islands the impact of the reform process, which started in 1996, (emphasis was on reducing the public sector and promoting the private sector) was depopulation in which a lot of people left the islands and migrated to New Zealand. But the position in Aitutaki now is accommodation problems. Same problem in Rarotonga. Hotels are full so tourists are turned away."

However, with proposed hotel developments in the pipeline, that hitch can be rectified. The reconstruction of the Rapae Hotel on Aitutaki, for instance, offers part of the solution once the matter concerning the choice of a developer is settled.

Minister of Tourism and Foreign Affairs Robert Woonton said that the landowners, who can expect some return from the venture, have the final say as to whom should undertake the work. There are three interested bidders. The property is government-owned.

"A goodwill payment of $NZ 0.5 million (US$ 227,126) will go to the landowners and 1.5 percent of the turnover also go to them," Woonton said. "It'll start off with 30 rooms, but we're aiming for 100. We hope to build its status to four-star level."

According to Drollet, the cost of the hotel may fall within the $NZ 20 million (US$ 9,085,060) range. Furthermore, Aitutaki Lagoon Resort, described by Cook Islands Tourism Corporation Chief Executive Chris Wong as a potential accommodation unit, hopes to extend its accommodation facilities to include eight over-the-water bungalows.

Developments: Meanwhile, construction will resume shortly on the dormant former Sheraton Hotel site on Rarotonga. Developers and the Cook Islands government have agreed to proceed with what is now called the Vaimanga project. The hotel, says Woonton, will be managed by the Hilton chain and will be called the Hilton Vaimanga Hotel. He says now the country anticipates the development will significantly boost the tourism industry. With all the proposed developments there is hope to cater for the increasing traffic of tourists into the Cook Islands. Possibilities of surpassing the record year of 1994, which registered 57,000 visitors, appear feasible.

Woonton is confident tourism will grow, but he stresses non-reliance on an industry vulnerable to global changes. There is an economic drive to promote the country's tourism industry alongside marine resource development and agriculture.

"We'll get to a stage whereby we'll have to assess the situation because it's a fragile industry," he said. "While tourism provides revenue the country needs, it's necessary to diversify, for instance, transferring the pearl farming industry to islands that can cope with pearl farming. We want to expand bone fishing or angling and improve the agricultural sector, which is one of the growth areas of the economy. Increased productivity is the aim. There are plans to look into prawn farming as well."

Aitutaki Premier Tai Herman agrees with Woonton that there is a need for a more sustained marine resource program, the beneficiaries of which would be the fisheries sector and the local people. Tourists also have the luxury of enjoying the marine life.

Says Woonton: "We're trying to create awareness that the value of fish in the lagoon is greater than the value of what's on the table." Consequently, within six months marine resources in Aitutaki waters have quadrupled. Rarotonga and the outer islands have taken the initiative to also practice marine conservation.

Herman, who also operates a lagoon tour business called Paradise Islands (jointly-owned with Air Rarotonga), says controlled harvesting is necessary if yields are to increase. Ra'ui is the traditional conservation method practiced in the Cook Islands. It bans the harvesting of marine resources to aid rejuvenation. Swimming and snorkeling, however, are permitted in Ra'ui zones. Bans may be lifted depending on resource availability and on decisions of traditional leaders.

Meanwhile Herman, who designed Vaka Titi-Ai-Tonga (his double-hulled vessel) on the back of a Steinlager box, says Aitutaki's cruising sector needs development. He has another boat on the drawing board. Herman defines the deal with Air Rarotonga as flexible in that they work the bookings while he handles the lagoon side. With hotel growth on Aitutaki, Herman says: "We have to view Aitutaki tourism in a sensible manner in that it has to develop hand in hand with the environment. "In Aitutaki there is a stipulation that there be no more than 250 rooms per accommodation unit because of the infrastructure and human resource availability. But the plan will be reviewed and updated. We want to maintain the status quo of the island by retaining the building structures; simple units rather than high rises." The Cook Islands, with a total land area of 240 square kilometers/96 square miles, observes the premise that no building should be higher than a coconut tree.

There are plans to attract Cook Islands residents in New Zealand, who are attached to the hospitality industry. It involves the relaxation of work permits. Woonton said that Cook Islands is opening its borders to interested trained individuals, especially where no local expertise is available. On June 2 the Cook Islands government with the local government of Manukau City in Auckland, New Zealand, signed a Memorandum of Cooperation that would allow Cook Island students to study at the Manukau Institute of Technology (MIT).

New confidence: Woonton said that 60 percent of the 20,000 MIT population consists of Pacific Islanders and the Cook Islands government intends to draw from that academic resource to work in trade and hospitality divisions. Cook Island students were previously sent to Fiji. Although successful, students were not trained at the management level. Economically, the Cook Islands appears to be performing well. Its economy took a dive in 1996, impacting the public service and leaving the country short of almost 4,500 residents.

But Woonton said the government has new confidence in the community. Indications of a recovering economy are reflected in the country's international credit rating. According to independent assessors, the Cook Islands has climbed a notch, improving its long-term debt from a B minus to a B and its short-term debt standing from a C to B.

Says Woonton: "We've experienced a 4.5 percent growth in the economy -- better than the projected growth rate of 3.5 percent. Government is looking to increase the minimum wage from the $NZ 3.80/US$ 1.73 to about $NZ 4.50/US$ 2.04. If we go too high it might hit the private sector. Therefore, there should be some agreement in principle as to the level. The tourist industry has allowed people to become self-employed, for instance tour guides, dance groups, the pearl industry. The latter generates over $NZ 9 million/US$ 4,088,277 and is growing. It's anticipated that by the next 12 months the pearl industry will output about $NZ 12 million/US$ 5,451,036 for 16,000 people.

"This month (July), seaweed farming will take off in the northern islands (in the Cook Islands chain). We've devolved a lot of responsibility to local state governments rather than centralizing decision-making to government in Rarotonga. But the regulatory functions (police, health, and judiciary) are retained with the central government. The central government really is there as a checkpoint or guide. We can see the results already. The days of spoon-feeding each island are gone. They're given their budget and they work with it."

Meanwhile, the Rarotonga Airport, which was built about 25 years ago, will be upgraded with a new management hopefully by next year. Negotiations with a Canadian company for the management of the airport, says Woonton, is continuing. Whether the Aitutaki airport will be upgraded also remains uncertain. Woonton says that the development, which will cost around NZ $15 million/US$ 6,813,795 will improve the terminal and ancillary services. New facilities, he said, might include a bar and a conference room. Woonton and Premier Herman were previous chairmen of the Rarotonga Airport board. "The development is initiated with the Vaimanga upgrade and Aitutaki upgrade," Woonton said.

"With the developments we anticipate more visitors and hopefully increased clients and airlines into the Cook Islands. We're also looking at the South American market. The plans are there, but it's a matter of sewing it all up," Woonton says.

For additional reports from Islands Business, go to PACIFIC ISLANDS REPORT News/Information Links: Magazines/Journals/Fiji Islands Business.

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