The economic impact of cruises in Vanuatu

Note on the source. This source should be read with caution: it may be funded by the sector, a draft or a thesis, or rely on self-reported or modelled data. See the limitations below.

The question

How much do passengers, crews and cruise lines spend in Vanuatu, how much of this spending stays in the local economy, and which investments could increase its benefits and spread them more widely?

The method

Questionnaires completed on board 22 ships after calls at three ports (Port Vila, Luganville, Mystery Island), March-May 2014: 4,039 usable passenger questionnaires (on behalf of 8,839 people, 21% response rate) and 926 from crew. Cruise line data on booked excursions and port fees; a business survey, interviews and focus groups to estimate indirect effects, leakage and employment; cost-benefit analysis of 10 investments. Reference year 2013; induced effects excluded.

What the study finds

AUD 34.6mestimated direct cruise spending in 2013According to the report's estimates (extrapolated from a three-month survey), cruise lines, passengers and crew spent AUD 34.6 million directly in Vanuatu in 2013, about 10% of the country's exports; 90% of this went to private businesses.

≈ AUD 125estimated spending per passenger in VanuatuOn average each cruise voyage generates about AUD 260,000 of spending in Vanuatu, or roughly AUD 125 per passenger (2013 estimates).

≈ AUD 96average daily passenger spend in Port VilaA passenger's average daily spend differs greatly between stops: about AUD 96 in Port Vila, 45 in Luganville and 11 on Mystery Island.

85%of passenger spending captured by Port VilaPort Vila captures 85% of passenger spending in the country (and 80% of total direct spending); the report attributes this to its larger number of calls and richer range of excursions and shopping.

According to estimates based on business interviews, of each dollar spent 59% feeds the local economy (10% to government, 49% to businesses and individuals) and 41% flows abroad.
The share leaving the country varies by sector and stop: about 65% for duty-free and 26% for services. On Mystery Island, where nearly all activities are assumed to be run by locals, it drops to 30%, with 65% going to local beneficiaries.
The report estimates that cruise tourism creates or sustains between 1,170 full-time-equivalent jobs and 3,250 part-time job opportunities in Vanuatu; the estimate includes 120 ni-Vanuatu employed on board ships.
Between 20% and 33% of passengers who had bought food, clothing, jewellery or souvenirs said they would have spent more with a wider choice. Spending is positively correlated with satisfaction with the variety of things to do and with hours spent ashore, up to about 7 hours (p. 13).

Why it matters for ports and cities

The report estimates, sector by sector and port by port, how much cruise spending stays in the country: according to the estimates, this depends on who owns businesses and how much is imported, not just on passenger numbers. For a port destination it points to levers such as variety of onshore offer, involvement of local firms and spreading calls across several places.

Limitations

A survey covering a three-month period and only ships from two cruise groups, extrapolated to the whole of 2013; leakage and employment rest on interviews and assumptions (e.g. 80% of businesses foreign-owned, exporting 50% of profits). Induced effects and environmental or congestion impacts are not estimated. The study is co-funded by a cruise company, which supplied part of the data.

Full reference and source

International Finance Corporation (Gruppo Banca Mondiale), Australian Department of Foreign Affairs and Trade, Carnival Australia; studio condotto da Net Balance Management Group (2014). Assessment of the Economic Impact of Cruise Ships to Vanuatu.

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Summary written by the ODYBOAT Observatory in our own words. Tables and figures belong to the authors.