Air New Zealand has announced that it is cutting its three flights per week service between Nadi and Los Angeles effective from April.

On February 2007 I wrote of the current coups potential crippling effect on Fijis tourist dependent economy. As previously anticipated, the likelihood of the nervy US market being effected long term has clearly been demonstrated by today’s Air NZ announcement.

The suspension of issuing new titles to foreigners at the start of the coup has frighten purchases away. Although this suspension was only temporary, the motivation was not clear and many observers comment that prospective property purchases felt that title to foreigners were not safe and potentially land could be nationalised back to native title.

Toberua Island is the latest offering to be marketed internationally to prospective purchases who might wish to buck the risk aversion that currently has gripped the Fiji property market. Situated at the Suva end of Fiji’s main island of Viti Levu, Toberua Island is approximately 1.62ha in size and has a 15-bure resort.

Toberua Island resort is a long established resort with an international reputation that included many celebrity guests, however it became rundown and overpriced prior to its sale to the present owners in 2001. The current owners have extensively refurbished all bures and included spa and massage services in a new purpose built area on the resort. The advertising spiel also lists a new retail shop, wine cellar, manager’s house, staff quarters, two new boats, a barge and recreational equipment including canoes and hobbie cat. The lighting, wiring, water storage and power supplies have all been upgraded.

The island complete with the resort, is for sale for $3.9 million NZD as a going concern freehold.

Not bad really when the replacement cost to build this type of resort would be much much more. Then, the price to buy a freehold island would also need to be added to the development cost. Allowing for depreciation of the resorts buildings and plant equipment, this price sounds very very reasonable. Almost half to 60% of the market price.

So what’s the catch?

The catch here is three fold.

Firstly I have covered the coup that has dampened prices.

Secondly the resort is located close to Suva.

And why bag Suva. That is related to my first point “the coup”. Suva is the capital of Fiji for home invasion, violence and burglary. It is also the capital of coups. The coup in Fiji could be called a Suva coup as little effect is notice or experienced outside this city.

The third reason is once again related to the coup. I had a recent meeting with the head economist for a New Zealand bank. During our discussions I asked what the banks attitude is to Fijian investments. The banks response was that they are not lending on any Fiji related development or property transaction full stop.

Commodore Voreqe Bainimarama, reinstituted martial law last week. The new regulations gives his soldiers the right to kill without criminal sanction. In response many countries have increased there travel advisory warnings. But is it safe to ignore these warnings and travel to Fiji?

I think you need to analyse two things before making a decision as to the security issues facing travellers.

Firstly it could be argued that New Zealand and Australia uses these travel advisories as political leverage in its diplomatic tussle with Fiji. The Fijian Islands economy are heavily dependent on tourism and in particular from those travelling from Australia and NZ. Any travel warning issued from these governments has the potential to cause internal pressure on the Fijian administrators.

Secondly, are you travelling to the capital city of Suva? The purpose of martial law is mainly to control the areas around Suva. Travellers arriving at Nadi International airport and visiting outer island resorts or Denarau Island will likely be unaware of any activity associated with martial law.

I have travelled to Suva many times and feel that even without the introduction of martial law, it is not a desirable holiday destination city.

Both New Zealanders and Australians continue to ignore these travel warnings and flock to Fiji in ever increasing numbers.

Fiji latest coup has been generally well received by the local population and has been described as a very smooth coup. Apart from the occasional military road block there is little evidence of military muscle and in true Fijian style one of these road blocks was manned by a soldier asleep behind his machine gun.

As reported earlier, visitor arrival numbers suffer during this political unrest, however the Fiji visitors bureau is hoping the industry will recover by June and arrival numbers will once again be over the 50 000 per month figure.

The bureau has reported that tourist arrivals were better than forecast. In January 26 000 visitors were forecast to arrive with actual numbers exceeding 35 000. Februarys forecasted 26 000 visitor arrivals resulted in 34 000 arrivals.

Bureau chief executive Viliame Gavoka said that although visitor arrivals have been better that expected this did not reflect in high accommodation occupancy rates. Mr Gavoka commented that high occupancy rates can only be achieved with arrival figures of 50 000 plus.

Fiji has in recent years seen the building of many new resorts that were planed on a projected arrival figure of 50 – 60 000 visitors per month. The present visitor arrivals have resulted in lean times for the accommodation industry that was very apparent among the Denarua Island resorts. During our tour of hotels it was evident that occupancy was around the 20 to 35% range with many staff suspended until the rates improve.

With another 300 rooms planed for completion in July 2007 on Denarua Island and many more large hotel developments in progress along the Coral Coast, Fijis occupancy rates look precarious even with the predicted rebound in visitor arrivals.

The recent coup has resulted in many countries issuing travel advisories warning against non essential travel. These warning together with the political uncertainty has resulted in an immediate fall in tourist booking from Fijis two largest markets namely Australia and New Zealand.

Tourist wholesalers have had a rocky road in recent years rebuilding tourist confidence only to have it shattered once again by the repetition of military coups. These inbound tourism operators have however gained the expertise to rebuild tourist numbers learnt from previous coups.

Someone’s misfortune as another one gain aptly applies to Fiji travel deals on offer to Australian and New Zealanders wishing to ignore Government travel warnings. Holiday makers have flocked to purchase heavily discounted holiday packages for the large hotels of Nadi, Denerau Island and the Sunshine Coast region. Even smaller resorts located on the Mamanuca and Yusawa Island groups, have been discounted up to 60%.

The marketing of these discounted holiday packages have been relatively successful for the New Zealand and Australian market however sales to North American and Asian travellers have been less impressive. Resistance by these markets will have a flow on effect for tourism in both Australia and New Zealand. Fiji is often visited in combination to Australia and New Zealand.

As reported earlier, New Zealand inbound tourist numbers are at a record high. These tourist statistics were released for the year ending January 07 and would include only one month of possible Fiji coup effects. Further analysis of these figures show a large increase in Australian numbers and a decrease in Asian figures. I believe that New Zealand tourist operators will feel the negative effects of the Fijian coup in the coming months for two reasons.The gain in tourist numbers in the Jan 07 figures relies heavily on the Australian market. New Zealand as a destination for Australians is now competing with Fiji “loss leader” type marketing.