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Country Highlights

Vanuatu: The Tourism Industry and Its Impact

In Vanuatu – the tourism industry has played a vital role in the economic growth and development of Vanuatu in recent decades. By 2019, tourism directly contributed around 40% of the country’s GDP and indirectly supported much of the retail, restaurants, transport and construction sectors through multiplier effects. Total visitor arrivals reached around 350,000 in 2019 before the Covid-19 pandemic disrupted global travel.

Australia, New Zealand, Europe and North America have traditionally been Vanuatu’s main tourist source markets. Arrivals from these markets had been rising steadily until 2020. There is also potential for further growth in arrivals from Asian countries such as China, Japan and South Korea as Vanuatu becomes more established as a destination.

Tourism supports over 12,000 local Ni-Vanuatu jobs in accommodation, tour companies, transport providers and the food and beverage industry. However, much of the sector’s profits tend to be repatriated by overseas owners. Encouraging more local ownership and linkages would allow more benefits to remain in Vanuatu.

The growth of tourism demand over the past decade fueled considerable resort and hotel development across Vanuatu’s islands. Most islands now boast small-scale resorts or guesthouse accommodation serving visitors. In addition, the number of cruise ships bringing day visitors has risen. While ongoing tourism expansion stimulates infrastructure upgrades, managing waste, protecting sensitive ecosystems and planning sustainable coastal development remain challenges for communities and authorities.

As a tourism-dependent economy, Vanuatu remains highly exposed to external shocks affecting travel flows. Events such as natural disasters, global recessions and health crises can heavily impact visitor numbers over short periods. Building greater economic diversification and resilience is therefore vital for sustainable national development.

The economy is vulnerable to external shocks that affect tourism such as— natural disasters, global downturns and health crises. For example – Covid-19 led to a 75% drop in arrivals. Diversification into other sectors could increase resilience. Tourism has significantly boosted GDP and employment but also posed sustainability challenges. Further expansion of tourism and related sectors is expected to continue driving Vanuatu’s short-term economic growth.

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