Since the opening of the international airport in 1973, tourism has been important, and directly or indirectly, it now employs more than a quarter of the workforce and accounts for around half of the gross domestic product. The Cook Islands has the highest tourist density in the South Pacific with four tourists a year for every local resident, compared to two Fijians, three Samoans, and four Tongans for every tourist visiting those countries. At times Rarotonga (with six tourists a year per Cook Islander) really has the feel of a little Hawaii, especially from July to October.
About half of the 80,000-odd arriving tourists visited the Cooks originate in New Zealand. Europe/UK comes second with 20 percent, then Australia with over 10 percent and the U.S.A. with five percent. Few Asian tourists make it this far. Most of the New Zealanders and Europeans stay one week, and a larger proportion of the Australians and Americans stay two weeks.
The typical visitor is between 25 and 34 years of age. The New Zealanders tend to be somewhat older and the Europeans younger, and this is reflected in the type of accommodations selected. About half the New Zealanders stay at upscale hotels or resorts, while Europeans are by far the largest users of budget accommodations. Most Australians also arrive on hotel packages, but the Americans are evenly divided between hotels and less expensive self-catering motels.
Rarotonga's waste disposal, electricity generation, and water supply systems are having trouble keeping pace with the rapid expansion of tourism, and lagoon pollution has become an issue along the south coast of Rarotonga. Tourist demand has led to double-digit inflation in the local housing market. Hundreds of low-wage Fijian workers have been imported to staff the resorts and hotels, and some have complained about long working hours and poor living conditions.
In 1984 "experts" from the United Nations Development Program advised that the way to make tourism more "profitable" was to allow more large hotels and stop construction of the smaller, family-operated motels. Finding itself unable to attract the required foreign investment, the government itself decided to bankroll construction of a four-star luxury hotel, and in 1987 NZ$52 million was borrowed from an Italian bank. A year later the Democratic Party government collapsed, and in 1989 Sir Geoffrey Henry's Cook Islands Party was voted in after promising to stop the project. Once in office, however, Sir Geoffrey did an about-face and announced that he now backed the hotel. A management contract was signed with the Sheraton chain and in May 1990, despite many objections from local residents, construction began on the south side of Rarotonga using Italian building materials and contractors.
The 204-room Cook Islands Sheraton Resort was conceived as a cluster of two-story buildings, similar to the Fiji Sheraton, with the inevitable 18-hole golf course. The project suffered repeated delays, and then it was announced that the Italian construction company had gone broke after spending NZ$30 million of the government's loan money without getting much done. A second Italian construction company (Stephany SpA) was brought in, and the government borrowed another NZ$20 million so work could resume. In mid-1993 the Italian government began its "clean hands" crackdown on Mafia activities, and several people involved in the Sheraton project were arrested in Italy, causing the Italian insurers to freeze coverage on the loans, and work on the Sheraton stopped again.
In late 1998 the government attempted to restart the project by letting its lease on the property lapse and turning the project over to Hawaiian/Japanese investors who paid the landowner a NZ$300,000 advance on the annual rent. A few months later the Japanese partner was arrested for tax fraud and the deal collapsed. In late 2000, another company announced that it was willing to finish the hotel, which would become a Hilton, provided it got a casino license. This outraged the pious Rarotongans, who held meetings and circulated petitions vehemently opposed to gambling, and the casino idea had to be dropped. In 2002 a brave attempt by Outrigger Hotels of Hawaii to revive the hotel failed thanks to meddlesome politicians. In 2008 a grandiose scheme by the Wellington-based Tepaki Group to complete the hotel as the "Captain Cook Hilton Lagoon Resort" also collapsed. The uncertainty continues and demolition of the shell of what is now euphemistically called the "Vaimaanga Hotel" may be the only solution.
What has gone on behind the scenes in all of this is largely unknown and the Cook Islands Government claims it doesn't have the resources/ability to mount a proper investigation. Most of the records are said to be missing, and between 10 and 20 million New Zealand dollars have simply "disappeared." In 1998 the government's NZ$120 million Italian debt was rescheduled to NZ$55 million to be paid over 27 years and in 2006 the Italians settled for US$8 million to close the file. (Sheraton had nothing to do with the construction scandal and would have become involved only had the project been completed.)
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