Papua New Guinea’s Vision 2050 and the Medium Term Development Plan (MTDP) 2011-2015 sees tourism rising to become a significant driver of the economy. This government recognition is supported by tax incentives such as double deductions for costs associated with export market development, and double deductions for tourism staff training costs. Accelerated depreciation is yet another form of tax incentive whereby capital investment in eligible tourism facilities qualifies for 55% increased initial-year depreciation. Investors in large-scale tourist accommodation facilities may be eligible for a concessional tax rate of 20%.

Foreign investment in Papua New Guinea is facilitated, regulated and monitored by the Investment Promotion Act and is subject to guarantees under the Multilateral Investment Guarantee Agency and other international agreements.

The Papua New Guinea government has targeted tourism as a priority area for the economic development of the country and for the creation of both rural and urban employment opportunities. The national government’s Medium Term Development Strategy (MTDS) has called for tourism to be a significant driver of the economy. The MTDS supports the use of fiscal policy tools to promote Papua New Guinea’s tourism industry, particularly the extension of existing tax concessions to the industry, provided a comprehensive appraisal of these incentives is conducted to make sure that the increased benefits from tourism are outweighing the costs of reduced tax revenue from tourism operators.

The development and expansion of tourism in Papua New Guinea is spearheaded by the Papua New Guinea Tourism Promotion Authority, with the support of government agencies and industry partners such as the Investment Promotion Authority, Internal Revenue Commission and Papua New Guinea Tourism Industry Association.

Recent developments in tourism hospitality included refurbishment and expansion of several well known Port Moresby hotels. The Airways Hotel is adding 63 new suites and providing retail space, a day spa, coffee shops and conference facilities. The Gateway Hotel and the Ela Beach hotel have indicated plans for expansion and refurbishment in 2009-2010 and more than US$50 million has already been invested in upgrading the Holiday Inn and Crowne Plaza hotels.

An upsurge in business tourists requiring accommodation in Port Moresby has meant good quality hotel rooms are often in short supply. Several new hotels are in the wind to ease this shortage including a luxury hotel planned by the Kumul Group which owns the existing Crowne Plaza and Holiday Inn complexes. The Coral Seas Hotel Group, which operates the largest chain of hotels in Papua New Guinea, has a 12-storey complex under construction in Port Moresby to add to Coral Seas’ growing chain. Coral Seas’ new complex on Mary Street combines residential and short-term apartment accommodation. The combination of short- and long-term accommodation is also favoured by the developers of the Kingfisher Apartments and Reef Apartments.

Extra rooms provided by refurbishments, extensions and new developments underway in 2009 are expected to be available in 2010. Although easing the accommodation shortfall, these are unlikely to fully satisfy the growing demand for high-standard accommodation in the country’s capital.

The capital city is not alone in attracting new hotel developments. Major cities like Madang, Kokopo and Lae also have new hotels under construction or existing ones undergoing expansion to add new rooms and apartments in 2009.