Covid-19

Reinventing tourism the Rarotongan way

Resort owner and controversial business leader Tata Crocombe has a plan to save tourism in a new Covid era – and it involves Silicon Valley. Jonathan Milne visits him at his Rarotongan resort.

Tata Crocombe has a desk in Silicon Valley. It’s at the Plug and Play Tech Center, one of the original venture capital incubators in Sunnyvale, Silicon Valley. From the outside, the 17,000 square metre Center looks like a sprawling terracotta-coloured shopping mall, the carparks interspersed with pink-flowering ornamental myrtle trees.

Inside, clusters of desks sit beneath hundreds of gaudy logos, some of them probably little more than ill-conceived vanity projects, some already household names. Plug and Play was an early investor in Google, PayPal, Dropbox and LendingClub. Among the logos may be the next big innovation that changes our lives.

Crocombe also has a desk at his famous Rarotongan Beach Resort and Lagoonarium, overseeing the second-biggest hotel group in Cook Islands. Outside are coconut trees, white sands, the best snorkelling in Rarotonga – and yellow ribbons cordoning it off.

The Rarotongan Beach Resort and Lagoonarium is closed off and mothballed for at least three months while staff work on the government-subsidised minimum wage to refurbish it. Photo: Jonathan Milne

Until a month ago, he could get in his car and drive from The Rarotongan to the country’s international airport, just a 12 minute jaunt around the island’s sun-dappled north-west coast, board an evening Air New Zealand flight to LAX, and be at his desk in Silicon Valley barely 12 hours later.

That’s changed now – perhaps forever. Today, Crocombe is inside a coronavirus lockdown he shares with 15,000 other people on 240 sq. km of land dotted across nearly 2 million sq. km of ocean. It’s an almost impermeable bubble called Cook Islands.

The country’s 170,000 annual tourists have all left, bar about a dozen who have hunkered down for the long run. There are no more flights from LA. None from Tahiti, none from Sydney. There’s just one a week from Auckland, but it carries only cargo.

So the jetsetting Crocombe, a Harvard-educated former NZ Army reserve officer, is tied to his desk in Rarotonga – or at least to his laptop, as he shows me around the mothballed resort.

“There’s nobody here today because we’re only working Monday to Friday,” he explains. “Hospitality is a seven-day week business, so we’re taking the opportunity to give everyone their weekends off. They’ve never had weekends before! They’re loving it – but they’re not going to love it forever.”

SEEKING SMART SOLUTIONS

As well as his three mothballed Rarotonga and Aitutaki hotels, Crocombe manages three tech joint ventures that float somewhere between Silicon Valley and The Bubble and The Cloud.

One is with Stratifyd, a North Carolina-based augmented intelligence start-up whose giant computer brain has scanned 400 million hotel reviews and applies that knowledge to questions like a hotel’s competitive advantage or who are its most profitable guests. Another venture assists visitors find the best price in the market, below that shown on meta-search engines such as Kayak and TripAdvisor.

Cook Islands resort owner and entrepreneur Tata Crocombe has a desk at Plug and Play Tech Center in Silicon Valley, which invested in many well-known dotcom startups. Photo: Keon Woo Kim/Google

A third is with Bespoke, a company whose Bebot multilingual chatbot is already a popular way to deliver personalised visitor information 24/7 in Japan – and is now ready to expand its artificial intelligence to the tourism industry around the world.

It was during a lunch in Silicon Valley with Bespoke’s founder and chief executive Akemi Tsunagawa that the idea of using Cook Islands as a testing ground for their software came up. Rolling out her multilingual chatbot in a hotel market as big as the USA was too hard, so why not a little country instead?

So for the past year, Stratifyd and its data scientists have been swotting up 100,000 Cook Islands online reviews (that’s all of them). Stratifyd is the brain; Bebot is the human interface. And soon, Crocombe hopes to switch on the chatbot for his own hotels.

He says online travel agents like Expedia and Booking.com were the biggest tourism innovation to come out of the global financial crisis of 2007-08 – and this year, it was those companies that panicked first and unilaterally refunded all their customers’ non-refundable deposits, plunging the world’s hotels further into financial crisis.

Those refunds could cost his company alone $5 million, he says, and could cost the Cook Islands accommodation sector more than $50m.

Now, the hotel and travel industry faces another, bigger crisis – and he believes artificial intelligence is one of the innovations that will emerge from these new, trying times, reducing the influence of the middle-men and returning control to hotels and their guests.

In what has become the catch-cry of the coronavirus era, he says we’re in this together. So he is promising to share his technology with other tourism operators around the country.

THE BAD NEWS

Crocombe, who in a previous life was chairman of Cook Islands Tourism and the Bank of the Cook Islands, has been running the numbers. His findings on the scale of the problem aren’t disputed by government and business. His proposed solutions, more so.

A sometimes polarising leader, Crocombe’s forthright tone doesn’t endear him to everyone. There are still those who resent the success he has made of the Rarotongan, which was a rundown 1970s-era white elephant losing money hand over fist when he took it over from government. He shut it down for three months in 1996, and pretty much rebuilt the resort from ground up.

Monty, 10, and Gus, 5, have the pool to themselves at the Rarotongan Beach Resort and Lagoonarium – now closed to the public. Photo: Jonathan Milne

Now he owns the Rarotongan and two smaller resorts, Sanctuary Rarotonga and Aitutaki Lagoon Private Island Resort. Combined, they have about 200 rooms – making his company (by that measure) the second-biggest hotelier in Cook Islands.

His business is paying a lot of interest on its debt. So he was first to announce he would be mothballing his properties after New Zealand closed its borders. It has effectively shut down Cook Islands’ economy. Crocombe told his staff there would be no jobs.

In the end, when the government rolled out its NZ$266 a week wage subsidy, he signed up and kept his 200-plus staff on minimum wage refurbishing the resorts.

Crocombe says workers, businesses and the community are supporting each other. At the Rarotongan, they’ve been helping each other with childcare during the school closures; locals have been sharing gardens with their co-workers from Fiji and the Philippines.

Crocombe’s partner Liz and son Daniel are in New Zealand. He has barely seen his mother Dr Marjorie Crocombe, the respected Cook Islands Maori author and academic – he and his siblings have been isolating her at home because, at 89, she is vulnerable.

So in the past six weeks he has thrown himself into imagining a new future for the tourism economy.

First, refreshing and refurbishing his three resorts from top to bottom, so they are ready to reopen with a flourish. All his staff, from general manager to the cleaners and ground-keepers have agreed to work for the government-funded minimum wage ($7.60/hr) for three months, rather than be without a job.

Secondly, he is trying to convince the government to find $150 million for a business stimulus package and national recovery plan that would inevitably be funded through borrowing.

The Rarotongan chairman Tata Crocombe, left, and Cook Islands Chamber of Commerce president Fletcher Melvin after a meeting of 200 tourism operators who heard that New Zealand had closed its border. Photo: Jonathan Milne / Cook Islands News

Where from, when almost every country in the world will need to borrow and rates will go sky-high? Cook Islands Government seems to be pinning its hopes on traditional lenders like the Asian Development Bank and China – but those come with strings attached. Everyone hopes New Zealand and Australia will offer support, but they have their own challenges.

Crocombe argues that New Zealand should embrace Cook Islands within its own banking zone, allowing New Zealand’s Reserve Bank to advance money directly to the four banks operating here; they in turn could offer a wider range of services to the country’s struggling businesses on lower interest rates.

Even more controversially, he thinks Cook Islands education and health should be “harmonised” with New Zealand. And there is an urgent need for real political reform, he says: Cook Islands Parliament and political system are too cumbersome, bureaucratic and expensive for such a small country.

But back to the immediate problem: Crocombe says a few flights a week aren’t enough – that the country needs to get back to at least 26 inbound flights a week. “Most likely, the Cook Islands will need to share some of the risk of rebuilding adequate air services with the airlines.”

With the Australian, European and United States markets closed for some time, those tourists will need to come from New Zealand – a tough call when New Zealand tourism is hurting too.

Crocombe says the best case scenario is New Zealand tourists doing two days’ managed tests and isolation in Auckland, before spending a week or two confined to their full service resort in Rarotonga.

Hi-de-hi, campers?

“Twenty years ago that was how tourism worked here,” Crocombe says. “People came here, they ate three meals a day where they stayed, they did all their activities there … I think we’re going back to it for a period.”

The worst case scenario? “It’s Armageddon. The borders stay closed, we’ll be broke. We’ll be back in subsistence farming.”

THE NEW ECONOMY

Crocombe is also turning his mind to a new tourist economy: one that celebrates what is unique, like the country’s marine reserves and traditional arts and culture; one that emphasises fresh, organic, local, healthy food and living; one that uses artificial intelligence to identify the right visitors who will appreciate what Cook Islands has to offer, and ensure they get personalised treatment.

He hopes the borders and the resorts will reopen in two or three months. “This has been a body blow but we’ll be going back to our strengths of reimagining how we present the uniqueness of the Cook Islands.

“It’s been tough, it’s been tough for everybody, the scale and pace of the shutdown has been unprecedented in history. We went from three hotels with 80 per cent occupancy and our best ever year, to three hotels that are shut. We went from four airlines servicing the country to effectively none. So the pace at which things have changed has been breath-taking.

“I think we’re moving to more restrictive global travel. There will basically be virus visas – the hope will be that New Zealand and Australia treat each other as one ecosystem with a common management plan for Covid-19, and Cook Islands will be part of that ecosystem.

“The Cook Islands tourism industry will come out of this crisis better, stronger, and more able to compete in what will be a much more competitive international tourism market. We don't really have a choice."

* Made with the support of NZ on Air *

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