A new tourism tax designed to help fund Fiji Airways has drawn swift opposition from Fiji’s tourism industry, with hotel operators warning they will be unable to absorb the extra cost and are likely to pass it on to visitors instead.
In its 2026-2027 National Budget, the Fijian Government introduced a temporary five per cent Tourism Services Tax on hotels, tour operators and cruise operators with annual turnover exceeding FJ$2 million. According to the FBC, the levy will apply from 1 September 2026 for an initial 12-month period.
Finance Minister Esrom Immanuel said the measure would generate around FJ$70 million, with the income earmarked to support Fiji Airways as it continues to recover from the financial impact of COVID while managing higher fuel costs.
“The revenue generated will be ring-fenced and fully directed to Fiji Airways, which continues to face financial pressure from rising aviation fuel costs and its ongoing recovery from losses incurred during the COVID-19 pandemic,” Immanuel said.
The Minister added that the tourism industry had broadly agreed to support the airline through the levy.
However, the Fiji Hotel and Tourism Association (FHTA) has strongly rejected that line, saying the wider tourism industry has not endorsed the new tax.
“Any suggestion that the tourism industry agreed to this measure is misleading,” FHTA CEO Fantasha Lockington said in a statement.
“The overwhelming majority of FHTA members strongly oppose the tax in its current form and the lack of consultation before its announcement.”
While acknowledging Fiji Airways’ importance to the country’s visitor economy, Lockington said supporting the airline should be a national responsibility rather than one borne primarily by tourism operators.
“Operators cannot simply return to guests, agents or wholesalers to recover another five per cent without risking disputes, cancellations, destination and brand reputational damage or margin loss,” she stated.
“Contracted rates, deposits and payments are legally binding and commercially locked in, meaning any attempt to retroactively add costs would breach agreements and undermine confidence in Fiji’s tourism product.”
Crucially, Lockington added that the industry would “not agree to absorb this turnover tax”.
“Indications from members suggest the majority, if not all, will pass it on in its entirety,” she remarked.
“By not doing so, it would erode already thin margins, destabilise forward contracts and compromise long-term viability.”
The FHTA believes any support for Fiji Airways should instead come through a broader mechanism rather than a tax targeting one industry.
“Support for Fiji Airways must be national, transparent, temporary, conditional and fair,” Lockington added.
If the new tax goes ahead, the association has called for guaranteed safeguards, including exempting existing bookings and ensuring the tax is not retrospective.
The association also warned the new levy would lift the tax burden on some tourism services to 17.5 per cent when combined with Fiji’s existing value-added tax, before travellers even pay the country’s FJ$200 departure tax.
Elsewhere, the budget includes a planned FJ$700 million-plus investment in airport infrastructure over five years, as well as funding for the 10-year Na Vualiku Project (for Vanua Levu) as part of the country’s broader tourism and aviation strategy.
“Bad blow”
A senior executive at a hotel group operating multiple resorts in Fiji called the tax a “bad blow” for the country’s tourism industry, saying the move had come “completely from left field”.
“We are most certainly not on board [with the move] as an industry,” they told Karryon.
They added that resorts would not absorb the tax if it passes, “which means higher prices for the consumer”.
“This will hurt us very much. The big question on all our lips is why other commercial tourism enterprises need to bail out another commercial enterprise?”
KARRYON UNPACKS: Supporting Fiji Airways is one thing. Asking hotels and tourism operators to foot the bill is another. If those costs flow through, Australian travellers (and the advisors selling Fiji) may ultimately feel the impact.
