Exclusive to five-star tourists only: Palau, Micronesia wants to ban budget tourists

The President of Palau has proposed a new law that will allow only five-star hotels to open up on its islands, essentially closing them to all but the wealthiest visitors.

Tommy Remengesau has expressed his desire for a "quality rather than quantity" tourism strategy – focusing on travellers with more cash to spend – after concerns were raised about the effects of mass tourism on the islands.

In a statement to reporters, Remengesau said he wanted to encourage high-end hotels that "would come in with their own designed water treatment system [and] power back-ups. If there are any other infrastructures that they have to do, like opening a road, the investor would do that themselves."

The hotels would be rewarded by the government for their assistance with "the necessary tax breaks and exemptions," said Remengesau. "It's kind of a win-win situation for Palau and the investor."

Palau, a remote republic in Oceania, is pure Bounty advert territory, with pristine beaches, world-class scuba diving, and forest-covered volcanic islands. It relies on tourism for 85 per cent of its GDP, but over the years rising visitor numbers have taken their toll – with damage to local coral reefs, relative overcrowding, and wildlife disturbance.

The archipelago is particularly popular with Chinese tourists, who visit on package holidays – but they are notorious for spending little money locally. In an effort to discourage these travellers, the Palau government halved the number of charter flights from China in 2015.

The move appeared to pay off. "While the numbers went down, the actual tourist spending went up," said Remengesau. "It confirms our direction [to attract] less tourists who spend more which equates to more tax dollars. We [will] go for quality rather than quantity... to create a goal of high-end, high-value tourism."

At present, there is just a handful of five-star resorts in Palau, centred around Koror – the most populous island in the state. Remengesau gave no indication of where he would like Palau's new five-star resorts to be built, but with 500 islands to its name there is no shortage of palm-fringed beaches and superlative sea views.