If you consider yourself too good to rub shoulders with commoners on holiday, this Pacific island nation should be on your itinerary.

The picturesque archipelago of Palau is considering a new law that would effectively make it off-limits to budget travellers, and a haven only for the cashed-up elite.

The proposed law, which would allow only luxury, five-star hotels to open on the islands, is part of Palau president Tommy Remengesau's new "quality over quantity" approach to tourism, Radio New Zealand reports.

The tourism sector contributes a whopping 85 per cent of the economy in Palau, a remote Pacific archipelago of more than 500 islands west of the Philippines.


But there are concerns about the impact of mass tourism on its natural environment, especially its pristine beaches, coral reefs and wildlife.

So Remengesau hopes to rebrand Palau as a luxury destination both to reduce visitor numbers — and therefore the risk of destructive tourists — and boost visitor spending.

He said the new law would include tax breaks for investors.

"In our definition of high end [tourism] would be that they would also come in with their own designed water treatment system, power backups," he said.

"If there are any other infrastructures that they have to do, like opening a road, the investor would do that themselves.

"In return for that we will give them the necessary tax break and exemptions for them."

Chinese tourists are the biggest group of foreign visitors in Palau, but they notoriously spend little money, The Telegraph reports. Last year, Palau decided to halve the number of chartered flights from China — a move Remengesau said paid off.

"While the numbers went down, the actual tourist spending went up," he said.


"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."

According to The Telegraph, there are just a few five-star resorts currently in Palau, mostly on the most populous island of Koror.

Should the president's plan go ahead, Palau wouldn't be the only travel destination skewed towards wealthy tourists.

Bhutan, in the Eastern Himalayas, already adopts a "low-volume, high-value" tourism strategy and charges tourists a fixed minimum tariff of a whopping $340 per day, making it one of the world's most expensive places to visit.

A similar approach has also made Botswana home to Africa's priciest — but most satisfying — safari tours.

Further information: See pristineparadisepalau.com