Maldives tourism receipts recorded a growth of nine percent to reach USD 2.7 billion last year, data from the country’s central bank has shown.

In its annual report, Maldives Monetary Authority (MMA) said the trend in the estimated tourism receipts reversed after two consecutive years of negative growth. This was because bed nights registered a double-digit growth of 11 percent — up from the six percent growth recorded in the preceding year — during 2017, while the average duration of stay ticked up from six days in 2016 to 6.2 days in 2017, it added.

“The year 2017 was a prosperous one for the tourism sector, as evidenced by the impressive growth in tourist arrivals, which soared to its highest in four years,” the report read.

“While the continuous promotional activities carried out in different parts of the globe proved successful in attracting a better than expected number of tourists into the country, tailwinds from favourable economic environments in the main source markets boosted the sector’s performance during the year. The sector also benefited from the lower global airfares over recent years resulting from lower global oil prices, as well as the increased flight movement by international carriers.”

Occupancy falls amidst increasing supply

However, the average occupancy rate of the industry fell slightly to 61 percent from 63 percent in 2016, largely due to the increased supply.

According to MMA, with the opening of nine new resorts, the total number of resorts increased to 135 at the end of the year, while the number of registered guesthouses, hotels and safari vessels reached 458, 10 and 133, respectively. The average operational bed capacity of the industry stood at 38,592 beds during the year, which is a significant expansion of 14 percent in annual terms, it said.

Europe rebounds to traditional position

MMA said annual tourist arrivals grew markedly by eight percent to reach 1.4 million in 2017, after three years of unremarkable growth. The growth trend was more pronounced in the latter part of the year, with the last quarter recording a double-digit growth of 15 percent in annual terms, it added.

“The growth in tourist arrivals was also in line with international tourism trends. According to United Nations World Tourism Organization Statistics, international tourist arrivals reached a seven-year high of 7%, and totalled 1.3 billion in 2017—mainly driven by tourist arrivals to Europe, which recorded a remarkable growth of 8%,” the report read.

According to MMA, Europe rebounded to its traditional position as the market leader, having surpassed the Asia and the Pacific market for the first time since 2014. Arrivals from the European market registered a remarkable increase of 12 percent during 2017 after recording a growth of seven percent in 2016, and constituted 47 percent of the total arrivals, up from 45 percent in 2016, it said.

The authority attributed to the boost in European tourist numbers to robust increase in arrivals from Italy and Russia on the back of the improving economic conditions of these countries in 2017. It also noted that arrivals from Germany, the largest source market from this region, showed a solid growth in contrast to the marginal growth recorded during the preceding year.

However, growth in arrivals from the second largest market, the UK, slowed down noticeably, reflecting the economic slowdown in the country and the weaker pound.

Meanwhile, arrivals from the Asia and the Pacific market dipped from 46 percent in 2016 to 44 percent in 2017.

MMA said total arrivals from the Asia and Pacific region increased by three percent in 2017 after recording a marginal decline in 2016. Although arrivals from China — the largest source market from the region –continued to decline during 2017, the pace of decline was observed to be slow and the arrival growth turned positive during the last quarter of the year, it added.

“This can be attributed to the significant improvement in the Chinese economy during the year,” the report read.

According to MMA, the sizeable increase in arrivals from India and Thailand helped to more than offset the decline in arrivals from China.

“Higher arrivals from India largely reflected the commencement of SpiceJet direct flights between Malé and Thiruvananthapuram, which also provided shorter routes to Bangalore and Hyderabad. Meanwhile, the increase in arrivals from Thailand can be attributed to the commencement of AirAsia direct flights from Thailand during the year,” the report said.

With respect to newly growing markets, MMA reported increases in arrivals from Australia and the US. However, arrival growth from the Middle Eastern market was hampered by a decline in arrivals from Saudi Arabia and Qatar during 2017, which may have resulted from the political instability in the region, the authority said.

“The brisk pace of growth in tourist arrivals was largely underpinned by the striking increase in arrivals from the European market, which began to pick up in 2016. Apart from the upturn in arrivals from large European source markets, arrivals from smaller source markets have also been observed to be increasing over the past few years.Further, arrivals from the Asia and the Pacific region marked a positive turnaround during the year despite a decline in arrivals from the largest source market from the region — China,” the report read.

“The arrivals growth was also bolstered by the flight movements by international carriers, although it edged upwards only slightly during the year. This marginal growth can be attributed to the suspension of operations of MEGA Maldives Airlines flights in May 2017. However, increased flight movements of other airlines, such as Silk Air, SpiceJet, AirAsia and China Eastern Airlines, combined with the commencement of new flights — AirAsia Thailand in August 2017 and Air France in November 2017 — helped to more than offset the decline in movements by MEGA Maldives Airlines flights.”

After years of double-digit growth in tourism, the Maldives has over the recent years observed a slowdown in growth. The government has set an ambitious target of attracting 1.5 million tourists by the end of this year, but the country has been struggling to create demand amidst a significant increase in bed capacity.

Over the past five years, dozens of uninhabited islands have been leased to local and foreign resort developers. Several international brands have entered into the market, increasing the number of resorts to 120. That number is set to increase as the government has announced the opening of some 20 new resorts over the next two years.

Along with the new resort openings come the challenge of increasing demand from budget travellers who choose guesthouses over luxury resorts that the Maldives is known for. The guesthouse sector has rapidly expanded with over 450 guesthouses in operation today.

The government has announced new steps to maintain a structured growth in tourism, including a slowdown in leasing islands for resort development and increased marketing efforts in key markets such as China and the Middle East in order to reach an ambitious target of a record 1.5 million tourist arrivals this year.