Maldives will see highest ever hotel transaction activity in 2019, says JLL

Maldives hospitality industry is on course to see its most active year with more than USD 450 million worth of resort transactions either completed or under offer, according to real estate consultancy firm JLL.

Traditionally dominated by Asian investors, the Maldives is now attracting new sources of cross-border capital from Europe and the US. In the past six months, investments from new sources of capital represent USD 300 million, compared to the annual average deal volume of USD 120 million per year.

“The tightening of yields in core markets across the globe, particularly in Europe, is causing investors to look further afield in search of higher yielding opportunities. Our clients outside of Asia are starting to show increasing interest in the Maldives, given its reputation as a sought-after tourist destination. We’re confident that investor demand will continue to rise and lift market sentiment,” Nihat Ercan, Managing Director and Head of Investment Sales, Asia, JLL Hotels & Hospitality Group, was quoted in a statement, as saying.

The Maldives tourism market continues to grow, with the first quarter of 2019 experiencing a 15 per cent year-on-year increase in visitor arrivals. Growth in Europe, the largest regional source market, accelerated as arrivals rose by nine per cent in January alone. Other notable source markets include India and the US, with increases of 86 per cent and 44 per cent respectively year-on-year.

In April, German-based Seaside Hotels & Resorts acquired Finolhu Maldives, a resort in Baa atoll, for approximately USD 90 million. JLL Hotels & Hospitality acted on behalf of the seller, Coastline Group of Companies.

“The sale of Finolhu Maldives to Seaside Hotels & Resorts is our first transaction of a Maldivian resort to a European buyer. With a 12 per cent year-on-year increase in European visitor arrivals last year, European hoteliers see an opportunity to capitalise on the familiarity of their brands with these travellers and tour operators. In the next nine to 12 months, we expect more of our European and American clients to enter the Maldives hospitality market,” Charlie MacIldowie, Vice President, JLL Hotels & Hospitality Group, said.

This is the second transaction by JLL Hotels & Hospitality in the Maldives this year. In February, the real estate firm was involved in the sale of Conrad Maldives Rangali Island resort, then owned by local developer Crown Company, to American investment firm Blackstone.

Official figures show that 144 resorts, 12 hotels, 508 guesthouses and 148 liveaboard vessels are registered in the Maldives. The number of registered travel agencies and dive schools stand at 308 and 272 respectively.

Government had earlier said that a total of 132 tourism projects involving 140 islands are being carried out across the Maldives.

The new government had also ramped up tourism promotion with new initiatives and more funding.

Authorities have come under fire from private organisations representing industry stakeholders such as the Maldives Association of Travel Agents and Tour Operators (MATATO) over the lack of effort and budget to promote the Maldives as a destination.

These concerns come as the world-famous holiday destination struggles to match demand with a rapid increase in bed capacity.

Over the past few 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 in operation to more than 130. That number is set to increase as another 20 resorts are expected to open over the next two years.

Singapore’s Park Hotel Group has opened its first resort in the Maldives, while major international hotel chains such as AccorHotels have entered the Maldives with four openings, including Mercure Maldives Kooddoo ResortFairmont Maldives Sirru Fen FushiMӧvenpick Resort Kuredhivaru Maldives and Raffles Maldives Meradhoo as well as two in the pipeline. Brands like Hard Rock InternationalCapella Hotel GroupCarlson Rezidor Hotel GroupEmaar Hospitality GroupBaglioni HotelsEmerald Collection and Meliá Hotels International have announced their entry to the Maldives as well.

Existing international players are also upping their presence, with Marriott International launching Westin and JW Marriott in Maldives, Hilton Worldwide re-introducing its top-end luxury brand Waldorf Astoria, Aitken Spence introducing its Heritance brand, Minor Hotel Group introducing its AVANI brand, Onyx Hospitality Group introducing its OZO brand with its second property in the island nation, and LUX* Hotels & Resorts opening its second resort in the Maldives. Centara Hotels and Resorts has also signed a management agreement for its third resort in the tropical destination, while The Residence by Cenizaro has announced the launch of its second Maldivian property.

Leading local hotel groups, including Atmosphere Hotels and ResortsSun Siyam Resorts, and Crown and Champa Resorts, are also on an expansion drive.

Meanwhile, the first integrated tourism developments in the Maldives — Emboodhoo Lagoon project and Rah Falhu Huraa lagoon project — are underway.

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 400 guesthouses in operation today.

Maldives welcomed a record 1.4 million tourists in 2018 — a 6.8 per cent increase from the 1,389,542 tourists that chose to holiday in the Maldives in 2017. Other factors such as average duration of stay, bed nights and occupancy also posted positive growth in 2018.

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