Maldives adopts structured growth policy to balance tourism demand, supply

Maldives has taken new steps to maintain a structured growth in tourism as the world famous holiday destination struggles to match an increased bed capacity.

Tourism minister Moosa Zameer told Financial Times’ FDI Intelligence that his government had slowed down leasing islands for resort development. It was to match supply with the demand in the face of increasing number of new resort openings, he added.

“That is why we are doing special work on marketing as well. Additionally, many structural changes have been made and debt-to-GDP ratios have improved tremendously over the past three years. So I think, as a result, the investor confidence is there,” Zameer was quoted as saying by the publication.

Over the past three 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 by the end of this year.

A recently opened resort in Maldives: a number of new resorts and budget holiday options have come into play over the past three 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 300 guesthouses in operation today.

Government has 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.

STR, a leading market research and analysis firm, has also reported decreases for the Maldives across three key performance metrics: Occupancy, ADR (Average Daily Rate) and RevPAR (revenue per available room).

In his interview with FDI Intelligence, Minister Zameer, however, assured that his government was making necessary investments to boost the tourism industry, which is the country’s main economic activity. One such measure he noted was an ongoing USD800 million project to expand the country’s main Velana International Airport.

“… We see there is keen interest from foreign and local investors to take advantage of the new government’s strategy to increase tourist arrivals and enhance the industry,” the minister said.

He also downplayed the effects of external shocks on the industry.

“Even when we had difficult political problems about five years ago, surprisingly we were not that badly hit because what happens in Male has very little bearing on the resort islands. There have been times when a specific market is targeted by something negative and it does have a short-term effect. We find that eventually the numbers come back,” Zameer said.

The minister’s comments come as the Maldives tries to recover the recent loss in important markets such as China and to court more travellers to cater an increased supply. The country has stepped up tourism promotion in China and in emerging markets such as the Middle East in an attempt to reach an ambitious target of a record 1.5 million tourists this year.

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