By Ahmed Naaif

“Demand for luxury resorts has declined and tourist demand for guesthouses has increased,” the World Bank says in its South Asia Development Update report released last month on the economy of the South Asian region, adding that this will have a significant impact on the growth of the country’s largest industry.

The question now is, will guesthouses become the number one brand of tourism in Maldives? If so, what changes will come to the tourism industry?

Maintaining ‘one island, one resort’ concept

The occupancy rate of guesthouses so far this year has increased by 21.7% compared to the statistics of the Ministry of Tourism and the tax authority, the Maldives Inland Revenue Authority (MIRA). However, resort occupancy increased by 16.85% points during the period.

According to statistics, guesthouses are opening up and dropping the figures related to expensive resorts. Guesthouses are ahead of resorts.

Ahmed Nazeer, Secretary General of the Maldives Association of Tourism Industry (MATI), the union of resort owners, said the country's resort market is facing various challenges after its 50th anniversary. Low occupancy of resorts. At the same time, the costs of running resorts are going up. However, the prices of resort rooms are declining. The bitter result is that the sales of the resorts are affected, he said.

Nazeer's claims are also supported by statistics.

According to statistics, tourism revenue declined by 6.8% year-on-year last year. Despite the record number of tourists approaching 2 million last year, the World Bank report noted that the demand for guesthouses is higher than that of expensive resorts. The main reason for this is the low number of nights spent by tourists in Maldives. They also spend relatively little compared to tourists coming to the resorts.

Last year, the average number of days spent by tourists in Maldives fell from eight days to 7.5 days.

"Maldives has won leading awards and become a strong product by selling the ‘One Island, One Resort’ concept over the past 50 years. Kurumba first started for less than $100. Tourism revenue reached about $5 billion with government revenue accounting for $470 million,” Nazeer said, noting the importance of maintaining the ‘one island, one resort’ concept.

"The future of tourism in Maldives is by maintaining the resort industry. This ‘one island, one resort’ concept is maintained. Maldives will grow in that way. That is very important.”

Nazeer said it was a mistake to think that a resort in an island benefits certain people. And that is not the economic reality, he says.

Nazeer said that the employees who worked in resorts built their own houses, started businesses and educated their children abroad with what they earned from working in the resorts.

“So, resorts are a concept that has achieved that goal in terms of distribution of wealth in itself,” he said.

The World Bank report also noted that as resort sales decline, economic growth slows. That is the main reason why Maldives’ economic growth or GDP fell from 12% to 4% last year.

“We can sustain our economy and other things by maintaining the original product of tourism in Maldives,” said Nazeer, who is one of the first to enter the tourism business in Maldives.

Challenging days for resorts

Nazeer said the biggest challenge facing Maldivian resorts is that they are facing a long off-season as they did 16 years ago. He said occupancy at most resorts is now averaging around 40%. Indian tourists have been relieving the fall in European tourists in summer. However, Indian tourist arrivals have fallen by 41% compared to last year.

That is because tourist destinations like Maldives, which opened after the pandemic, are reducing prices in an effort to attract more tourists. Improving their destination marketing is another reason.

"We have to work harder to maintain the occupancy of these resorts. We need to improve the advertising of Maldives," Nazeer said.

Maldives marketing is yet to show any changes. There is no adequate budget. The result is fewer activities to attract tourists from markets such as Asia and the Middle East. This is one of the reasons for the fall in tourists in the resorts after prosperous years.

Climate change affects resort business

Another concern that resorts are currently facing is the adverse impact of the unusually bad weather on their environment. Nazeer said climate change is a major concern of MAT. He said a resort beach is now protected by a fence around it, with the beach eroding and operators having to sand it.

"We have to install sand pumps and sand. We have to dig around. Climate change is increasing the cost of running a resort every year. This is something that needs to be seriously considered and action taken," Nazeer said.

He said he did not support the unlimited land reclamation of lagoons to build resorts. There must be restraints. He believes that this is something that needs to be done for the sustainability of tourism.

"The sustainability of tourism depends on protecting this environment. The level is very concerning. Arrivals are also decreasing with the heavy rains. The maintenance cost of the resorts is increasing," Nazeer said.

There is another main reason why Nazeer emphasises the importance of overcoming all these challenges and protecting the ‘one island, one resort’ concept. He said Maldives can only gain investor confidence by maintaining the profitability of the resorts. That is the easiest way to attract foreign investment, he said.

"Eight new resorts are opening in Maldives this year. By 2025, the number of resorts will reach 200. People will not invest $100 million in each of these places if they do not get that return,” he explained.

Guesthouse expansion not killing resorts

The expansion of the guesthouse business in itself is not a concern of MAT, Nazeer said. He believes that with the changing times, new forms of tourism such as homestays and guesthouses will be born and expand. He acknowledges that fact. However, since running a guesthouse is also a business, it must be done within certain rules and regulations, he said.

"We are doing the resort business through regulation. Similarly, guesthouses have to be regulated. For example, insurance should be compulsory. Otherwise, it could overshadow tourism in the country. So, guesthouses should be regulated for the safety of the entire industry should,” Nazeer said.

The expansion of the guesthouse business is not the death of the resort business. Resorts and guesthouses can go hand in hand. That is the message that Nazeer is giving. But it can only be done by working harder to overcome the challenges facing the ‘one island, one resort’ concept. By changing the way Maldives is marketed to address the challenge of resort occupancy.