Report by: Shifneen Rasheed & Daha Shuaib

The year 2016 was a year of ups and downs for the Maldivian economy. While some sectors experienced lackluster growth within the year, developments in other major sectors such as the construction sector were impressive. According to the quarterly GDP statistics for the first two quarters of 2016, the overall performance of the economy looked robust with an average growth of 5.4%. However, tourism sector growth, which accounts for the lion’s share of the country’s economic growth fell below expectations owing to weaknesses in the global economy. Despite this, growth was largely propelled by a robust expansion in the construction sector.

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Over the past two years, the performance of the tourism sector has been less than ideal, with arrival growth experiencing a loss of momentum. This was amid weak global economic conditions, resulting from the slowdown in the Chinese economy, the persistent economic recession in Russia and uncertain conditions in the euro area economies. Tourist arrivals to the country grew at a mere 2.4% during 2015, down from 7.1% the previous year. Annual bednights growth dipped to -4.3% with a reduction in average duration of stay by the tourists.

Given these worrisome statistics, the key stakeholders of the tourism sector of the Maldives set out on a mission to boost the number of tourist arrivals in 2016, under the campaign flag “Visit Maldives Year 2016”. The main aim of the campaign was to achieve a tourist arrival target of 1.5 million within the year 2016. Under this campaign, various activities were carried out in different parts of the globe to showcase the beautiful island nation as an ideal travel and holiday destination. These activities included participation in various travel fairs, exhibitions and road shows in key source market countries such as China, India, Russia and other European countries. The highlight event of the year took place at the “World’s Leading Travel Trade Fair” ITB Berlin, held in Germany from 9 to 13 March 2016, where Maldives received the honor of being the official partner host country. The Maldives was thus the main focus of the event and was showcased to the core source markets, especially to the European segment.

These tireless efforts at improving the tourism sector were rewarded at the end of the year, as the annual arrival growth accelerated to 4.2%. The Maldives celebrated the arrival of their one millionth tourist on 16 October 2016 and the total count reached 1.3 million by the end of the year. Annual bednight growth also picked up, registering 2.3%, despite the average duration of stay dipping slightly to 5.5 days from 5.7 days the previous year. The occupancy rate of the industry also fell slightly to 68% from 69% in 2015. This could be due to an increase in the operational bed capacity of the industry. Furthermore, the resort sector that makes up over 90% of the tourism industry experienced a whopping 74% occupancy rate, with 11 new resorts springing up during the year. Meanwhile, the flourishing guesthouse sector which has been making its mark in the industry since 2008, recorded an occupancy rate of 29%.

In the last few years, the guesthouse sector of the industry has made the luxurious sun-sand-sea destination more accessible and affordable to tourists worldwide. The sector has made remarkable progress since its inception and it now aims to double its arrivals to 500,000 by the end of 2020. The stakeholders of the industry also made history in 2016 by holding the very first guesthouse sector conference named “Guesthouses Maldives conference”. The conference was a successful networking event that brought together 160 guesthouse representatives in addition to leading domestic and international travel agents and business partners.

The guesthouse industry has been playing an important role in transferring the benefits of the lucrative tourism sector to the general population. Striving towards a more inclusive tourism sector, the government also established a stateowned enterprise (SOE) in 2016 under the name Maldives Integrated Tourism Development Corporation (MITDC). This SOE, established in August 2016, aims to enhance the tourism sector gains and promote the participation of small and medium sized businesses in the sector.

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