The Maldives’ tourism sector experienced a significant slowdown in the second quarter of 2025, with business activity contracting across almost all key indicators, according to the Maldives Monetary Authority’s (MMA) latest Quarterly Business Survey.
Conducted between 25 June and 14 July, the survey showed that the traditional off-peak season hit harder than usual, as resorts reported sharp declines in bookings, revenue, and occupancy.
In numerical terms, the revenue index dropped by 187 points, reflecting a widespread fall in income for tourism businesses. Similarly, both resort bookings and occupancy levels recorded declines of around 170 to 175 points, which signals a broad dip in guest arrivals and stay durations during Q2.
The average room rate also fell sharply, down by 177 points, one of the steepest drops recorded. This means not only were fewer rooms being booked, but they were being sold at lower rates than in the previous quarter.
Labour-related indicators also weakened. Businesses reported a reduction in staff, with the employment index falling by 60 points, and a notable cut in wages and labour costs, which dropped by 96 points. These figures suggest cost-cutting across the board as operators tried to navigate a difficult quarter.
However, there was one area of optimism. Capital expenditure rose modestly, with that index climbing by 14 points. Despite the downturn, this indicates that some businesses are still pushing forward with planned upgrades or investments.
Looking ahead to Q3, the outlook has improved slightly. While overall sentiment remains negative, it is less pessimistic than before, particularly with the off-peak season now behind.
The expected bookings index for Q3 rose by 90 points, and expected revenue improved by 69 points, both pointing to hopes of increased activity as mid-season picks up. While the average room rate is still expected to decline, the fall is not projected to be as steep as it was in Q2.
Input costs, on the other hand, are expected to rise, as shown by a 43-point increase in the relevant index. This suggests that while bookings may recover, operating expenses could begin to climb again.
Access to finance also remains a concern. Although businesses expect slightly improved conditions next quarter, the index for expected access to credit remains in negative territory, indicating that many still anticipate challenges in securing funding or loans.
The financial health of tourism businesses remains fragile. Despite a slight rebound in sentiment, the financial situation index remains negative, reflecting continued pressure on cash flow and profitability.
In summary, Q2 2025 was marked by deep contractions across most tourism indicators, compounded by seasonal factors. But as the industry enters a more active period, operators are hoping for a modest rebound, although challenges around pricing, profitability, and financing are expected to persist.
