Government spending on tourism marketing comes under scrutiny

A tour operator has claimed that the government should not spend so much money marketing multi-million dollar resorts, particularly since it receives such limited revenue from the industry in return.

Ahmed Firaq, chairman of tour operator Inner Maldives, said the government should not be so much money on tourism advertisement marketing resorts as many had their own marketing campaigns.

Firaq told newspaper Miadhu that the “amount of money being spent on tourism advertising is the same money which could go into the development of social services”.

Government tourism advertising

State Minister of Tourism Thoyyib Mohamed Waheed said the government’s budget for tourism, including marketing, is planned each year in advance.

“The money [for marketing] comes from both stakeholders and the government,” Waheed said, mentioning that the industry adds to the budget if it is asked by the government.

“If there is not enough funding, we approach the industry,” he said.

Waheed said the “industry is quite cooperative” but added the government “does needs more help and support from it.”

Secretary General for the Maldives Association of Travel Agents and Tour Operators (MATATO) Mohamed Maleeh Jamal said after the 2004 Tsunami the marketing budget “drastically increased” to about US$9 million per year.

This number remained unchanged until the 2008 economic depression, when the budget decreased to its current amount of US$2.5 million, used mainly for destination marketing.

Sim Mohamed from Maldives Association of Tourism Industry (MATI) said the government has “very little money to play around with. When this government took over, [the country] was broke.”

Sim said marketing was essential in times of crisis, particularly following events such as the 2004 tsunami or the financial depression, as “you need to let people know you are still here.”

Jamal noted that MATATO’s main concern “is the total number of rooms is increasing and the [marketing] budget is down. If it is reduced further, in the long run we will be disadvantaged.”

Jamal estimated this year’s spend on tourism marketing across the Maldives to be around US$30 million. The industry, he said, was providing around US$20 million for specific product marketing.

He said in a time when the tourism industry is being “expanded north to south” the government should at least maintain the previous budget, if not increase it.

With the new tourism taxation bill being considered in parliament, (a bill that will phase out the ‘bed tax’ which currently stands at US$8 per night) the government will be getting an additional six percent in revenue from the tourism industry, “but they are still reducing the marketing budget,” Jamal claimed.

Marketing the Maldives as a tourist destination

Sim agreed that “the government should get out of [marketing] all together” and “business should be left to businesses.”

But he expressed his appreciation for the government’s efforts to help the industry, saying “we like what the government is trying to do.”

Sim believes “the government should regulate and set national and industry standards” and not focus so much on advertising.

“It is tour operators who sell the Maldives,” Sim said, and “they are doing a good job at it. We should keep them happy.”

He added that “the tourism industry is not about resorts alone, but also employment, transport and aviation.”

He also questioned on whether the government should be spending any money on marketing the Maldives as a tourist destination, saying “it sells itself.”

And although there are other similar products on the market, Sim says the Maldives offers “unique features” and not a lot of money is needed to market it as a travel destination.

However Jamal said competition in the region is a major concern. He noted that the Sri Lankan government has allocated US$50 million to tourism marketing this year, a significant amount compared to how much the Maldivian government is spending.

“We need to maintain occupancy,” Jamal said, adding that the Pacific islands, the Middle East and African countries like Mozambique were quickly becoming major competitors.

One of the main marketing strategies for the Maldives, according to Jamal, is “destination branding”. This brings another major concern for MATATO to the surface.

Jamal said tour operators “now say the Maldives is sinking”, and asked why travel agencies would send their customers to a “sinking” destination.

Other traditional marketing strategies for the Maldives have been road shows and travel fairs. Jamal says road shows in China, Eastern Europe and the Middle East have been cancelled for this year, and that the Maldives is attending eight fewer travel fairs than it did last year.

“We don’t see much [advertising] in magazines,” Jamal said, adding that existing advertising contracts with television channels BBC, National Geographic and CNN will expire this June “and there is not enough budget to renew them.”

“The success of the tourism industry in the Maldives depends on whether or not we maintain advertising,” he said.

On his return from Copenhagen President Mohamed Nasheed said the Maldives’ growing significance on the world stage as an icon of climate change – and the associated free publicity – was worth far more than the government could ever spend on paid advertising.

Tourism Revenue

One of Firaq’s complaints was that the government should be spending this money on development for social services and not on tourism advertising.

When asked about Firaq’s statement that the revenue from the tourism industry should be spent on developing social services and not on marketing, Waheed noted that the money “doesn’t come straight to the ministry, but it goes to the Treasury.”

The Treasury then decides how the money is allocated; some of it goes to social services and some goes back to the tourism industry.

Press Secretary for the President’s Office Mohamed Zuhair said “there is no direct relationship between tourism revenue and social service development.”

He added that the expenses of tourism marketing are jointly assumed by MATI, the Tourism Ministry and the Tourism Board.