How will guest house islands benefit the community?

With the unveiling of the first guest house island plan this week, industry experts have questioned whether the government’s new guest house tourism policy will benefit the local communities in the same was as past approaches.

“The guest house is a policy – a development implement,” said former Minister for Economic Development Mahmud Razee.

“It should be an equitable thing – if it is purely a tourism policy that is only on a selected island, then we are moving away from the fundamental issue of enabling all Maldivians to benefit from tourism.”

The model’s first project – the Thumburi ‘Integrated Resort Development’ scheme – was launched on Monday night (June 23), being branded as a way to “responsibly diversify the tourism product of the Maldives”.

Recent guest house development – reintroduced by the Maldivian Democratic Party after a decades-long hiatus – was intended to open up the billion dollar tourism market to small and medium sized businesses.

While the placement of guest houses on local island was also intended to stimulate the local economies, concern was expressed by religious groups regarding the impact on local communities.

President Yameen’s guest house island policy – included in his election manifesto – instead plans to recreate the more traditional resort concept, with the participation of multiple smaller entrepreneurs.

“Once again today we are looking to diversify tourism, to shape it in a different way. It does not mean moving away from the existing concept of having one resort on one island,” said Yameen at Monday’s launch.

Yameen also revealed that future developments would take place within proposed special economic zones, which will cede local authority to incoming foreign investors as part of  a system of incentives agreed upon at the government’s discretion.

‘A new concept for a world class brand’

Describing the project as “a new concept for a world class brand”, the Thumburi brochure reveals plans for several beach hotels with rooms ranging from US$100-200 – far less than that currently charged by the country’s budget resorts.

The development of the project will be overseen by the government’s marketing corporation, the MMPRC – who unable to respond to further queries at the time of press.

Tourism Minister Ahmed Adeeb has previously told Minivan News that, while his government would continue to support individual guest houses, there was a reluctance to promote them for fear of damaging the country’s brand as a luxury tourism destination.

“The thing is, from a marketing perspective, we have positioned the Maldives as a high-end destination,” explained Adeeb.

“A-category guests will continue coming for as long as we market the country as an A-category destination. Guests for B,C,D and E categories are something we automatically get.”

General Manager of Sales and Marketing at Triple A resorts Willem Fokkenrood, however, disagrees with this assessment, suggesting that this type of exclusive approach is outdated.

“Does guest house and B&Bs damage Hawaii’s image? No, it just puts more money into the pot.”

Fokkenrood also suggested that placement of the of the guest house concept on single islands would “defeat the purpose” of the model.

“People want to have guesthouses so the local people can reap the benefit from it. If you open a guest house island, what benefit are you talking about?” he asked.

“Because you get to stay with the local population, it’s a draw for a lot of people to say ‘I have stayed in the real Maldives’.”

Fokkenrood felt the key difference between the new concept and the traditional guest house model would be the addition of pork and alcohol products – illegal on the Maldives’ inhabited islands – to the mid-market sector.

“That would change the game, then it becomes a direct competitor to these established resorts,” he said.

Razee, however, felt that the policy may represent an attempt to reassure current industry leaders – described as oligarchs in a recent UNDP report – that the mid range market would progress in a “more controlled fashion”.

Minivan News was unable to obtain further comment from the Tourism Ministry on this subject.


Sixty resort islands in limbo after political turmoil strikes CSR programme

The government has refuted local media reports that it is considering halting the lease of 60 islands award for resort development by the former administration.

The islands in question were to be leased under a Corporate Social Responsibility (CSR) tourism programme initiated by the former government. The programme faced heavy criticism from the start, especially from opposition figures now senior officials in the current government.

Critics alleged that the CSR programme was against the law as the islands were awarded in the absence of an open bidding system, and had favored Maldivian Democratic Party (MDP) members.

The National Planning Council (NPC) – formed by the previous government and currently “under review” – leased islands for resort development to interested individuals, with the condition they undertook a development project on an inhabited island, such as building water and sewerage systems.

The development project had to be completed to an “acceptable level” on an island of the government’s choice within an allocated time frame, before the resort would be leased for development. In addition, the resort would be owned by a joint-venture company formed between the state and the resort developer,  with the government holding a five percent share of the company.

The NPC had awarded contracts to at least 10 parties to develop 10 different islands. The fate of these contracts are still unclear as the potential resort developers await a decision by the government. The government, in turn, claim to be waiting for the Anti-Corruption Commission (ACC) to make a decision.

“The issue is not in our hands now. There are some legal issues to be addressed. Even the 10 islands with contracts might be cancelled. We will decide on it once the ACC gives its recommendations,” said the Minister of Tourism, Ahmed Adheeb.

Meanwhile,  local newspaper Haveeru on Monday reported a “prominent” tourism ministry official stating that the government had decided not to lease the islands awarded “without bids”, in line with the ACC’s recommendations on the issue. Around 60 of the awarded islands will no longer to be leased, according to Haveeru.

“We have decided to cancel the proposals of the islands without agreements. In addition, a decision pertaining to the islands where agreements have been made will be taken after the ongoing discussions with the ACC,” the official told Haveeru.

President of the ACC, Hassan Luthfy denied reports that the commission had specifically ordered the NPC to discontinue the CSR programme.

“During the former administration, we recommended the NPC award all projects within an open bidding system. It did apply to the CSR programme but we did not specifically ask for the CSR projects to be stopped,” Luthfy told Minivan News.

The ACC began investigating the CSR programme in May 2012 and a decision is yet to be made.

Speaking to Minivan News, member of the NPC and former Economic Minister Mahmoud Razee defended the CSR-programme.

“The  programme did not break the law. The tourism law allows two options by which resort islands can be leased: either through the bidding system or by the government holding a share of the company owning the leased resort,” said Razee.

He further claimed the CSR programme was more egalitarian and would enable more people to be involved in the tourism industry, rather than just those with access to large upfront capital.

“The programme was completely open for anyone to apply. It was conducted in a very transparent manner. It was also more efficient than the bidding system where people would just put down huge amounts of money and then later be unable to develop the resort. Even now there are about 60 islands awarded through bids that are still not developed,” he said.

“The CSR programme cuts down the initial costs for developers and gives more people the opportunity to own resorts,” Razee explained.

‘Sim’ Ibrahim Mohamed, one of the individuals awarded an island and under the CSR programme, agreed.

“According to tourism law there is no need for an open bid if the government has a share in the resort. The whole motivation behind the theme of the CSR programme was very noble. It was a very sound, well thought-out policy by the previous government,” said Ibrahim.

In contrast to the bidding system which “always favored people who already had money”, the CSR programme “made everyone equal in terms of the ability to enter the tourism industry as an owner,” he explained.

The CSR programme also opened a doorway for Small and Medium Enterprises (SMEs) to enter the tourism industry, said Ibrahim.

In addition, he said that leasing islands to resort developers in exchange for providing basic facilities on inhabited islands, such as water and sewerage system,s was “a very good way of doing it”, taking the country’s economic situation into consideration.

Asked  how the current limbo state of the CSR programme would affect investor confidence in the country, Ibrahim noted “well, in this instance, the investors ran away.”

“This government has been in power for over 100 days and still nothing has happened. We don’t know. We are waiting, the investors are waiting. So it is just money lost, it is opportunity lost. It’s not only investors’ confidence but also financial institutions such as banks that lend you money.”

Although the government has not reached a decision yet, it still remains skeptical about the CSR programme.

“I don’t think the people who got the resorts have the financial capacity to conduct the projects in the islands,” said tourism minister Adheeb. “There are no documents with any evidence of their funds.”