Chinese investment in Maldives tourism ‘expected to rise’

Tourism minister Ahmed Adeeb has said he expects an increase in Chinese investment in Maldives tourism following the lease of a second island for resort development to Chinese companies.

The joint venture -between China’s Guandong Beta Ocean and a Maldivian company – were awarded Vaavu Atoll Kunaavashi this week to develop a five-star luxury resort with some 142 rooms.

“More Chinese investors will follow. There is a lot of interest, from Sri Lankan and Singapore companies as well,” Adeeb told Minivan News today.

The tourism ministry in May also signed an MOU with the state-owned China Machinery Engineering Corporation (CMEC) to develop Thaa Atoll Kalhufahalafushi as a resort.

Chinese tourists accounted for nearly one third of arrivals in 2014 with a total of 363,626 arrivals. China now represents the single biggest source market for tourists in the Maldives with a 30 percent market share.

On Monday, Adeeb said China’s Ambassador to the Maldives, Wang Fukang, had pledged to increase Chinese arrivals to one million. The venture would require extensive infrastructure developments, such as airport developments and building new resorts to increase the total bed capacity of the country, he said.

Mifzal Ahmed, the director of strategy and business development at privately owned airline Mega Maldives, said he hoped “this is the start of a full wave of such investment in the country, and the Government should be congratulated for the role they have played in making these investments happen.”

Mega Maldives pioneered direct flights from Maldives to China in 2009. It operates four to five flights a week from Beijing, Shanghai, and Hong Kong.

“We have long argued that the demands from the Chinese tourists to the Maldives are at times a little different from the European traveller. Therefore, getting investors who understand the mentality of these tourists is a very good thing,” he added.

Mauroof Zaki, the secretary general of the Tourism Employees Association of the Maldives (TEAM), noted the importance of equipping Maldivian staff with the skills to cater to an influx of Chinese tourists.

“We need more language classes on Mandarin or training on food and beverage services to Chinese tourists,” he said.

However, he said he was concerned that Chinese tourists may not be as conscientious as European tourists on labor rights, human rights and the environment.

“When ethical tourists come to the Maldives, it improves the work environment for Maldivian staff, for example, tourists pushed for the equitable distribution of service charge to staff,” he said.

A resort owner, who wished to remain anonymous, said Chinese developers must take care to develop international resorts. “Does the Chinese traveler want to be on an island by themselves? From what I’ve seen, they want to be among others, and do not like to be segregated.”

The Maldives Association of Tourism Industries (MATI) was not available for comment at the time of going to press.

The Maldives reached the one million tourist arrival mark in 2013. In 2014, the Maldives welcomed 1.2million arrivals, and the government hopes to see 1.4million arrivals in 2014.

The tourism ministry last week launched the “Visit Maldives Year 2016” campaign. The US$10million will see festivals and trade events, and award free holidays throughout the year. The Maldives has also been designated as the partner host country for the ITB fair in Berlin in 2016.

According to Forbes, Chinese investment in the global hospitality industry has seen a surge in the last two years. The trend started when Chinese Dalian Wanda group announced plans of investing a US$ 1.09 billion luxury hotel in London.

Since then, Chinese companies has announced a US$ 900 million skyscraper in Chicago, a US$ 1.95 billion acquisition of New York’s Waldorf Astoria, and a US$ 399 million hotel in Sydney.

Maldives has become a main attraction for Chinese travelers, with South China Morning Post saying, the country has topped travel lists for Chinese travelers, with the country being promoted in China’s media as an “approved destination” by the Communist Party government.


Comment: Where is the love? Chinese tourists in the Maldives

In one of Minivan News’ recent articles, a tourism sector official from the Maldives was quoted as saying:

“[E]ven though total arrivals increased, the tourism industry suffered as a whole in 2014.

Total tourist arrivals have increased compared to the previous year. However, as arrivals from Europe and Russia decrease, less income is generated as the replacing Chinese visitors spend less and stay for lesser periods,”

As the Maldivian airline that brought over 30 percent of the Chinese to the Maldives – more than any other foreign or domestic airline – we know a thing or two about Chinese visitors to the Maldives. And we would like to point out that this idea of the Chinese as the poor, pot-noodle-eating, ‘second-class’ tourist is not only offensive, but also untrue.

The data

Don’t take our word for it. Data from the World Tourism Organisation show that at US$102.2 billion, Chinese passengers were by 2012 already the biggest spenders abroad. By 2014 this had reached over US$155 billion, and is expected to hit US$194 billion in 2015.

Individual country results also show similar patterns. According to the US Travel Association, Chinese tourists spend on average US$7,200, compared to US$4,500 from other nationals. Chinese tourists are so important, that some countries, like the UK, are changing their entire visa systems to attract them.

In fact, data from our own tourism ministry also implies that the Chinese are big spenders here in the Maldives too. According to the Maldives Tourism Visitor Survey 2013, 40 percent of Chinese spent over US$5,000 (not including their hotel and air package), while only 27 percent of the Germans, 24 percent of the British, and 23 percent of Russians spent more than this in the Maldives.

So, whichever way you look at it, the data does not agree with the common (mis)perception of Chinese passengers as being poor.

The Chinese ‘fad’

We in the Maldives have consistently been wrong about the China market. Let’s not forget that in 2010, there were senior officials in the tourism sector who regarded Chinese tourists to the Maldives to be a ‘passing fad’.

Thankfully for the Maldives, it wasn’t. Since 2010, the ‘fad’ tripled from about 100,000 to 300,000 today. Chinese tourists are the reason why we count ourselves a million visitor destination today.

Retail therapy

“Yes they are here”, you say. “But they do not spend”.

Despite the statistics above, we believe there is some partial truth to this. The Chinese do not spend like the Europeans on holiday do. This is partly because ‘spending’ for Chinese on holiday meant primarily one thing: shopping.

Unlike Malaysia, Thailand, or Dubai, we in the Maldives do not do ‘shopping’ as a tourism product. So when they first arrived, the Chinese did not have much to ‘buy’: no Burberry scarves, no Godiva chocolates and no Rolex watches. It was not that they lacked money. They were simply not the type to spend US$500 on a bottle of wine (at least not one they could not take back as a gift).

This gave the local tourism industry a perception of the Chinese passenger as ‘poor’. However, those of us who sold duty-free products to them, either at the airport or on their return journeys, knew perfectly well that they were not. On one flight from Male to Beijing, the entire contents of a Mega Maldives Airlines duty-free shopping trolley were sold out. Every single item!

The coming opportunity

That said, it is unlikely that we can, or even want to turn the Maldives into a shopping-focused haven of malls and discount-retail outlets. Luckily for us, we don’t have to. The spending habits of Chinese tourists are changing.

According to research by China UnionPay – one of China’s biggest bank-card association – the importance Chinese customers assign to shopping is falling. According to data analyst at China UnionPay Chen Han:

“The data show that outbound Chinese consumers are focusing more on what they gain from their travel experiences instead of what they buy at their destinations. This shift shows a heightened awareness of ‘quality time’ during their holidays.”

This means that the Chinese tourist is becoming a little more similar to the Western tourist. They will start appreciating cuisine, drinks, spas, diving and all the other ‘experiences’ that make the Maldives unique today. However, this also presents us with an opportunity to develop a much more active and innovative tourism sector product. Maldivian culture does not have to just mean the weekly local cuisine buffet, or the staff ‘bodu-beru’ band of the resort.

We could for example, have festivals of music, art, dances, poetry and literature, all of which will be highly appealing to the Chinese market. We could have talks on conservation, sustainability, nature and the environment – concepts becoming very popular in China. Natural remedies and approaches to health and well-being, as well as meditation and ‘mindfulness’ are also increasingly popular with this market, especially as Chinese cities like Beijing become increasingly polluted.

All of these opportunities generate a lot more in terms of jobs and creative opportunities for our youth, and is much better for us than selling a $20,000 Gucci handbag.

How will we get this diversified product to the tourists? The answer to this question may be difficult, but the Maldives tourism product has shown itself to be highly dynamic. The recent emergence of guest houses is one such example of this dynamism. The current government’s ‘Thumburi project,’ is also another very good opportunity to diversify these products and really develop a product that appeals to the Chinese market.

Where is the love?

Look around you. Every country in the world – from Canada to South Africa – is spending hundreds of millions of dollars in promoting their destination in the hope of attracting Chinese tourists.

But we in the Maldives, with our pristine natural beauty, were able to make the Chinese fall in love with us with little or no effort. It’s about time we put our prejudices aside and learnt to love them back.

Mizna Ahmed is a Director at Mega Maldives.

Related to this story

MMPRC to further boost Chinese visitors with tourism roadshow

Maldives mulls tourism future as China reaches quarter of all arrivals


Mega Maldives US$99 return tickets to Malaysia sell out in two hours

Return tickets to Malaysia priced at US$99 by local airline Mega Maldives sold out in less than two hours today.

The airline told local media that 99 tickets at the promotional price sold out shortly after it went on sale at 9:00am this morning.

The promotion offered travel to Malaysia on December 26, 27, and 31 with a return date before January 20.

Customers reportedly began queuing outside the Mega Maldives office as early as 1:30am last night.


Center for Asia Pacific Aviation profile on Mega Maldives

The Center for Asia Pacific Aviation (CAPA) has said that Mega Maldives Airlines is planning a rapid fleet and network expansion by seeking potential joint venture partnerships in other markets.

In a company profile for the airline, CAPA said that the first phase of the expansion plan would involve the addition of four 757s and one 767 to the fleet, while the second phase would involve launching flights to Australia and Europe.

Mega Maldives has pursued modest expansion since launching in early 2011 and currently operates three scheduled routes from Malé with a fleet of two 767s and one 757.

“Tourist arrivals from China including Hong Kong have increased more than five-fold over the last four years from about 60,000 in 2009 to 332,000 in 2013, according to Maldives Ministry of Tourism data. China is now by far the largest and fastest growing source market for tourists to the Maldives, accounting for 30% of all arrivals in 2013,’’ said the CAPA profile.

In Southeast Asia Mega Maldives has been considering starting flights to Jakarta and Kuala Lumpur.

“Kuala Lumpur and Jakarta are not nearly large enough to support MEGA on a purely local basis. Malaysia accounted for about 11,000 visitor arrivals in the Maldives in 2013,’’ CAPA stated.

However, CAPA reported that the airline was confident that Jakarta and Kuala Lumpur to Malé would be viable routes with connections to Saudi Arabia because of strong demand for religious travel.

If Mega Maldives launches flights from Kuala Lampur or Jakarta to Jeddah it would become the first transit market and turn Male’ in to a potential transit hub from Asia to the Middle East, Africa, and other Indian Ocean islands, read the profile.

Read more


Mega Maldives negotiating with tax authorities over account freezing dispute

Airline Mega Maldives continues to operate scheduled flights to and from China this week, despite the Maldives Inland Revenue Authority (MIRA) taking action to freeze the company’s accounts on Monday (June 17) over disputed tax payments.

MIRA announced this week that it had decided to freeze bank accounts linked to Mega Maldives with the assistance of the Maldives Monetary Authority (MMA) over what it claimed was the company’s refusal to cover tax flagged in an audit report.

The airline has stated that it was engaged in negotiations with local authorities to try and resolve the dispute with MIRA concerning the state’s interpretation of the requirements under which withholding tax must be paid.

The company has maintained that it remains fully up-to-date in terms of covering profit and service tax payments to MIRA.

Mega Maldives, which is operated through a US-Maldives private joint-venture under the name Mega Global Air Services (Maldives) Private Limited, is the country’s second scheduled airline.

The airline commenced operations in 2010 and completed its maiden flight in January 2011, where it flew over 230 passengers from Hong Kong to Gan International Airport.

During July 2011, the airline went onto become the first Maldivian carrier to provide flight services from Shanghai to Male’ with 200 passengers.

MIRA’s Director General of Audit and Finances Fathuhulla Jameel told local media this week that a tax audit carried out by the authority revealed that Mega Maldives owed large sums of money as unpaid taxes.

According to Jameel, the total amount of money MIRA is owed by Mega Maldives stood at more than MVR 13 million (US$ 843,060.96) as of this week.

The airline is also required to cover unpaid fines valued at around MVR 1 million (US$ 64,850.84) resulting from the company’s failure to pay taxes and produce statements, according to MIRA.

Speaking to Minivan News today, Jameel said that MIRA had been acting in accordance with the law, adding that withholding taxes were imposed under section sixof the Corporate Profit Tax Act.

“We have a two stage appeal process. One is if they are not satisfied with our figures in the tax audits, then there is a department in MIRA which they can appeal. If that fails, they can appeal to the Tax Appeal Tribunal. So far, to my knowledge, no appeal has been made to Tax Appeal tribunal. If they are unhappy with our figures, there are ways they can find a solution,” he said.

No funds in the frozen accounts: MIRA

MIRA has revealed that the accounts of Mega Maldives frozen by the MMA were found to have insufficient funds to cover the outstanding payments.

“We believe that they will produce the required tax statements and pay the money owed to the authority. Having failed to pay the amount, we froze their accounts and when we checked, there were no funds in those accounts,” Jameel said.

According to Jameel, of the two frozen accounts, one had only US$ 10,000, while the other contained MVR 9,000.

“Some accounts are still not frozen. But we had requested to freeze all accounts under the airline. They can still deposit money even if the account is frozen,” Jameel added.

Jameel told Minivan News that negotiations were already under way with the airline, which would be allowed to make payments in installments once an initial 30 percent of the outstanding payment to MIRA has been covered. However, Jameel said it was difficult to detail the exact figures or the duration over which installments could be made as negotiations were ongoing.

Jameel said that MIRA had formally requested the MMA to freeze the company’s accounts last Thursday (June 13) after several attempts to retrieve the money were unsuccessful.

“As a last resort, we requested [MMA] to freeze their account. We had made the decision [to freeze the account] after all the attempts made to collect the money failed,” Jameel said. “MMA will order all the banks to freeze the accounts of that airline.  I presume the accounts may now have been already frozen.”

Airline negotiations

In a press statement issued yesterday (June 18 ), the airline claimed that it was currently in negotiations with MIRA and the government to try and resolve the dispute.

“The tax that this airline is required to pay as per Maldives Inland Revenue is the withholding tax. This tax, by any means, is not similar to taxes such as the Corporate Profit Tax (CPT) or the Goods and Services Tax (GST),” read the company statement.

“Generally, corporations are required to pay taxes based on their profits or based on the income that is generated. These two taxes [CPT and GST] are being regularly paid to MIRA as required by the law,” it added.

Withholding taxes are based on a local company’s spending on services provided by expatriates. Mega Maldives, being an operator of wide body flights, said it was continuously required to seek foreign technical assistance.

Interpretation issues

The airline has said that according to MIRA and the Maldivian government’s interpretation of tax laws, several services required by the airline had fallen into the criteria requiring payment of withholding tax. The tax currently stands at 10 percent of the costs paid in such services.

“Assessing the figures, having to pay an additional 10 percent as tax means 10 percent is added to the cost incurred by the airline,” it claimed.

The airline argued that under this interpretation, it was required to pay withholding tax on top of the cost of spare parts required to be made available by each airline in the country as per the Maldives Civil Aviation regulations. Withholding tax was also said to have been added to the general cost of operating international flights.

“Since the stated expenses are required by an international carrier, imposing a huge tax on such expenses is a financial burden on the airline that is resulting in huge losses. The Maldives Civil Aviation Authority which is helping this airline in the negotiations with MIRA has also highlighted that such taxation could be detrimental to the aviation industry,” it claimed.

Speaking to Minivan News, Chief Executive Officer of Maldives Civil Aviation Authority, Hussain Jameel confirmed that the authority had been assisting the talks between the airline and MIRA.

However, he declined to provide further details at the current time.

Mega Maldives stated that as a result of financial difficulties incurred by the company over the dispute concerning the withholding tax, it had been forced to reduce its number of scheduled flights.

The airline maintained nonetheless that was working on expanding its fleet, which currently consists of several aircraft.

In its statement, Mega Maldives called on authorities to create an environment for aviation companies to have a profitable and viable business in the country.

Operations interrupted

Local media reported earlier this week that the Maldives Airports Company Limited (MACL) had originally denied approval for a Mega Maldives flight to leave the country over its failure to pay for the airport handler’s services.

However, the flight was allowed to leave the country after the airline and MACL finally came to an agreement over payment of the services.

The flight, which was expected to depart at 5:10pm on Monday evening, was only able to leave more than two hours later at around 7:20pm.

According to MACL’s Managing Director Dr Ibrahim Mahfooz, both Mega and the MACL had discussed the issue of pending payments, and Mahfooz told local media outlet Sun Online that Mega had agreed to make the payments to MACL.

Sun Online reported that following the grounding of Monday’s scheduled flight by the airline, it had agreed to pay MACL a sum of US$ 235,000 and to pay an additional sum of US$ 389,000 on Wednesday and Thursday.

Meanwhile, speaking to Minivan News about the dispute today on condition of anonymity, a senor figure within the country’s tourism industry said that Mega Maldives had in recent years played a vital role in connecting Maldives to China.

China last year overtook established European tourism markets to become the leading source of visitors to the Maldives. The senior tourism source said that air connectivity and flight frequency played a significant part n the fortunes of an isolated destination like the Maldives.

“An impact on any airline operating to the Maldives will impact the country’s tourism sector,” the source claimed.


Mega Maldives expands fleet with Boeing 757

Mega Maldives has announced an expansion of its fleet with the acquisition of a Boeing 757-200ER aircraft to aid the possible operation of services to a wider number of destinations from the country.

According to the company, which presently operates two 767 jets, the new aircraft is set to come into service this month to support the groups’ existing services from Male’ to Hong Kong, Chongqing and Chengdu.

In April, Mega Maldives joined forces with the Maldives government and the wider tourism industry to conduct a travel roadshow to promote the destination on a whistle-stop tour of five Chinese cities in one week.

The tour was part of attempts to counter the negative impacts of international news coverage concerning the destination after February’s controversial transfer and help the industry meet its aims of attracting a record 1 million visitors to the Maldives during 2012.

MEGA Maldives Airlines CEO George Weinmann claimed that as well as bolstering the group’s ability to provide existing services, the aircraft could also form part of plans to expand to new markets.

“The 757 will allow us to serve markets with more frequency and to open up smaller markets with non-stop direct service,” he said. “The aircraft’s long range capability – which can reach as far as Beijing, China; Perth, Australia; and Johannesburg, South Africa make it a very flexible choice as well.”

The company said it remained committed to expanding mew routes “to widen” the aviation and tourism industries in the Maldives.


Maldives Tourism Board opens offices in Beijing in Shanghai

TTG Asia travel magazine has reported the opening of Maldives Tourism Promotion Board offices in Beijing and Shanghai.

Chen Xueyu, secretary-general of the Shanghai Tourism Trade Association, told TTG that the Maldives was one of the most popular tourist destinations among Shanghai’s population.

Zou Qingling of Shanghai Spring International Travel Service, said that the Maldives was the “first-choice destination for (Chinese) honeymooners”, anticipating that numbers would continue to grow at 20-30 percent per year.

The Ministry of Tourism took part in a travel roadshow in conjunction with Mega Maldives airlines which flys tourist to the Maldives from 6 Chinese destinations. The tour aimed to publicise the industry’s aims to attract a record 1 million visitors this year as well as to encourage Chinese investment in the Maldives.

Last year, the number of visitors from China surpassed those from Britain, reaching 198,000. Statistics from the ministry show that Chinese tourist arrivals are up 12.6 percent this year compared with the same point last year.


Chinese market shows signs of recovery as UK, Italian arrivals plunge in April

Chinese tourist arrivals have shown signs of recovery with a 3.5 percent increase in April 2012 compared to the same period last year, after a massive 34.8 percent decline was recorded in February.

“The Chinese market performed well due to resuming of charter airlines with more frequency and flights from additional cities and strong demand for Maldives. Tour operators’ forecast phenomenal growth in June and July,” observed the Maldives Marketing and Public Relations Corporation (MMPRC).

Figures released by the MMPRC show 10,523 Chinese arrivals during April, still making it the country’s largest market, but only narrowly eclipsing Germany’s 10,145 arrivals.

That 8.1 percent increase in German visitors places the country above the Maldives’ former mainstay market of the UK, which was badly affected by the 2008 economic recession. UK arrivals plunged 20 percent in April this year to 8,934 visitors, compared to 2011.

In its April report, the MMPRC speculated that the UK market would continue to shrink throughout 2012 on the back of a 14.3 percent drop in arrivals so far this year.

Italy, one of the Maldives’ first and traditionally strongest markets, recorded a huge 27 percent drop in arrivals during April compared to the same period  last year.

The MMPPC said the Italian market was not expected to perform well in 2012, due significantly to the bankruptcy of major tour operators in Italy.

“The strict fiscal policies of Italian government also discouraged long haul outbound tourism,” the MMPRC stated. “The whole of Southern Europe is not performing well due to the economic crisis. The region is going to be the most challenging region in terms of arrivals in 2012.”

The Russian market – a favourite at many resorts due to its proportionate affluence, insulation from the economic crisis in Europe and general disregard of political turmoil – grew 24.1 percent compared to April last year.

The MMPRC’s figures show declining occupancy at resorts across the country this year, as markets in the Maldives reshuffle and the country battles negative international publicity around the controversial change of power in February.

Occupancy was down 3 percent in February, 7.4 percent in March and 6.1 percent in April, compared to the corresponding months last year. Bed nights followed a similar pattern.

George Weinmann, CEO of Mega Maldives Airlines – the Maldives’ national carrier that currently flies long-haul services to major Chinese cities including Hong Kong, Shanghai, and Beijing, said the market had recovered through April-May “and we’re now back up to where were – six flights a month to each destination, 12 to Beijing. But we were supposed to reach there two months ago – our first quarter was pitiful,” he told Minivan News.

Mega Maldives halted flights to Hong Kong in February, which were restored on April 4. Flights to Beijing and Shanghai continued non-stop, Weinmann stated.

Such was the anticipated demand that Mega Maldives had taken on a second aircraft and was looking to deploy a third before the end of the year, said Weinmann, adding that such high potential demand for the destination could see the airline conceivably expand to 10 aircraft.

“We’re aiming to add two a year,” he said, expanding the carrier’s reach to developing markets for the Maldives such as Eastern Europe, Australia, South Africa and South Korea.


Mega Maldives aims to double number of passengers in 2012

Mega Maldives airlines has today announced plans to more than double the number of passengers it carries this year. The airline flew 31,000 people in its maiden year and plans to hit 70,000 in 2012.

The airline now links the Gan and Ibrahim Nasir airports in the Maldives to four destinations in China. Last year China overtook the United Kingdom to became the biggest tourism market for the Maldives, comprising 15 percent of all arrivals according to Tourism Ministry statistics.

There were fears that the Chinese market had been worried by the political unrest in the country after passenger numbers dropped in February. Some Mega Maldives charter flights were cancelled but a full schedule was resumed earlier this month.

The company held a ceremony welcoming its new cabin crew. Haveeru reports that this brings the total number of staff to 200, of which 60 percent are local. Chief Executive George Weinmann last month told the New York Times that he expected the company’s number of flights between China and the Maldives will have reached 34 by June of this year.