Tourist arrivals decline in January as Chinese arrivals slow down

Tourist arrivals to the Maldives in January 2015 declined by -7.8 percent compared to the same period last year, the Ministry of Tourism has revealed.

Arrivals in January stood at 97,073 visitors, down from 105,296 visitors in January 2014, according to monthly statistics from the tourism ministry.

“This was the fourth consecutive month where a negative growth was recorded in tourist arrivals to the country,” the ministry observed in a statement last week.

Consequently, the occupancy rate fell from 82.5 percent in January 2014 to 73.9 percent last month.

“However, the average duration of stay remained uniform at January 2014 level with 6.5 days, this however was an increase compared with the 6.1 days at the end of December 2014,” the ministry noted.

In contrast to the negative growth recorded last month, tourist arrivals grew by 18.5 percent in January 2014.

Tourist arrivals also registered negative growth in November (-5.1 percent) and December (-1.2 percent) last year on the back of a steep decline in arrivals from Russia and Western Europe as well as Asia and Pacific markets.

The number of Russian tourists declined by 44.7 percent in December 2014 compared to the same period the previous year.

Arrivals from China and Japan in December meanwhile dropped by 12.2 percent and 11.8 percent respectively.

Last month, industry insiders expressed concern that the Maldives could become an overpriced destination with the introduction of new taxes.

While the Tourism Goods and Services Tax (T-GST) was hiked from 8 to 12 percent in November 2014, the government announced that a US$6 per day ‘green tax’ would be imposed on tourists from November 2015 onward.

“The green tax will definitely have an impact. It is (already) becoming too expensive to go to the top resorts because of all the service charges and taxes,” Shafraz Fazley, managing director of Viluxur Holidays told travel website TTG Asia.

Chinese market

In a phenomenon that caught many industry experts by surprise, the number of Chinese tourists visiting the Maldives tripled from about 100,000 in 2010 to more than 300,000 last year.

In 2014, Chinese tourists accounted for nearly one-third of arrivals with a 30% market share, representing the single biggest source market for tourists to the Maldives.

A total of 363,626 Chinese tourists visited the Maldives in 2014, up 9.6 percent from the previous year, which saw 331,719 arrivals.

However, during 2014, the annual growth rate of Chinese tourist arrivals slowed from 20 percent at the end of June to 9 percent by the end of December.

“Arrivals to the Maldives from China started slowing down during mid-2014 and negative growths were registered since August that year,” the tourism ministry explained.

“January 2015 was recorded as the worst performed month for the Chinese market to the Maldives so far, with a strong negative growth of 33.1 percent. China being the number one market to the Maldives, the negative growth registered from the market was reflected in the total arrivals to the country.”

Meanwhile, according to the tourism ministry’s visitor survey for 2014, less than 10 percent of Chinese tourists were repeat visitors.

In contrast, the survey found that more than 25 percent of British, Italian and German tourists visited the Maldives between two to 10 times.


With the decline in arrivals from China, Europe has regained top spot as the largest regional source market for tourists, increasing its market share from 43.9 percent at the end of December to 54.1 percent in January.

A total of 52,545 visitors were recorded from European countries, representing a marginal growth rate of 0.5 percent compared to January 2014.

In 2014, the annual growth rate of tourist arrivals from Europe flatlined to 0.4 percent.

However, with Chinese arrivals representing more than a quarter of visitors, total arrivals during the year reached the government’s target of 1.2 million visitors.

In terms of individual markets in January 2015, Italy was the second largest source market with an 8.3 percent market share, followed by the UK with 7.4 percent, Germany with 7.3 percent, and Russia with 6 percent.

However, Russia was the worst performing market during January, the ministry noted, registering negative growth of 38 percent.

Registered establishments

In January, the Maldives had a total of 529 registered tourist facilities with a total bed capacity of 32,087, including 112 resorts (24,151 beds), 19 hotels (1,704 beds), 231 guesthouses (3,397 beds) and 167 safari vessels (2,835 beds), according to the tourism ministry.

However, a total of 302 establishments (27,520 beds) were operational during the month, the ministry revealed.

“Operational capacity included 106 resorts with 23,247 beds, 15 hotels with 1,468 beds, 107 guest houses with 1,569 beds and 74 safari vessels with 1,236 beds,” the ministry’s statistics showed.

“The total tourist bed nights of these operational establishments in January 2015 was 630,840 which was a drop (-7.8%) compared with that of January 2014.”

Related to this story

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Addu City condemns government’s “obstruction” of guesthouse venture

Addu City Council has condemned the government’s alleged “obstruction” of its flagship guesthouse venture which aims to establish up to 2000 guesthouse beds.

“Government officials are spreading falsehoods to reduce investor confidence with the aim of obstructing Addu City Guesthouse Venture,” read a council statement released on Monday (October 20).

Condemning the “atrocity,” the council urged “government officials to stop such acts and facilitate an environment for this project – intended to bring development to the people – to succeed.”

The tourism ministry has denied the allegations, though the President’s Office has told local media it believes the scheme was designed purely to benefit members of the Maldivian Democratic Party (MDP).

The council on October 13 had handed over 29 plots of privately owned land to an India’s SG18 Realty to develop approximately 250 beds.

Companies from Denmark, Australia, and the United Arab Emirates have also expressed interest in building and operating guesthouses, the council has said.

A source close to the Addu City Council said government ministers had told investors foreigners they would not be allowed to operate and manage guesthouses.

However, State Minister for Tourism Hussein Lirar has dismissed Addu City Council’s allegations, and said he has to consult with a lawyer to definitively say if Maldivian laws and regulations bar foreigners from operating guesthouses.

“If foreigners get involved in guesthouse business, it narrows the opportunity for Maldivians to benefit,” he said.

An amendment to the Guesthouse Regulation of 2010 says licenses will be issued only to Maldivians, or partnerships without foreigners or companies registered in the Maldives as per the 1996 Company Act.

The Company Act says foreign companies may do business in the Maldives if they register in the country.

Meanwhile, President’s Office Spokesperson Ibrahim Muaz Ali has today said the Addu City Guesthouse Venture is a scheme by opposition MDP to benefit its supporters. All six Addu City Councilors belong to MDP.

“It seems to us as if it’s a plan to benefit individuals of a certain party. MDP members have participated in Addu City Guesthouse Venture meetings, and it seems from the photos and media that it is aimed to benefit party members. So it appears the project is designed for political gain,” he told newspaper Haveeru.

He claimed the council should have shared information on the venture with the government and the Local Government Authority if they sincerely intended the project to benefit all Addu residents. The council has previously said the Ministry of Tourism has been informed and Minister of Tourism Ahmed Adeeb has written a letter approving the venture.

The ministry has meanwhile revealed plans to establish guesthouse islands where multiple investors will be invited to build guesthouses on uninhabited islands.

The guesthouse island consists of three components, leasing of 5000 square feet plots for 25 rooms, 10,000 for 50 rooms and water villa plots for 100 rooms.

Foreigners can only invest in the 5,000 and 10,000 square feet plots if they form a joint venture company with a Maldivian. However, they will be allowed to bid for the water villa component without a Maldivian partner.

The Addu City Council in its statement said investors have expressed interest in developing guesthouses in all areas designated for guesthouse development in Addu.

Although landowners will have the option of operating guesthouses once they are built, the majority of landowners have no desire to manage them, Mayor Abdulla Sodiq previously told Minivan News.

The council has said the aim of the US$20million venture is to create jobs in the country’s second most populous region and increase living standards in Addu.

The region’s Gan International Airport will only become viable with 3,000 – 4,000 beds in operation in Addu, the council has said.

There are only two resorts in Addu at present and only a few additional islands for resort development. Even if all the remaining uninhabited islands are developed as resorts, it would not increase bed capacity to the required figure, the council said.

Hence, guesthouse tourism is key to ensuring the viability of the Gan International Airport, the council added.

Despite being the country’s second largest urban area, Addu is home to just 3.6 percent of the industry’s registered bed capacity.

The Maldives’ tourism industry, with over 100 resorts and nearly one million visitors per year, brings in approximately US$2 billion annually.


9.7% increase in tourists arrivals for first quarter of 2014

At the end of first quarter of 2014 tourist arrivals to the Maldives saw an increase of 9.7% compared with the same period of 2013, reaching a total of 321,561, reported the Ministry of Tourism on Tuesday.

Europe was the leading market generator taking account of 51.3% of all arrivals to the Maldives with a sum total of 321,561 tourists during the first quarter of the 2014, the report stated.

Asia and the Pacific recorded an impressive growth rate of 24.4% at the end of first quarter of 2014 bringing in additional 26,606 tourists to reach a total of 135,839. This region accounted for 42.2% of arrivals to the Maldives at the end of first quarter of 2014.

According to the Ministry, the Chinese market was increased by 24% with an additional 16,960 tourists compared with the same period of 2013.


Civil Court issues injunction against termination of Palm Beach Resort and Spa management agreement

The Civil Court has issued an injunction temporarily blocking a decision by the head leaseholder of the Palm Beach Resort and Spa to terminate a sub-lease agreement with the property’s current management.

The Ministry of Tourism, Arts and Culture has confirmed that the resort, based in Lhaviyani Atoll, is to remain under the management of Sun Sporting Holidays Limited until the conclusion of a court case to determine the legality of terminating the companty’s sub-lease agreement.

“Sun Sporting Holidays filed a case against the leaseholder and the court issued an order stating that the termination notice should be suspended until the court decided whether the termination is lawful of not,” Tourism Ministry Senior Legal Officer Faseeh Zahir explained to Minivan News.

“So, the ministry accordingly extended the temporary permit for resort operation to Sun Sporting Holidays,” he said.

No date has yet been set for the next hearing in the case, according to the ministry.

In a document (part 1, part 2, part 3) dated July 15, 2013,  Leaseholder Ibrahim Ali Maniku issued a notice of termination for the agreement between himself and Sun Sporting Holidays Limited to operate the Palm Beach Island Resort and Spa.

He wrote that the decision was based over concerns the company, as sub lessee, had failed to meet a number of safety standards and mandatory requirements set out by the Tourism Ministry and other local authorities.

Citing a Tourism Ministry report from April 11, 2013 – Number: 88­QAR/PRIV/2013/604 – the notice alleges that of 97 observations and violations noted by authorities at the time, 61 were considered serious and in need of immediate rectification.

According to the leaseholder, a maximum period of no more than three weeks from the publication of the report were provided for any short comings or violations raised by the ministry to be dealt with by management on the site.  The notice does not clarify if the required changes were made within the deadline.

The leaseholder however alleged that 14 “major violations” of the General Regulation for Food Establishment and Service of Maldives (2007/182/FSI) raised by the Tourism Ministry had not been corrected during a further inspection held a month later.

The notice claimed that Sun Sporting Holidays had also failed to register the property’s desalination plant with the Environmental Protection Agency (EPA), as well as ensuring the resort’s power system was approved by the Maldives Energy Authority (MEA).

Concerns were also raised in the document over the EPA’s conclusions concerning the impact of severe erosion on the island’s coastline, which is claimed to have led to serious damage to the site’s ‘‘A la Carte’ restaurant as well as the loss of 17,953 square metres of land since the sub-lease agreement had come into force.

The notice claimed the sub lessee had additionally failed to comply with the EPA’s recommendations of relocating the resort’s reverse osmosis desalination) intake away from “the site where sewage is discharged”.

Sun Sporting Holidays was also accused by the leaseholder of failing to address recommendations by the Maldives National Defence Force (MNDF) to repair the resort’s fire alarm and fire hydrant systems that had previously been found to be out of order, while also failing to prepare and practice drills as part of an emergency fire plan.

When contacted by Minivan News this week, Sun Sporting Holidays said Palm Beach Resort and Spa remained under its management and was being operated as normal.

However, the company declined to comment further on the termination notice sent by the island’s leaseholder while legal action into the matter was ongoing.


New financial restrictions on tourism development exclude small and medium-scale investors: developer

An island owner involved in the country’s burgeoning mid-market holiday sector has slammed new regulations imposing financial restrictions on tourism joint venture projects with the government, claiming the legislation outright excludes small and medium-scale investors.

Speaking on condition of anonymity, the island owner alleged that the recently implemented amendments to the Tourism Act served to “shut the door” on small and medium-sized investors.

The Ministry of Tourism, Arts and Culture told Minivan News that the regulations were required in order to ensure future developments in the country were financially viable and that investors could guarantee a project’s completion.

However, the regulation is expected to favour much larger-scale investment projects such as resorts, to the detriment of mid-market tourism, claimed the island owner.

“The real issue here would be that only those with very high net worth can be venture partners with government. Very, very few tycoons are in that wealth bracket,” the source said.

“[Former President] Nasheed’s government tried to be inclusive in offering business opportunities. This regulation is exclusive and shuts the door for medium to small-size investors to partner with the government.”

Joint venture regulation

Published in the Government Gazette Volume 42, number 17 – dated January 28, 2013 – the regulation requires any joint venture partner working with the state on a tourism projects to have a minimum financial worth of US$300 million  and make a minimum initial capital investment of at least US$100 million.

The regulation, entitled the “Procedure to Follow Where the Government Undertakes Joint Venture Investment in Islands or Land”, allows a company with at least a 10 percent share held by the state to develop a resort from land set aside for tourism use, such as a picnic island.

Land used for water sports or diving would also be included once the lease for the area is acquired by a joint venture company.

“Notwithstanding that section five of the Maldives Tourism Act states that islands and land for development as tourist resorts shall be leased to the party that submits the best-qualified bid in respect of such islands or land in accordance with pre-established procedures in a public tender held by the Ministry of Tourism; the same section states that those Islands or land in which the Government makes an investment wholly or in joint venture shall be exempted from the Procedure provided therein,” the regulation reads.

“Therefore the object of this procedure is to determine the procedure to follow in that prescribed exemption status. Uninhabited islands or land may be leased to a company created under a joint venture with the Government for tourist resorts, tourist hotels and marinas development pursuant to this Procedure.”

An unofficial English translation of the regulation can be read here.

Development safeguards

Minister of Tourism, Arts and Culture Ahmed Adheeb told Minivan News this week that the regulation was needed to safeguard future resort development, claiming opportunities would continue to exist for small and medium investors in the tourism sector through sectors such as guest-houses and safari boats.

With what he called a “limited” number of islands presently available in the country to be developed as resort properties – a major earner for the Maldives government both in terms of lease payments and Tourism Goods and Services Tax (T-GST) – Adheeb said the regulation was already bringing in large-scale investment.

“We already have a Qatar-based group interested in the resort business here and they have signed a memorandum of understanding (MOU) on this,” he said. “We are now looking to find a suitable location for them.”

Adheeb claimed the legislation was particularly important considering the  number of pending tourism development projects approved under the former government that failed to be completed – resulting in an overall loss to the country’s economy as a result. He said that the regulation approved back in January would ensure a more “strategic” solution to finding investment partners to ensure financial returns on tourism projects.

Adheeb said that the regulations applied to land such picnic islands that were effectively being used “almost as a resort”, such as areas licensed to serve alcohol to tourists, something not allowed on islands designated as “inhabited”.

“The only difference [to these islands] is that tourists cannot sleep there for the night,” he said. “Now they can stay there the night, but [operators] have to pay land rent. It is to stop the concept from being abused.”

The tourism minister said that picnic islands open to the Maldivian public would not be affected by the regulation and would continue to be accessed and used by local people.

“Picnic island”

Speaking to Minivan News, former Tourism Minister Dr Mariyam Zulfa said the concept of a “picnic island” dated back to the 30-year rule of former President Maumoon Abdul Gayoom.

She said the Gayoom administration had opted to lease islands either for tourism – such as through the development of exclusive resort properties – or tourism-related purposes.

While islands leased for tourism went through a bidding process, land provided for tourism related purposes was said to have been provided on an “ad hoc” basis at the tourism ministry’s discretion, according to Dr Zulfa.

“These were often leased for the purposes of day picnics for tourists, safe harbours and other ancillary facilities of resorts,” she stated. “These islands were only for the use of those persons allowed by the leaseholder (and not available for public use). These islands came to be known as ‘picnic islands’, leased by the Ministry of Tourism.”

Dr Zulfa claimed that the method of providing land for tourism related purposes during the Gayoom-era meant that there had been a lack of regulation for how much an individual party paid to lease such islands.

“Originally these were leased at rates that were not based on a uniform formula and it was very difficult to justify as to why one party had an island for, say US$2,000  a month and others for double that or sometimes more,” she added.

“What has happened traditionally is that some of the leaseholders started building rooms on some of these islands for tourists and very soon some islands became, for all intents and purposes, a tourist resort but without being registered as one and of course without being registered for the taxes that were attached to tourist resorts.”

Under the Nasheed government, Zulfa claimed the former administration attempted to introduce “a fair and just” formula allowing “picnic islands” to be converted legally into tourist resorts at the leaseholder’s request in partnership with the government.

“Thus the uniform formula of US $600,000 per square hectare and all the other conditions were stipulated in our regulations and picnic island lease holders were invited to become legal – if they so required, and without involving the bidding process. These islands are very different to islands leased by other ministries as tourism legislation – and tourism tax, I might add – applies only to islands leased by the Tourism Ministry.”

She added that land leased for public purposes such as picnics by other ministries would not be affected by the Tourism Act.


Maldives minister slams “dubious” motives behind Avaaz boycott campaign

Deputy Tourism Minister Mohamed Maleeh Jamal has slammed what he calls the “dubious” motivations behind an petition calling for tourists to boycott the Maldives in protest over the sentencing of a 15 year-old rape victim to flogging, alleging the campaign is “politically motivated”.

While accepting a need for “capacity building” in parliament and other institutions, Maleeh said tourism had been a key driver in ensuring national development and democratic reforms for the last 40 years, granting the industry “sacred” importance in the Maldives.

“People should not be doing anything to damage the industry. In Switzerland, you would not see a campaign designed to damage Swiss chocolate. Likewise you would not see a German campaign to damage their automobile industry,” he said.

The comments were made as over 1.7 million people worldwide have signed a petition on the Avaaz site aiming to target the “reputation” of the Maldives tourism industry and encourage the dropping of charges against the 15 year-old rape victim, as well as wider legal reforms to prevent similar cases.

The girl was sentenced on charges of fornication after confessing to having consensual sex with an unknown man during investigations into her alleged abuse by her stepfather. The girl is also alleged to have been abused by a number of unidentified men on her island dating back to 2009, according to sources on the local council.

The government of President Dr Mohamed Waheed has pledged to appeal the sentence given to the minor by the country’s Juvenile Court, while also reviewing local laws to enact potential reforms of the use of flogging. No time-line for such reforms has yet been set beyond the commitment to hold talks.

Democratic path

In an interview with Minivan News today, Deputy Minister Maleeh argued that over the last 40 years, the tourism industry has been an intrinsic part of not only relieving poverty nationally, but also driving the country’s democratic transition process – leading eventually to elections in 2008.

Presidential elections are now scheduled for later this year in a highly-polarised political environment that follows a controversial transfer of power in February 2012 that saw President Waheed come to power following a mutiny by sections of the police and military.

Former President Mohamed Nasheed and his opposition Maldivian Democratic Party (MDP) have alleged that his government was ousted in a “coup d’etat”.  Nasheed has maintained these claims despite the findings of a Commonwealth-backed Commission of National Inquiry (CNI).

“Chaos and anarchy”

Considering the present political landscape, Maleeh claimed had been deliberately “misinformed” in a politically motivated attempt to destabilise the government and tourism industry through negative media headlines.

“By misinformed, I mean that I don’t think they have taken the government’s stand into account, the president has already spoke on the issue , as has the attorney general,” he said. “I think that in time, Avaaz will be informed of this and will even be our partners.”

Maleeh criticised the intentions behind the campaign, alleging the petition was being used for political gain, rather than focusing on the welfare of the 15 year-old girl at the centre of the sexual abuse allegations.

“I would say the motivation [behind the campaign] is dubious. The problem ultimately needs to be addressed by the judiciary and parliament, not the tourism ministry,” he said. “We are in the middle of a successful democratic transition. Killing the most important industry in the country will not give way for reforms, but chaos and anarchy.”

Maleeh claimed that when accounting for the economic significance and societal benefits of tourism to the Maldives, the industry was very fragile.

He added that the tourism industry has ensured continued national developments in “the right direction” that had helped to alleviate general poverty and improve the quality of life in the country. Maleeh pointed to the availability of consumer goods such as like branded coffees and other foods and produce as an example of the quality of life.

Maleeh added it had been tourism that helped drive democratic developments in the nation, with international parties encouraging former president Maumoon Abdul Gayoom, who served as the country’s autocratic leader for 30 years, to undertake a path towards democratic reforms.

“In the last 40 years [since the introduction of tourism]. we have listened to groups like the World Bank and the United Nations World Tourism Organization (UNWTO),” he said.

Pointing specifically to reforms that had brought a new constitution to the Maldives in 2008, Maleeh said that rather than seeking a damaging boycott, international partners like the EU, the US and Australia had in the past engaged in dialogue instead.

“We have western-educated people here. We know there are issues in parliament and with capacity building that needs to happen. But we cannot be compared to a Middle Eastern country for example,” he said. “ We are a successful transitional democracy.”

“Concerted effort”

Maleeh said that after facing the impact of negative international and domestic headlines following the controversial transfer of power last year, the country had undertaken a “concerted effort” to promote the Maldives.

“Negative news needs to be minimised as I believe that tourism should be sacred here in the Maldives. In recent years, the democratic system has helped tourism, so we encourage openness and are not afraid of media.  What we want to see is correct information being out there. There needs to be more accountability with stories proven with facts,” he said.

“As far as the tourism ministry is concerned we don’t discriminate against any media. It is only those channels who call to boycott [the industry] that we would hesitate to speak to.”

The government last year agreed a US$250,000 (MVR 3.8million) advertising deal to promote the country’s tourism industry on the BBC through sponsorship of its weather services, as well as signing a £93,000 per month (US$150,000) contract with public relations group Ruder Finn to try and improve the country’s image internationally.

For the coming year, Maleeh added that the Maldives was again seeking similar support from private groups to engage in high-profile marketing efforts with media organisations like CNN and the BBC to try and push the Maldives unique selling points – namely “sun, sea, sand and spa”.

He added that with the expected introduction of new high-profile hotel chains to the country’s resort industry, including Louis Vuitton Moët Hennessy (LVMH), there was strong potential for positive international headlines in the media.

With a reduced promotional budget available for the coming year, Maleeh added that regardless of the allegiance of the next government, consistency needed to be seen in the country’s promotional budget to better plan future campaigns.

Accepting the potential budgetary challenges ahead, Maleeh said he believed that the Maldives tourism industry had become adept at promoting itself even with limitations, pointing to the growing importance of social media services like Twitter and Facebook to destination marketing – especially in terms of photo sharing.

“The Maldives stands at an advantage in that no one can take a bad picture here,” he said.

Addendum: Avaaz Executive Director Ricken Patel sought to justify the organisation’s petition in a subsequent comment piece published in Minivan News.


Maldives falls 40,000 short of million tourist target for 2012

The Maldivian government has narrowly failed to reach its target of one million tourist arrivals for 2012, according to figures released by Ministry of Tourism, after a year of political turmoil and an economic slump in key markets.

Despite arrivals falling short by roughly 42,000 tourists, figures released by the ministry have shown that overall arrivals rose 2.9 percent from 931,333 in 2011 to 958,027 in 2012.

Prior to the release of the figures, Tourism Minister Ahmed Adheeb predicted that while there may be a shortfall of roughly 20,000 in 2012, he was confident the ministry could achieve the one million mark in 2013.

“There were a lot of hiccups last year with the political turmoil that the country experienced. It is important that we do not compare ourselves to other destinations like Sri Lanka or Seychelles, as our tourism market is very different. We have a high-value tourism market.

“We will formulate a strategy to go forward this year and later this month [January] we are going to finalise the fourth master plan of tourism. I am sure we will get one million tourists in 2013. I can assure you of it,” Adheeb told Minivan News earlier this month.

Figures released by the  tourism ministry show that Europe, which accounted for 54 percent of all tourist arrivals in 2012, fell by 3.7 percent from 537,757 in 2011 to 517,809 in 2012. Arrivals from the United Kingdom – the second highest share of European arrivals to the Maldives this year – continued to fall from 104,508 in 2011 to 91,776 in 2012 – a 12.2 percent  drop.

Germany took over the UK in 2012 as having the largest share of European arrivals to the Maldives, growing by an extra 7,834 arrivals from 90,517 in 2011. The 8.7 percent increase in arrival numbers, meant that Germany was accountable for 10.3 percent of all tourist arrivals in 2012.

Italy, which had the second highest arrival share of European tourists in 2010, fell drastically in 2012 by 24.4 percent from 83,088 arrivals to 62,782.

Meanwhile, tourist arrivals from ‘Asia and Pacific’ regions continued year-on-year growth from 2010, increasing by 10.2 percent from 2011 and accounting for a 40.1 percent share in the overall market at 384,506 arrivals in 2012.

Shift to ‘low yield’ Chinese tourists

Chinese arrivals continued to grow in 2012, with a 15.6 percent increase from 198,655 in 2011 to 229,551 in 2012.

Chinese tourists now account for the largest share of arrivals from any nation in 2012 standing at 24 percent, a massive increase from Chinese arrival figures in 2009 which stood at 60,666.

Despite the high number of Chinese tourists, tourism experts stated back in 2010 that Chinese guests were relatively ‘low yield’ despite their high numbers.

Speaking to Minivan News in 2010, the now former Secretary General Maldives Association of Tourism Industry (MATI), Sim Mohamed Ibrahim, said Chinese tourists tended to spend less than their European counterparts.

“The Chinese who come do not come for the sun and the beach – they come because the Maldives is a novelty, a safe destination, and because of their new-found freedom to travel. Resorts are saying there are not many repeat visitors from China,” he said at at he time.

Tourism growth slowed to less than one percent in 2012

Tourism growth meanwhile slowed to less than one percent in 2012. While the tourism industry grew by 15.8 percent in 2010 and 9.1 percent in 2011, the industry’s growth in 2012 was expected to be 0.7 percent.

The two main reasons cited by the Finance Ministry for the anaemic growth were “the political turmoil the country faced in February” and a decline in the average number of nights tourists spend in the country “as a result of a decline in the average number of days a tourist spent in the Maldives.”

On average, tourism accounted for 28 percent of GDP during the past 10 years.

Despite the widely reported Ibrahim Nasir International Airport (INIA) dispute between the Indian infrastructure giant GMR and the Maldivian Government in December last year – as well as claims of anti-India sentiment within the country – arrivals from India  increased by 34 percent in December compared to the same month in 2011.

The largest increase in tourist arrivals compared to 2011 was from the Middle East, which saw close to a 50 percent rise in arrivals for 2012 at 21,843 from 14,570 in 2011.

Arrivals from United Arab Emirates grew the highest in percentage from 2011 by 76.6 percent. Despite the high percentage growth however, the number of tourists was comparatively low to other countries standing at 4,047 in 2012.

MVR 70 million tourism marketing budget in 2012

The Maldives Marketing and Public Relations Corporation (MMPRC) was allocated a budget of MVR 70 million (US$4.5 million) in 2012 to conduct marketing activities for the year, almost double the 2011 budget of US$2.3 million, which saw the country receive 900,000 tourist arrivals.

Following February’s controversial transfer of power, the incoming government of President Dr Mohamed Waheed Hassan sought to utilise public relations groups and advertising to try and offset the impact of negative news headlines resulting from the controversial nature of the change in government.

That focus included a US$250,000 (MVR3.8million) advertising deal to promote the country’s tourism industry on the BBC through sponsorship of its weather services, as well as signing a £93,000 per month (US$150,000) contract with public relations group Ruder Finn to try and improve the country’s image internationally.

Maldives tourism authorities said back in October that they were confident the country would meet its one million visitor target, despite ongoing “political turmoil”.

Registered beds up, occupancy rates down

According to the 2012 statistics released by the Tourism Ministry, the average number of registered beds between resorts, hotels, guest houses and safari vessels stood at 27,702 in 2012 – an increase of 1,346 from 2011.

Despite the increases in tourism arrivals, bed nights fell from 6,529,200 in 2011 to 6,450,794 – a total drop of 1.2 percent – and the average days spent in the Maldives by tourists fell from 7.0 days in 2011 to 6.7 days in 2012.

Occupany rates also fell across all types of accommodation aside from a 1.9 percent increase on safari vessels. Altogether the occupancy rates fell from 73.1 in 2011 to 70.6 in 2012.

Maldives top five markets by visitor numbers (2012)

China: 229,551

Germany: 98,351

United Kingdom: 91,776

Russia: 66,378

Italy: 62,782


Deputy Minister paid salary with no record of attendance, Tourism Ministry audit report reveals

A Deputy Minister at the Ministry of Tourism, Arts and Culture was paid salary and allowances from April 2011 to January 2012 with no official records of attendance, the ministry’s audit report for 2011 has revealed.

The audit report (Dhivehi) made public on Tuesday stated that a total of MVR 343,351 (US$22,267) was paid to the senior official for 10 months while there was no documentation to show that he “ever attended either the ministry or any office functioning under the ministry.”

The Auditor General recommended recovering the funds and taking action against the responsible staff at the ministry.

While there was no specific regulation governing attendance of political appointees at the time, the Auditor General contended that paying salaries without attendance records was against “the spirit of the public finance regulations.”

In addition, the audit discovered that the ministry gave a temporary license or authorisation to a private company to operate a tourist hotel at the Laamu atoll Kadhdhoo airport in violation of the Tourism Act.

The audit found that the permission was given despite an inspection report finding that the facility did not meet the criteria for a tourist guesthouse in terms of quality of service.

A tourist hotel is ranked higher than a guesthouse, the audit report noted.

Under articles 4, 18 and 19 of the tourism law, the report explained, a tourist hotel could not be operated on the plot at the regional airport.

The hotel was however operated from May 24, 2011 to December 25, 2011 before official permission or a permanent license was sought, the audit report noted.

Local media reported yesterday (November 28) that the guesthouse or hotel was operated by Heavy Load Maldives, a family business of MP ‘Reeko’ Moosa Manik, chairperson of the formerly ruling Maldivian Democratic Party (MDP).

The Auditor General recommended submitting the case to the Anti-Corruption Commission (ACC) for further investigation.

Minivan News is seeking comment from former Tourism Minister Dr Mariyam Zulfa.

The audit report also noted that temporary authorisation or licenses for operating guesthouses were renewed “some times for over a year” while the facilities did not meet the requisite criteria.

Moreover, registration and licenses were provided to some dive centres and guesthouses without collecting registration and licensing fees.

In other cases highlighted in the report, the audit noted that documentation was not properly maintained for equipment such as camera and mobile phones purchased in 2010.

As a result, equipment provided for use by staff was not recovered when the employees left the office.

In addition, the Tourism Ministry did not maintain a detailed income registry with reference numbers and dates as required by the public finance regulations. The regulations require that the registry must be routinely shared with the Finance Ministry.

“However, inquiries for the Ministry of Tourism’s 2011 audit revealed that such a record [of income] was not prepared and maintained,” the audit report stated. “As a result, we note that it could not be confirmed whether the incomes due to the ministry was received in full.”

Offices and departments under the Tourism Ministry

The audit report noted that the Tourism Ministry’s audit for 2011 was conducted without any documentations or financial records from the Department of Information (DOI) operating under the ministry.

Repeated requests for documents from the department went unheeded, the report stated, adding that the financial statement of the DOI was not provided for the 2010 audit either.

On Monday (November 26), the President’s Office announced that the DOI has been abolished as new institutions formed by the 2008 constitutions carries out the functions previously performed by the department.

“Following this change, registration of media; formulating policies and facilitating the development of local media; creating the official Maldives’ calendar; maintaining the registry of journalists and writers; and, representing the Maldives internationally in the press field will be carried out by the Ministry of Tourism, Arts and Culture. Information to international media on local events will be given by the Ministry of Foreign Affairs,” the President’s Office stated.

Meanwhile, concerning the other offices operating under the ministry, the audit found that employees of the Maldives Tourism Promotion Board (MTPB) were paid overtime salaries in violation of the civil service regulations for calculating overtime.

The audit also noted that clothing allowance was paid to all employees in January 2011 in anticipation of overseas trips to attend tourism fairs. However, the allowance was not recovered from two staff at MTPB who did not travel abroad during the year.

An audit of the National Centre for the Arts (NCA) meanwhile revealed that MVR 24,735 (US$1,604) was spent out of the budget on tickets for a lecturer and his family for a “one-day creative writing workshop” on November 19, 2011.

However, an official agreement was not signed between the lecturer and the NCA and there was no documentation at the centre regarding the workshop.

The NCA also spent MVR 33,000 (US$2,140) during a ten-day period on food for 20 staff working on a “Male’ Art Festival” in excess of the approved rate in the public finance regulations. Catering was also arranged without a public announcement after seeking quotations from only two parties, the audit found.

A total of MVR 19,750 (US$1,280) was spent on catering for seven events organised by the NCA in 2010 without seeking quotations from more than one party.

The catering contract was awarded to a particular party at a rate of MVR 50 per person while the public finance regulations specify a rate of MVR 40 per person.

Aside from a note from NCA and catering bills, the audit report noted that no other documentation for the transactions could be found at the NCA.


Tourism Ministry hits back at MIRA accusations over failure to collect resort rents

The Ministry of Tourism has hit back at claims made last week that it was failing in its duty to collect rents and associated non-tax revenue from the country’s largest industry.

Following claims made by the Commissioner General of Taxation at the Maldives Inland Revenue Authority (MIRA) that the tourism ministry was failing perform its duty of collecting such revenue, State Minister for Tourism Mizna Shareef has called the accusations “baseless and unfair.”

“Under the new tax regime, MIRA can go after those who don’t pay rent,” said Mizna. “It is very unfair and inappropriate for MIRA to make these statements.”

Mizna argued that the authority had been pressuring the tourism ministry to suspend operating licenses for late-payers without considering the wider implications for the industry as a whole.

“There has to be balance – the industry must be protected while rents are collected,” she continued.

Tourism is by far the largest industry in the country, contributing over 70 percent of GDP via associated industries and 90 percent of all foreign exchange receipts.

Allegations by groups in support of the now-opposition Maldivian Democratic Party (MDP) linked several prominent Maldivian resort operators with February’s disputed transfer of power.

A travel advisory created shortly after the transfer rated resorts on a traffic-light system, urging against travel to resorts marked ‘red’ – being linked with the alleged coup-makers. The site has since been taken down.

The recently completed Commission of National Inquiry (CNI) ruled that the transfer of power had occurred within constitutional boundaries – a decision over which the MDP has registered strong reservations.

Tourist arrivals have continued to rise this year, with the Asian (largely Chinese) market taking up the slack from a downturn in European holiday-makers, although growth has slowed considerably in comparison with last year.

Director General of Revenue Service at MIRA, Fathuhulla Jameel, was not responding to calls at the time of press.

Lease extension

MIRA’s figures for August showed that ‘Tourism Land Rent’ collected last month was only 19 percent of the amount collected in the corresponding period last year.

Tourism land rent for the year so far is shown to be only three quarters of that collected by the same point on 2011.

The importance of this revenue stream can be seen in the share of overall revenue tourism land rent alone contributes to the authority’s figures – making up 10 percent of MIRA’s income this year.

Another important source of tourism revenue comes from lease extension payments from resort operators – islands are ultimately the property of the state and are leased to the operators on long term bases.

Mizna took issue with the suggestion that the government had re-interpreted the lease extension payments with detrimental effects for the state’s annual budget.

MIRA’s figures show that revenue from lease period extension fees has been US$11million (MVR 168 million) so far this year, compared to US$20million (MVR 273 million) at the same point in 2011.

Mizna argued that the initial arrangement for the collection of lease extension payments had not been fully elucidated by the courts prior to the current government’s assumption of office.

A High Court ruling last December ruled in favour of the 2010 second amendment to the Maldives Tourism Act after it was said to contradict article 8 of the original legislation, pointed out Mizna.

The second amendment states that fees of US$100,000 for every year extended should be paid over a period of between 18 or 36 months depending on operator’s status when the act was published in the government gazette.

The Nasheed government had requested that the payments be made in a lump sum.

Former Tourism Mariyam Zulfa, speaking shortly after the new government took office, explained the Nasheed government’s reading of the system.

“The second amendment to the tourism law came into place it gave the option for resorts to extend the existing 25 year leases to 50 years. A time period was given and there is a clause that stipulates that the payment must be done in completion before the lease period can be extended,” she said in March.

“So, the Nasheed government had interpreted that clause as the payment to be paid in full for the period extended. So, because the wording is such that the payment must be complete before the extension is granted, we interpreted it as the full payment,” she continued.

“But there is another clause which says the manner in which the payment is calculated is on an annual basis. This government has over-interpreted that clause and has said that the payment has to be made annually,” argued Zulfa.