Tourist resorts in Maldives observed an increase in total revenue and bookings in the first quarter of the year, a survey by the country’s central bank said Tuesday.
In its Quarterly Business Survey, Maldives Monetary Authority (MMA) said due to the peak season for the tourism industry, revenue of resorts and bookings increased in Q1 2017 compared to the previous quarter; net balances of 76 percent and 61 percent respectively. Looking at average room rates, 81 percent of respondents reported an increase in Q1 2017 compared to Q4 2016, it added.
The survey, which was carried out from March 28 to April 10, showed that 54 percent of businesses in the tourism sector had no change in their financial situation compared to the previous quarter, while 37 percent reported an improvement in the first quarter of the year. It also said that 60 percent and 62 percent of tourism sector establishments reported an increase in labour related costs and input prices respectively.
According to the survey, with the peak season of the tourism sector coming to an end in the second quarter, most of the businesses in the tourism sector expect total revenue, resort bookings and average room rates to decrease in Q2 compared to Q1 2017. Sixty-six and 63 percent of the businesses anticipate an increase in labour costs and other input prices in Q2 compared to Q1, but 49 percent plan to increase their capital expenditure in Q2 compared to Q1 (net balance of 43 percent), it said.
The survey noted that 51 percent of respondents expect their financial situation to remain the same in Q2 2017 compared to Q1 2017, while 34 percent anticipate an improvement.
“In analysing the factors that limit growth opportunities for businesses in the tourism sector, the most significant factor highlighted by the businesses was competition within the sector. Additionally, insufficient demand, cost of labour, and shortage of skilled labour were also reported as some of the constraints,” the survey, which was participated by 96 business establishments, read.
MMA has earlier posted a strong growth forecast for the tourism industry, saying that the strong growth observed in the tourism sector during the latter part of last year is expected to continue this year. Mirroring the positive outlook for the sector, the authority projected bed nights growth to be at five percent in 2017.
Despite the strong growth forecast by the central bank, Maldives has experienced another slowdown in tourist arrivals in the first quarter of the year. January saw a significant increase in arrivals, but growth has slowed down since then with a 2.1 percent drop in arrivals in March.
Leading global market research and analysis firm STR has said that the Maldives tourism industry observed a moderate performance in the first quarter of the year.
A report analysing Asia Pacific hotel industry performance shows that occupancy fell by one percent to 69 percent in the Maldives during the first quarter. Average Daily Rate (ADR), however, increased by 2.3 percent to MVR13,044.63 (USD846.5) and Revenue Per Available Room (RevPAR) was up 1.3 percent to reach MVR9,000.17 (USD584).
RevPAR growth was moderate in the Maldives throughout the quarter despite a 10.3 percent increase in January, which was due to a 32 percent rise in arrivals from China during the Spring Festival Golden Week holiday. RevPAR growth for the quarter, however, became muted with declines in both February (-3.8 percent) and March (-4.2 percent).
Over the past three years, dozens of uninhabited islands have been leased to local and foreign resort developers. Several international brands have entered into the market, increasing the number of resorts to 120. That number is set to increase as the government has announced the opening of some 20 new resorts by the end of this year.
Along with the new resort openings come the challenge of increasing demand from budget travellers who choose guesthouses over luxury resorts that the Maldives is known for. The guesthouse sector has rapidly expanded with over 300 guesthouses in operation today.
Government has come under fire from private organisations representing industry stakeholders such as the Maldives Association of Travel Agents and Tour Operators (MATATO) over the lack of effort and budget to promote the Maldives as a destination.
The government has recently announced new steps to maintain a structured growth in tourism, including a slowdown in leasing islands for resort development and increased marketing efforts in key markets such as China and the Middle East in order to reach an ambitious target of a record 1.5 million tourist arrivals this year.