The initial promise of more equitable and inclusive income to communities via the guesthouse trade is currently not being realised — with deft, competent and decisive action it still can be.
Source: Arena Hotels
The Maldives tourism industry has undergone different development phases since tourism started in the 1970s. With most tourist establishments developed as resorts in separate uninhabited islands, and because of the high entry barriers, total bed capacity was restricted for almost 30 years. Only a few companies or individuals were given the rights to lease islands for resort development, and local inhabited islands were not allowed to host any tourism establishments. The receipts from tourism — the income and wealth in the country — were held by a select few.
Meanwhile the ‘Maldives’ brand is positioned as a luxury destination affordable to the high-end market. Naturally, premium brands like Hilton, Waldorf Astoria, Four Seasons, and the like have come and invested in resorts in the Maldives, charging upwards of USD2,000 per night or more.
Up until 2011, the resorts owners had to pay only USD8 per guest per night as bed tax to the government, in addition to the land lease rent paid per year. With relatively low taxes, and revenue to the state, the direct benefits of tourism receipts went to a select group. While there was huge disparity between the rich and the poor, the government also did not have adequate resources to provide the much needed social and public services to the population.
In 2009, a major policy shift by the newly elected Nasheed administration resulted in allowing operation of hotels and guesthouses on inhabited local islands, opening the door for locals to obtain the direct benefits of tourism. Maafushi Island, a mere 25km from Velana International Airport (VIA), was the first island to open a guesthouse for international tourists with only four rooms developed in 2010. Eleven years later, the island has 45 registered guesthouses/hotels with 730 rooms and an astonishing total bed capacity of 1,478. While the local population of Maafushi is at a little over 2,000, when the guesthouses reach 90 percent occupancy there are more than 1,300 tourists on the island.
Currently there are more than 600 registered guesthouses in the country, spread across all 20 atolls. There were 629 guesthouse in operation until end of March 2020 when the country’s borders were closed due to COVID-19. Around 42 percent of the guest houses are located in Kaafu Atoll, including some in Malé and Hulhumalé. Excluding those in Male’ and Hulhumale’, rest of the Kaafu Atoll inhabited islands have 27 percent of the guesthouses. Alifu Alifu and Alifu Dhaalu have 17 and 11 percent respectively. With Baa Atoll and Vaavu Atoll having seven percent, the rest of the atolls have very few registered tourist facilities.
Looking at the atoll level distribution, 86 percent of guest rooms are located in the central seven atolls, including the greater Malé area. This leaves only 88 guesthouses — 14 percent — in the rest. The islands in the central region obtain a greater benefit due to the close proximity to VIA. Not enough has been done at a policy level to make domestic air travel cheaper for tourists, or the public, and as a result development in the northern and southern regions have remained near stagnant. Travellers on a budget normally will not opt to spend the additional USD300 for domestic travel, on top of the USD50 per night for a room.
Currently as per Ministry of Tourism regulations, the minimum number of rooms that can be registered as a guesthouse is three. A total of 447 guest houses — 72 percent — have between three to nine rooms. In fact, more than 50 percent of registered guesthouses have less than seven rooms. About 23 percent, or 143 guest houses, have rooms between 10 and 20, while there are 30 guest houses with rooms between 21 and 49. Only two guest houses have more than 50 rooms, of which one has 105 rooms.
Shifting focus back to Maafushi, the majority of guesthouses there have between six to 19 rooms; 20 percent of guesthouses have between 20 to 49 rooms.
The latest property to open in 2020, Kaani Palm Beach, has 105 rooms in total. With the opening of this hotel, the Kaani group has secured around 200 rooms in Maafushi. The second largest group in the Island, Arena Hotels has more than 90 rooms in operation. The largest five companies in Maafushi together controls more than 50 percent of the rooms on the island. Close to half — 40 percent — of the guesthouses in Maafushi are investments made and operated by companies outside Maafushi.
The initial concept of guesthouse tourism in local islands was heralded as a development that would make the benefits of tourism more inclusive, as receipts would flow directly to the island communities. It was also seen as a vehicle that could promote local island cultures, and the Maldivian way of life on the islands.
The lack of active tending to the fledgling industry has left it with problems similar to those within the tourism industry. The promise of direct income to the island community is moot when major commercial interests from the capital controls the lions share of the market. This in turn also means that commercial interests have been prioritised over social interests — where companies and investments pay little or no mind to eroding social values and norms, leaving communities increasingly frustrated as the industry’s demands encroach on their lifestyle and culture.
Policy makers were right in seeing the potential of the guesthouse industry as a 'great equaliser.' However if they truly desire change, rather than just paying lip service to a people-pleasing idea while only just patting themselves on the back, a more hands on approach, with the end goal being the guiding post, is clearly needed.
Policy makers, in consultation with the stakeholders which should include island communities and community groups, should work more actively to develop and strengthen the specific vision of greater inflows, and wealth, to the communities not just through cursory legislation and regulation but also through community specific incentives and programs.
