Arrivals Numbers Alone Do Not Indicate Health of Maldives Tourism Industry

The tourist arrival figure is not the only indicator to measure the health of the tourism industry. Arrivals are a straightforward metric to obtain and celebrate, but it is not adequate to assess the health of the tourism industry. More important indicators may be overshadowed by the preoccupation of arrival targets. With rapid development of properties introducing hundreds of new beds a year, it is imperative to monitor occupancy rates, average daily rate of rooms and the revenue available per room.

Rapid Introduction of Beds

As of January 2023, 1,208 tourist establishments, including resorts, guesthouses, hotels and safaris, registered 59,625 operational beds with the Ministry of Tourism. Property development is rapid, with hundreds of new beds becoming operational each year. Last year, 881 beds were introduced to the market. It is expected that approximately 1,450 new rooms are to open in the next two years (JLL, 2023). Although there are upcoming properties in the ultra-luxury and luxury segment, most of the beds are in the mid-scale segment.

Occupancy Rates

Despite impressive tourist arrival figures, occupancy rates have been slower to recover post-COVID. Prior to the pandemic, occupancy rates in 2016-2019 averaged 62.1%. In comparison, the occupancy rate was 56% in 2022. Lower occupancy rates adversely affect a property’s revenue. As a response, to attract guests, properties may have to lower room rates.

Average Daily Rate Increase

With the increased number of rooms, especially in the budget and mid-scale segment, there is a risk that the average daily rate (ADR) may drop. However, this effect is not yet observed in the Maldives. ADR has recovered and increased since the pandemic. In 2022, the average daily rate was $671 USD (JLL, 2023). This is significant growth compared to the year prior. In 2022, ADR was $578 USD (JLL, 2022). Prior to the pandemic, in 2019, ADR was $544.22 USD (STR, 2020). The development of more properties has not yet negatively affected the average daily rate, but this metric must be carefully monitored.

Slight Increase in Revenue per Available Room

In 2022, the revenue per available room (RevPAR) was $376 USD (JLL, 2023). This is a slight increase from $375 USD in 2021 (JLL, 2021). The Maldives tourism industry has proven it has overcome the hardships posed by the pandemic as RevPAR has recovered 109% relative to 2019 (JLL, 2023).

2023 Outlook

Projections for 2023 estimate a continued recovery and growth of the Maldives tourism industry. Increased investments with the development of new properties indicate confidence in the industry. Tourism arrivals are expected to exceed pre-pandemic levels this year. However, the development of new properties and arrivals alone are not an adequate indicator to assess the health of the tourism industry. A more robust analysis is required with metrics such as occupancy rates, average daily room rate and revenue.