Maldives cuts tourism forecasts amid market, geopolitical changes

The Ministry of Finance in Maldives has revised its tourism growth forecasts downward, reflecting changes in market composition and economic and geopolitical circumstances.

According to the Macroeconomic Update, published in late June, in 2023, tourist arrivals reached 1.88 million, surpassing pre-pandemic levels with a 12.1 percent increase compared to 2022. The first three months of 2024 saw 604,004 tourists, a 15.3 percent increase from the same period in 2023. This growth was driven by a significant rise in arrivals from China, which accounted for 11.2 percent of total arrivals in early 2024, up from 3.4 percent in 2023. The increase is attributed to additional direct flights and the timing of the Chinese New Year.

However, a decline in arrivals from South Asia, particularly India, was noted. This decline is linked to the removal of travel restrictions, opening up other tourist destinations, limited flight connectivity, and regional geopolitical tensions.

By the end of 2023, 12.9 million bed nights were recorded, a 5.2 percent increase from 2022. Despite this growth, the actual bed nights were 3.5 percent lower than forecasted. Discrepancies between data from the Ministry of Tourism and the Maldives Inland Revenue Authority (MIRA) are cited as a reason for this variance. Efforts are underway to reconcile these figures for improved accuracy.

For 2024, tourist arrivals are expected to reach 2 million, an 8.1 percent increase from 2023. Despite this, projected bed nights have been revised downward to 13.8 million, reflecting a declining trend in average stay duration and changes in key source markets. The average stay is now expected to be 6.8 days, down from the previously forecasted 7.1 days, driven by the shorter stays of Chinese tourists.

In the medium term, tourist arrivals and bed nights are expected to grow at average rates of 8.4 percent and 7.4 percent, respectively. However, forecasts have been adjusted downward to account for recent market changes and geopolitical factors. The operationalisation of the Velana International Airport passenger terminal in late 2024 is also expected to impact these forecasts.