Tourist arrivals increase in July despite decline in Chinese visitors

Tourist arrivals increase in July despite decline in Chinese visitors
August 30 13:30 2015

Tourist arrivals increased by 4.3 percent in July compared to the same period last year, reaching 104,517 visitors during the month. However, arrivals from China declined by 4 percent compared to July 2014.

With a 30 percent market share, Chinese tourists accounted for nearly one-third of arrivals in 2014 and currently represents the single biggest source market for tourists to the Maldives.

Chinese arrivals fell from 43,269 in July 2014 to 41,527 last month, according to statistics from the tourism ministry.

Total arrivals from January to July meanwhile rose 1.7 percent compared to the corresponding period in 2014, reaching 713,622 visitors by the end of July.

The occupancy rate, however, has fallen from 75 percent in the first seven months of 2014 to 70.3 percent this year. The average duration of stay also decreased from 6.1 days to 5.8 days.

With the exception of a marginal increase (0.6 percent) in February, the occupancy rate has steadily fallen this year.

After reaching a milestone of one million visitors in 2013, followed by 1.2 million visitors the following year, the government’s target for 2015 is 1.4 million tourist arrivals.

However, the performance of the tourism industry in the first half of 2015 has been mixed. Tourist arrivals declined by 7.8 percent, 2.9 percent, and 2.2 percent in January, April and June, respectively, but registered increases of 8.8 percent, 6.5 percent, and 4.5 percent in February, March and May.

Arrivals in January declined on the back of a slow down in Chinese arrivals, but reached a record high the following month with a significant growth in Chinese tourists.

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 350,000 last year.

The number of outbound Chinese travellers are expected to fall sharply this year following a steady decline in Chinese stock markets since June.

European visitors, traditionally the largest source market for the Maldives, currently accounts 43.3 percent of arrivals. After China (30.8 percent), Germany is the second largest market with 8.1 percent, followed by the United Kingdom (7.6 percent), Italy (5.4 percent), India (4.0 percent), France (3.8 percent), and Russia (3.5 percent).

Arrivals from Russia has fallen by 39.7 percent this year compared to the same period in 2014.

Revenue shortfalls

In its quarterly economic bulletin for the first quarter of 2015, the Maldives Monetary Authority noted that bednights had declined by three percent in the first quarter of 2014 when compared with the same period in 2014 “owing to the fall in average stay of tourists from 6.3 days in Q1-2014 to 6.0 in the review quarter.”

Total receipts from tourism also decreased by four percent in the first quarter while the occupancy rate of the industry to 79 percent from 84 percent in the first quarter of 2014.

According to the Maldives Inland Revenue Authority (MIRA), total revenue collection in July was 6.5 percent below forecasts.

The tourism goods and services tax (T-GST) accounted for 31.2 percent of total revenue collected so far this year. Tourist land rent and resort lease period extension fees represented 8.1 percent and 7.4 percent, respectively, of total income.

The tax authority collected MVR8.4 billion (US$544 million) by the end of July, less than half of the MVR21.5 billion (US$1.3 billion) forecast as government revenue in 2015.

The projected revenue includes MVR3.4 billion (US$220 million) anticipated from new revenue raising measures, including revisions of import duty rates, the introduction of a “green tax,” acquisition fees from investments in special economic zones (SEZs), and leasing 10 islands for resort development.

In April, the government obtained a US$20 million grant from Saudi Arabia for budget support to “manage cash flow” as revenue was lower than expected.

Finance minister Abdulla Jihad said at the time that a large portion of forecast revenue is expected later in the year, including US$100 million expected as acquisition fees from SEZs.

Jihad said shortfalls were being plugged through sale of treasury bills.

The opposition has criticised the lack of significant foreign investments despite assurances from the government following the passage of its flagship SEZ legislation in August last year.

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