The Maldives tourism sector overcame challenges to continue its robust recovery in the first three months of 2022, according to the central bank’s quarterly economic bulletin.
After war broke out in late February, tourist arrivals from Ukraine – which accounted for 3% of arrivals in 2021 – came to a halt and the number of Russian tourists fell from 736 arrivals per day prior to the war to an average of 284 arrivals per day in March as national airline Aeroflot suspended flights.
Russia was formerly the top market in 2022 with 44,055 holidaymakers but arrivals declined by 56% in March. More than 3000 room nights were cancelled as a result, according to a survey by the Maldives Association of Tourism Industry (MATI).
“Despite these developments, the tourism sector withheld its recovery owing to pent-up demand from traditional source markets of Europe,” the central bank observed. “As such, tourist arrivals increased by 45% in Q1-2022 compared to the same period of 2021, totalling 431,520 arrivals.”
Tourist arrivals remained 11% below pre-pandemic levels of Q1-2019. But as the average duration of stay rose from 6.3 days then to 8.5 days in Q1-2022, bed nights increased by 12% compared to Q1-2019.
Traditionally the main source region for tourists to the Maldives, Europe accounted for 71% of tourist arrivals. The market share of Asia declined to 16% amid the continuing absence of Chinese tourists, who represented the top market before the pandemic.
Three new resorts came into operation during Q1-2022, rising to 163 from 147 in the same period last year. The average occupancy rate of resorts climbed to 80% from 70% in Q1-2021.
The number of flight movements rose by 32% from Q1-2021 and by 8% compared to Q1-2019, which mainly reflected “the frequency in flight movements by major carriers such as Sri Lankan Airlines, Turkish Airlines, Emirates, Singapore Airlines and Saudi Arabian Airlines.”
Despite a wave of Covid-19 infections driven by the Omicron variant in January and the impact of the war in Ukraine, the central bank estimated domestic economic recovery to have gained further strength in Q1-2022 with GDP growth of 12% as previously projected for this year.
“Available high frequency indicators and business survey results for Q1-2022 point to a continued strengthening of economic activity, underpinned by the significant expansion in tourism sector with positive spill-over effects on other major sectors, such as transportation and communication sector and wholesale and retail trade sector,” the bulletin explained. “In addition, the ongoing recovery of construction and real estate activity is also estimated to have contributed positively to GDP growth in Q1-2022.”
But the rate of inflation is expected to accelerate sharply “mainly due to a surge in global oil prices in the wake of the Russia- Ukraine war” and the outlook for the second half of 2022 “will largely depend on the evolution of global oil and food prices and government policies related to taxation and subsidies.”
A substantial increase in global inflation in recent months was attributed to “an intensification of supply side bottlenecks amid lockdowns in China and the war in Ukraine”.