Sri Lanka resort operators in Maldives seen facing more competition

Tuesday, September 7th, 2010

Tourists arrivals to the Maldives, where two Sri Lankan conglomerates own or operate resorts, are recovering from recession but construction of more hotels is seen hitting room rates.

Sri Lanka’s Aitken Spence and John Keells Holdings had long relied on their Maldivian resorts to compensate for lower earnings or losses in their local hotels during the island’s ethnic war.

But earnings from Maldivian hotels were hit last year owing to global recession which reduced arrivals from the main market in Western Europe.

Although arrivals from Europe are likely to be affected in the short to medium term by the region’s economic woes, CT Smith Stockbrokers said in a report they expect this to be mitigated by increased arrivals from Asia, especially China.

In July 2010, Maldivian resort occupancy rose to 65.9 percent from 58.4 percent in July 2009, albeit off a low base.

“Capacity in the Maldives is also expanding, as international hotel chains and the government have plans to open more resorts and hotels in the archipelago,” CT Smith Stockbrokers said.

Registered average resort bed capacity in the Maldives rose to 21,040 beds as at July 2010 from 20,514 beds as at July 2009.

“Thus average room rates could possibly become constrained due to likely increased room supply in the Maldives in the longer term,” the brokers said.

Although tourists from Western Europe still dominate arrivals in the Maldives, new markets such as China and Russia have been growing fast in recent years.

Tourists arrivals in the Maldives rose 29 percent to 57, 232 in July 2010 from a year ago, the highest ever July arrivals in the archipelago.

This was the tenth consecutive year-on-year monthly rise in arrivals, once again bolstered by arrivals from China, CT Smith Stockbrokers said.

China was the highest tourism generating market to the Maldives in July 2010 with a 22 percent market share followed by the United Kingdom with 16 percent.

China is the second highest tourism market to the archipelago so far this year with a 14.2 percent market share preceded only by the UK with a market share of 14.8 percent.

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