Maldives: Paradise under threat of cheaper competition?

The Maldives, a pristine archipelago of scattered island pearls across the Indian Ocean and a four-time World’s Leading Destination title holder, is comprised of some 1,200 natural islands within 20 administrative atolls.

Besides being regarded as one of the most beautiful tropical island destinations in the world, the Maldives is a renowned tourism destination for the global traveler market. Since the birth of its tourism industry, the country has gone on to establish itself as a premier top-of-mind luxury destination that often competes and, on multiple occasions, wins against some of the heaviest-hitters in the global tourism scene.

Historically, tourism in the Maldives began in the early 1970s; more accurately, it was in 1972 that the country opened its first tourist property, the Kurumba Maldives. Records suggest that the first-ever travelers to the Maldives were hippie backpackers from Italy.

Before the tourism industry was established in the Maldives, several international agencies failed to recognize its potential as a lucrative sector for the island nation, which has since become crucial to the country’s economy. In fact, there were warnings to this effect, cautioning the Maldives not to take such an ambitious step, which, according to skeptics, was doomed to fail.

However, the reality was far from what was cautioned, and this economic sector’s engine operated at full throttle since the country’s first property opened with welcoming arms. The trademark Maldivian hospitality played a monumental role in propelling the country’s tourism industry, as guests were welcomed with gentle smiles, friendly charms and open arms of Maldives’ natives.

The quick realization on the part of the then-government regarding the potentiality of the tourism industry led to its monolithic expansion over the next 50 years. Today, the island nation boasts more than 150 tourist resorts, along with several other segments, including over 800 guesthouses, 12 hotels, and more than 150 safari vessels.

The country welcomed over 1.8 million tourists in 2023, while the Maldives is poised to attract two million tourist arrivals in 2024. As of July 27^th, the annual arrivals stand a little north of 1.15 million, which is a 9.9% increment from the corresponding period last year.

While the Maldives faces environmental threats and economic vulnerabilities, especially owing to the Maldives state’s high borrowing patterns, this pristine tourism-centric destination also faces stiff competition from global contemporaries, with some of them attempting to capitalize on their own tropical qualities.

Some countries have attempted to emulate the success of the Maldives tourism brand with their alternative offerings. Dubai, of the United Arab Emirates (UAE), has gone as far as to reclaim land to develop entire slips of artificial islands to replicate the tropical and unique qualities that are pristine to the Maldives in a bid to promote their own version of the tropical tourist resort destination.

Here’s a look at some of these projects that either attempted to replicate or take inspiration from the Maldives tourism industry and its offerings:

Red Sea Project

This is a planned tourism megaproject on the Red Sea coast of Saudi Arabia. The Public Investment Fund-owned Red Sea Global is developing the project. This project is part of the Saudi Vision 2030 program, which is launched by the Saudi Kingdom with the aim of achieving increased economic, social, and cultural diversification.

Upon completion, expected in 2030, the Rea Sea aims to have 50 hotels with 8,000 rooms and more than 1,000 residential properties across 22 islands and six island sites. This project is also expected to generate significant economic benefits and provide over 35,000 job opportunities.

Umluj

Dubbed the “Maldives of Saudi Arabia”, Umluj is part of the Red Sea Project and features turquoise waters, pristine beaches, and marine life. This Saudi Arabian governorate in the Tabuk Region is gaining popularity among both local and international tourists, with the destination set to become a premier resort destination in the future.

The average rate for a three-day tour of Umluj is around USD 1,030 per person.

Palawan

The Philippines offers Palawan as a more affordable alternative to the Maldives and is known for its stunning landscapes, clear waters, and diverse marine life as well. The region has also observed a strong increment in tourist arrivals in more recent years, especially due to the affordable prices offered by multiple tour operators and agents.

For instance, Tour Radar offers a 10-day excursion across key Philippines’ towns and cities at the price of USD 883 per person, which is at the rate of USD 88 per day. The destinations include Manila, Puerto Princesa, Port Barton, El Nido, and Palawan. Most of the multi-destination packages offered by this particular tour operator come at an average rate of USD 105 per person per day. Another site, Astoria Palawan, offers lodging at the property at rates between USD 74 and USD 205 per two persons per night, with the price variances based on the room types.

World Islands and Jumeirah Islands

Dubai developed artificial island destinations, the World Islands and Jumeirah Islands, with the aim of offering luxurious and unique experiences mirroring the Maldives’ tourism experience. These islands feature high-end resorts, private villas, and extensive leisure facilities.

Although these projects have seen some success, they often cater to a different market segment compared to the natural allure of the Maldives. Moreover, in terms of price comparisons and affordability, it can seldom be argued that the tourism offers across these ultra-luxury properties are lower compared to the Maldivian tourism resorts.

While there have been several attempts to emulate the success story of the Maldivian tourism industry, it has often resulted in less than favorable outcomes for the countries that attempted it. For instance, Palawan faces several challenges and setbacks in positioning itself as a competitive alternative to the Maldives in the luxury tourism market.

The Maldives Marketing and Public Relations Corporation (MMPRC), the Maldivian tourism board, puts in significant effort to promote the country’s tourism and destination across several trade fairs, events, and exhibitions worldwide. This translates to the Maldives being a well-established global brand in tourism. The Indian Ocean archipelago’s tourism is also widely recognized and associated with exclusivity, high-end resorts, and celebrity visits.

As such, this brand image is challenging for Palawan to compete with, despite it being renowned for its natural beauty. This cheaper alternative destination has to mount up similar efforts to promote the destination to become as widely recognized as the Maldives.

Moreover, Palawan also faces limited infrastructure. The quality of roads, transportation, and utilities can impact the overall tourist experience, especially for luxury travelers accustomed to seamless service. Palawan, however, does not have infrastructure as developed as the Indian Ocean island nation.

Earlier in July, it was announced that China’s XIamen Airlines has launched scheduled direct flights to the Maldives, making it the fourth such Chinese airline to operate on this route. From January to July, Chinese tourist arrivals to the Maldives exceeded well over 157,000. Besides these Chinese airlines, various other global airlines operate direct flights to the Maldives, making the island nation comparatively more easily accessible, whereas Palawan requires more complex travel arrangements, including domestic flights and boat transfers.

The Maldivian tourism industry, over its five decades of service, has collectively improved its service standards to be on par with international standards. Palawan, however, needs to invest in training and service quality to match these standards.

Although Palawan has several high-end resorts, the overall number and variety of luxury accommodations are lower compared to the Maldives, making it difficult for the former to compete with the latter.

The Maldives also excels due to its heavy investment in global marketing campaigns to promote itself as a top luxury destination, whereas Palawan is still in need of a more coordinated marketing initiative to increase its visibility. Moreover, the Maldives also effectively targets affluent travelers, honeymooners, and celebrities, along with budget travelers and thrill enthusiasts, meaning that the Maldives caters to a larger composition of travelers globally compared to Palawan, which is still in need of identifying its target demographics.

While the Maldives reign supreme in the Indian Ocean as a globally renowned destination, mostly because it does not face any significant challenges from its close neighbors,. However, Palawan is at a disadvantage as it faces stiff competition from emerging Southeast Asian destinations like Bali, Phuket, and the beaches of Vietnam, which offer diverse experiences and competitive pricing.

As for the World Islands and Jumeirah Islands, despite their successes in attracting affluent travelers, they too have not been able to mount a significant challenge for the Maldives. The reasons are many, but perhaps the most fundamental reason is that while the Maldives offers natural allure, the islands in Dubai are man-made.

Since the Maldives offers an experience rooted in natural beauty and cultural authenticity, which many tourists value highly, artificial islands lack the perceived authenticity that travelers seek. Moreover, the Maldivian tourist experience often includes interactions with local culture and traditions, which are more challenging to replicate in a highly commercialized setting like Dubai.

Furthermore, building and maintaining artificial islands is costly, and the World Islands have faced significant financial challenges, including delays and funding issues. These factors have an impact on the overall appeal and availability of the islands as luxury destinations. Additionally, the environmental impact and sustainability of artificial islands are a concern for many travelers who prioritize eco-friendly tourism, something that the Maldives has been actively promoting in its tourism.

There are some international competitors with their own versions of tropical tourist offers, with some attempting to emulate the success of the Maldivian tourism scene. The Maldives, however, has been in the game for over 50 years, and during this period, it has consistently strived to excel in its hospitality offerings, often diversifying its tourism segments to cater to larger tourist demographics. Furthermore, the natural appeal of the Maldives, which the country’s tourism board constantly promotes, is hard to compete with.

Despite the various challenges and competition from some international brands, the Maldives tourism brand has continued to progress, and with continued efforts by the island nation’s government to promote and market the country’s tourism industry globally, it would be challenging for global competitors to mount a challenge for a tourism brand that has been evolving and growing throughout.