Price war emerges amid flurry of new resort openings in the Maldives

Things are looking up for Maldives' tourism sector

A flurry of new resorts opening in the Maldives, with more still coming in the coming months to add to the room stock, has triggered a price war with heavy discounts in the destination.

The revenue manager of an established five-star resort, who said discounting has become rampant in recent months, expressed hopes that the Maldivian hospitality sector “as a community don’t drop prices sharply”.

A bird’s-eye view of a resort in the Maldives

There was however divided opinion as to which segment is most affected, with five-star plus properties saying the three- and four-star resorts are the ones affected while the four-star properties say that it’s the lower end of the market that is feeling the pinch, according to several resort managers that TTG Asia spoke to during the TTM travel trade show in Male last week.

The reality? Most of the increasing new room inventory is in the five- and five-star-plus categories.

At least 162 new resorts – largely in the five-star category – have opened in the past three years, with an additional 7,152 beds to 43,770 by end 2018 from 36,618 beds by end 2016. Moreover, another 20 resorts are opening or have opened this year with an extra 2,000 beds; these include Hotel Riu Atoll which opened in May with 250 rooms, and whose Maldives sales manager Jose Manual Rodriguez said they have confidence in the market.

Among the new openings are Singapore’s Park Hotel Group resort, Raffles Maldives Meradhoo and Movenpick Resort Kurudhivaru while the Emerald Maldives Resort & Spa, member of the The Leading Hotels of the World, is opening in August with 120 villas. Also opening shortly is the iconic Hard Rock property with 178 keys as part of Crossroads Maldives, one of the Indian Ocean’s largest integrated resorts with a few islands strung together and having resorts, malls, shopping and entertainment.

“Big brands will survive while it is the local investors with five-star properties who are in the midst of this price war,” said the sales manager of a recently opened top international brand, who spoke on condition of anonymity. “At the rate new resorts are cropping up, 2020 would be a key year to assess how properties are doing,” he said.

Judy Ong, director of sales and marketing, Maldives at Banyan Tree Hotels and Resorts, agreed that while the big brands will survive market trends, it will be challenging for the category between three and four stars.

“The problem with price wars is that if you push down the price it’s difficult to regain it and would then depict Maldives as a cheap destination like Bangkok,” said another manager from a five-star resort, who also declined to be named.

However, Mohamed Nihaj, general manager at the 100-villa Rahaa opening next month, said the property made a push into the four-star category as there is lesser competition compared to the luxury segment.

Afrah Abdulla, reservations manager at Waldorf Astoria Maldives Ithaafushi – opening in July with 122 rooms – said the airport expansion will help enhance traffic and increase the number of first class and business class seats, which is their clientele and for which there is a shortage of seats.

“Our decision to invest here was based on the airport development and also to have a property in this exotic destination,” he said.

Airport infrastructure is being expanded to meet an increasing number of arrivals with a new 3,400m-long, 60m-wide runway and a new passenger terminal targeted to serve 7.5 million passengers with both facilities due to open in 2019-2020.

The Maldives is targeting 1.5 million arrivals this year from 1.4 million in 2018.

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