By Riaz Shareef, PhD (UWA), 24 July 2008
In the recent past, there has not been a single weekend gone passed without a travel feature appearing about the Maldives in one of the Big-5 Newspaper’s Magazines in the UK—which is our largest tourism source country.
Historically, in Western European countries, Maldives’ tourism has been popular. In Italy, the first prize on television quiz programmes features Maldives regularly. Italy is our second largest tourism source country. Among our top-10 tourist source countries, 9 are from Europe and Japan lingers between 6 and 7.
The recently promulgated Employment Act of Maldives excluded tourism industry employees and due to amplified protests the Government has agreed to include them in the Act.
As a result, the tourism industry lobby MATI has aired its concerns: (a) That a resort’s operational overheads particularly the wage bill will increase exponentially. (b) Tourist arrivals are already in decline implying the industry is on a downward trend (scaremongering tactics). (c) Tour operators are abandoning Maldives because we are becoming a more expensive destination for them to sell.
I find these comments bewildering and would take them on board with a grain of salt. How seriously does the industry or the Government take these concerns? I would like to put my perspective to MATI’s concerns in view of the implications for the industry.
With a legal limit of a 48 hour working week, an employee can demand overtime payments if asked to perform duties beyond that limit. That is perfectly plausible and honourable, even though the industry believes that has a right to exploit staff for their financial benefit.
MATI has exaggerated in asserting that resorts may have to employ twice as many staff, which would result in operational overheads being doubled.
The solution is for the tourist resort operator is to seek cost efficient measures, other than placing the burden on the labour overheads. I know that one of the largest shares of overheads in a tourist resort operation is its labour cost because tourism is a very labour intensive industry and requires semi- to low-skilled than skilled-labour.
With the Employment Act coming into effect the resort operators have got to do additional work, which would give some pride to the good old Maldivians who have been working tirelessly on our economic backbone.
Like any other Maldivian, I favour those rights of Maldivians being respected because we are now embarking on our journey to join the civilised world.
In all the sectors of the Maldivian economy there is a chronic deficit in human capital development. The policy to produce graduates alone is not sufficient if the economy cannot offer them avenues to become future managers and leaders.
I am not saying all of us should strive to be Presidents and Ministers, but responsible citizens to take care of the economy for in view of sustainability for future generations.
Some of us should be groomed to participate in the tourism industry—as waiters, room boys, chefs, and engineers, among many others. Furthermore, we need to maintain a sustainable stock of semi-skilled labour as well.
The extant industry scenario does not provide much incentive to do so because some argue that the financial rewards of working in a tourist resort is not worthwhile the effort.
MATI and the industry operators should stomach these recent economic developments and formulate innovative ways to achieve their corporate targets, rather than whinge.
The industry may desire to employ cheap labour to maximise their profits. That won’t be a sustainable option, because the country’s labour force will be dominated by foreign labour and would result in unprecedented consequences with our neighbouring countries.
We are not influential or affluent like the Middle Eastern countries to do whatever they want and the way they want.
Due to the high dependency ratio in our society, there is no incentive for participation in the labour force at all. That maybe true in some sense, but hopefully that will change one day.
In an economy where there is very limited capacity to retain foreign exchange, and where foreign exchange is regarded as the ‘only’ asset, we can’t afford to keep employing cheap labour from neighbouring countries and let them repatriate all our foreign exchange.
That is detrimental to our economy because according to my conservative estimates the entire Maldivian economy repatriates approximately US$ 6.3 million a month as expatriate salaries and wages through our banking system. Majority of expatriate remunerations are transferred through our banking system.
Thirty years is a substantial period to create a mature financial sector for people to invest such earnings but it’s a shame that we don’t have that.
As regards to the declining tourist arrivals, I can confidently say that it is the seasonal effect. This is the time when tourist arrivals decline and starts to pick up late September. It is obvious because this is the European summer months. If you take the seasonal effects out of our international tourist arrivals time series, I can also confidently say we are on the mean growth path even after after the 2004 tsunami.
But I see some sluggishness in tourism due to the international oil price. That will only happen if there is a major adjustment to airfares—biggest component of the package cost. Let’s hope that does not happen.
However, the outlook for international travel and tourism is showing some positive signs such as Etihad Airways placing the largest order for commercial aircraft in aviation history. [Etihad Airways]
Maldives tourist industry is dominated by package tours and tour operators are the biggest beneficiaries from our tourism—not even the resort owners. The notion that tour operators are abandoning Maldives because our destination is expensive should be swallowed with a grain of salt.
The tour operator’s would like to maximise their return by selling packages and they hardly differentiate their tourism product based on a particular destination, but on the total package being sold.
Ideally, we would like all their packages sold to the Maldives and unfortunately, we depend on them without much leverage.
All the tourism promotions (as I see it) are done by the tour operators. Let say, a couple goes to buy a 2 week package at a Travel Agency in London, Sydney or Frankfurt. The Agency representative will pull out their seasonal brochure, and show the choice of packages as homogenous products. Tourism product is not a homogenous product, but that is how majority of tour operators project them.
Since, Maldives tend to be on the expensive side, we lose out mostly to Caribbean, which is relatively cheap. Caribbean is also different because it has historical connections to Anglo-Saxon countries.
But on occasions Maldives wins out because of word-of-mouth promotions among friends and family and also the “what you see in a Maldives’ resort brochure is what you get” approach. In my own calculations, a substantial component of our arrivals is repeater tourists. Furthermore, Maldives has been wining several visitor determined competitions for exclusive service and satisfaction
I believe it will be worthwhile to broaden the stake of the Maldives Tourism Promotion Board’s efforts beyond organising travel fairs, seeking advertising slots on international television and airline in-flight magazines, among others.
Tourism promotion is a complex field and the risk of getting it wrong is very high. The level of Maldives’ Single Destination Promotion is relatively very little. Such an initiative should take a whole-of-industry perspective to get the maximum benefit in view of sustaining tourist arrivals for the longer term.
As I understand, the industry contributes some of their earnings for tourism promotion but the Government should have a tourism promotion budget of approximately US$20 million per annum, specifically intended for international television and internet.
If the tour operators are abandoning Maldives because it is becoming expensive, the Government or the industry should take the role of the tour operator. The Maldives economy has the strength for such an initiation.
Our major tourist source countries (markets) are the G8 countries, high income and well acquainted with the internet. We should design a 24 hour industry reservation hub, which should cater client requests by e-mail, fax and phone.
Tourism promotion should be done in a broader fashion and should span out for a 5 year period with pre-determined key performance indicators (KPIs) to be attained. Those KPIs should be evaluated and modifications should be made accordingly. This is no easy task and careful thought must be given, but it can be done. I think it’s essential we should embark on such a strategy.
So, when Maldivians working in the industry are gradually gaining their rights, their pride, do not blame them as a reason for the tourism industry’s demise. They are the heart and soul of the industry. Just because giving them their rights mean financial loss to the resort operators, the industry should note it is industry staff who is behind the exorbitant industry profits.
As a final note, the industry should collectively formulate an innovative and vigorous tourism promotion campaign to combat tour operator desertions and any anticipated adverse shocks to arrivals.
There is no doubt our tourism industry can be taken to new horizons because it really is the world’s most exclusive destination. Why? Our resorts’ geological setting is the best in the world with guaranteed beaches, water, lagoons, undersea world, and the list goes on.
We provide undisputed privacy to most high profile clientele in the world, world class cuisine at the highest standard, and a tourist transfer system that is indigenous to us.
Given all of this, Maldives has become the dream holiday destination. Let’s sustain that exclusivity eternally.
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