Why Did the Maldives’ Tourism Advisor Step Down?

Tim Elliott (0:00)

It's the Morning Drive at Mira Business FM. The Maldives is under the spotlight at Arabian Travel Market, ATM, from Gulf demand and aviation connectivity to investment and new tourism policies. Mohamed Khaleel joins us after recently stepping down as tourism advisor to the president of the Maldives, citing concerns over the impact of new foreign currency requirements in the tourism sector. We'll talk about that a little bit. But he's also the CEO of Manta Air and the managing director of Pulse Hotels & Resorts, which really gives him a front row view to really where Maldivian tourism is heading. So a man of many hats and probably not that much time.

Mohamed, it's good to have you here.

Mohamed Khaleel (0:47)

Thank you. Thank you for having me here.

Tim Elliott (0:49)

You're very welcome. Welcome to Dubai as well. Welcome to another ATM, bringing the global travel industry here to Dubai, of course.

I wanted to start with you in this way. What are you hearing from GCC Travelers and Investors at ATM about the Maldives right now?

Mohamed Khaleel (1:09)

I think the ATM has been a very good show for the Maldives in the last few years. And the market has been growing to Maldives significantly.

And specifically the Saudi and the UAE market, that's basically the top two market from the Middle East for the Maldives. I think there is a good reason for the growth in the market. We have been investing in the market for quite some time. And also the product that we have, basically the Middle Eastern people, they like to have a product with the total privacy and the good quality of services. I think these two basically help us to capture a good market share from the GCC.

Tim Elliott (1:52)

That's really what the Maldives is kind of renowned for, I guess. And it's probably fair to say that the Maldives is kind of under the global spotlight at ATM at the moment, pitching everything from Gulf travel demand and enhanced connectivity, aviation connectivity, to new investment structures. But there is, behind that kind of the image of the Maldives, there is an economic reality, which is a little bit more tense, I think it's fair to say. You recently stepped down as tourism advisor to the president and that followed, I need to get this right, Parliament's passing of the strict new foreign exchange bill. So resorts have to deposit 40% of their US dollar earnings locally. And it clamps down on rates a little bit as well.

I'm interested, why was that kind of the line in the sand?

Mohamed Khaleel (2:44)

I think the reason why I accepted the position as the advisor to the president on tourism development is I wholeheartedly believe that I could make a contribution at the policy level, when basically the policies of the government and the industry doesn't really align with this one. So I decided basically to step down from my position when my vote basically doesn't matter to the government. And I believe that this 40% the mandatory exchange is practically impossible. We really need to see the outlay of the operational requirement of dollars for each properties in the Maldives, whether it's a guest house, resorts or any other company. Because we basically pay the taxes, all the TGSTs, land rent, BPT, withholding tax, and the green tax in dollars. And for the staff, they've been basically enjoying the dollar income for the last, I would say, 40, 50 years. And staff basically is one of the pillars of the tourism development in the Maldives. And it's a great asset for people. And this basically, I can foresee that we will no longer be able to pay their remuneration and the service charge in dollars. We basically have to look for alternative options. I basically had quite a good interaction with the president. I explained to him why it is practically impossible to meet by any property in the Maldives this mandatory 40% requirement. I suggested to him to keep and stay with the 20%, which is already a challenge for a certain resort, because 20% are able to meet by, I would say, around 25% of the hotels with ADR $1,000 plus. Any hotels which is basically below $1,000 ADR is impossible even 20% to meet. 10% is more realistic basically. Everybody will be able to meet with the 10%.

As a hotelier, we understand that the Maldives financial system is not strong enough. We always have to look for the loan facility from abroad. All these facilities that we basically have to pay and the money will go out. So how are we going to comply and keep our commitment with the foreign banks?