12 Mar 2014
For investors and holiday-makers alike, the Maldives is an unrivalled destination. What does the future hold for the Indian Ocean paradise?
Two thousand picture-perfect tropical islands, mostly uninhabited, in gin-clear waters packed with more sealife than the average aquarium: welcome to the Maldives, a market where growth seems to know no bounds. Last year international visitor arrivals hit one million with Asian demand significantly outpacing European demand for a third consecutive year. Fifteen resorts charge more than an average of US$1,000 per night - little wonder investors are clamoring to get a piece of this paradise.
Neil Jacobs, CEO of Six Senses Hotels, Resorts & Spas, has witnessed first-hand the Maldives boom. Fifteen years ago he oversaw an acquisition for Four Seasons, the first multinational operator to arrive to the islands. At that time the predecessor to the original Four Seasons hotel was run by a local operator and it took only a quarter of today’s room rates.
"Some people don’t leave for two or three weeks, which is incredibly relaxing. With the experiences available these days at resorts like Six Senses – yoga, diving, specialist wellness – there’s plenty to keep you occupied."
Few tourist destinations are as geographically well positioned as the Maldives to benefit from both European wealth and the rapid economic growth of Asia-Pacific and the Middle East. Dubai, Abu Dhabi, Singapore and Bangkok are all within a four-and-a-half hour flight; Shanghai, Frankfurt, London and Moscow are fewer than 10 hours away. An increase in domestic airport development, served by fixed wing aircraft, plus forty-four seaplanes serving 69 resorts, keep the final stage of the journey relatively pain-free.
The result is a growing and increasingly international clientele, with visitor numbers from Germany, India and the Middle East rising between 40 and 92 per cent in 2012 and 2013. Mainland China is making the biggest difference, soaring in recent years to now account for nearly a quarter of the market.
Transaction volumes in 2013 were further boosted by the arrival of major institutional investors, such as Blackstone and CDL Hospitality REIT, coupled with increasingly wide-reaching air access (33 international airlines serve 32 global destinations)
In December JLL’s Hotels & Hospitality Group sold the Jumeirah Dhevanafushi, one of the Maldives most luxurious resorts, to Singapore-based CDL Hospitality Trusts for US$59.6 million. In January of this year JLL advised on the sale of the US$70 million Six Senses Laamu resort, set in one of the Maldives’ few undiscovered lagoons. Leisure Frontiers Limited made the acquisition with Six Senses continuing to manage the resort. Scott Hetherington, CEO of JLL’s Hotels & Hospitality operations across Asia, compares the Maldives’ prime room rates to those seen in central London, but he’s equally excited about the potential lower down the star-ratings.
"There’s a huge opportunity in the mid-sector, driven by demand from across Asia and the Middle East where the middle classes are booming. These will be the most expensive three star resorts in the world. A midmarket hotel in Singapore achieves USD150 per night; a midmarket hotel in the Maldives will achieve double or more."
These growth prospects are undoubtedly alluring for investors, but they do raise questions about the potential impact of more visitors on the natural environment that makes the Maldives’ 26 atolls so popular. The environmental challenge doesn’t escape the attention of international hoteliers who are increasing their sustainability efforts.
The Four Seasons spends hundreds of thousands of dollars a year on marine scientists to protect the local coral and sealife habitats; Six Senses has had Green Globe certification for sustainable tourism since 2006. And as Hetherington points out, the Maldives has one further essential asset for accommodating growth: space.
"If you think the Maldives only received a million visitors in 2013 and 400,000 locals, yet it takes more than four hours to fly from one end of the islands to the other… that’s an awful lot of space. Every big hotel is doing work to keep the environment pristine and to help the local communities do their bit too. These are positive signs the Maldives can afford to welcome hundreds of thousands of new visitors in search of their piece of paradise."