How do you anticipate the recent changes in the financial ecosystem of the Maldives will impact the tourism industry as we approach early 2025?

Raise in departure tax, green tax, and the Airport service charge may deter arrivals and harm economic growth, especially in the Guest House sector, as now a pair will pay USD184 or USD268 as taxes in addition to 17% TGST The currency exchange of 20% or USD500 per head too will have an impact on the midscale and economy resorts and in GHs, as they will do 20% while luxury resorts can choose USD500 or 20%. (Should have gone for 20% which will be fair on all & would provide more foreign exchanges in the economy.

We hope for the best, but I believe the government's real financial needs may not be fully resolved, which could lead to significant hiccups in revenue. Market forces suggest that there might be an initial drop in tourism activity due to recent changes in the financial ecosystem. However, with strong support from the industry, I expect the situation to stabilize and pick up over time. May be 18 to 30 months. That said, the growing competition from other destinations o ering similar experiences remains a challenge. Di erentiation through innovation, sustainability, and value creation will be critical to maintaining our edge. The road ahead requires careful planning and collaboration to mitigate potential revenue shortfalls.

Yes, the frequent tax changes are a bit alarming. But given that Maldives is a higher value destination to begin with, I doubt if it will a ect the purchasing decision of a traveler. Let's do the maths. On a 5 night stay, the green tax increase added USD 60 to the trip cost per couple. Let's assume two hotel levels - USD 500 a night and USD 1200 a night. At the 1% increase in tax, the lower package will add USD 25 total for the couple. On the higher package, the 1% increase adds USD 60 per couple. So - increases of USD 85 to USD 120 is peanuts compared to the overall cost of the trip. The USD 20 pp on economy class passenger departures is not that much either. I don't think they should however di erentiate on the departure tax by class of travel. That's discriminatory. In our part of the world we like to get worked up about tax increases. Some angst is very valid. But when you do the maths and look at the bigger picture, a destination like the Maldives should not be worried. If this was India, yes, we would have a bigger issue. Our hotels are taxed at 18% to 28% depending on the service. So you have it far better then us. The Maldives does need to be careful though on not to over do it. There are limits of price elasticity in consumer buying. Don't push it.

The increased costs associated with higher taxes may deter visitors, leading to a decline in arrivals. Tourism is a major contributor to the Maldives' GDP, downturn of that could have implications for economy hence policy refinements that balance fiscal needs with the sustainability of the tourism sector is needed with policy changes aimed to address economic challenges. The actual impact will depend on how both the government and industry stakeholders respond to these developments.