Why is there significant opposition to the new tourism fee?

The Maldives' tourism sector is under pressure following the Maldives Monetary Authority (MMA) introduction of a new regulation mandating resorts to pay a compulsory USD 500 per tourist fee. The move, intended to stabilize foreign reserves, has sparked significant opposition from the Maldives Association of Tourism Industry (MATI), which argues that the measure could harm the sector's growth.

MATI, supported by over 50 resorts, raised concerns that the regulation fails to account for the realities of the tourism industry. While the average daily rate (ADR) for high-end resorts is around USD 500, smaller, mid-tier properties struggle to meet this threshold. Many of these resorts, which typically do not generate USD 500 per guest during a stay, may resort to the black market for dollars, deepening the nation’s currency crisis.

MATI proposed alternative solutions, including a modest 10% foreign exchange earnings contribution or a minimal USD 1 per tourist fee, with lower fees for guesthouses and city hotels. They also suggested fixed deposit schemes with attractive interest rates to encourage resorts to deposit foreign currency into local banks. However, these proposals have been largely ignored by the MMA.

The new regulations will increase operational costs for resorts, requiring investments in administrative staff and financial systems, potentially deterring investors. MATI predicts a 36% decline in investor interest in the Maldives tourism sector, further complicating the economic landscape, which is already burdened by tax hikes and foreign debt repayments.

Industry leaders also warn that the regulations could exacerbate dollar shortages, fueling inflation and reliance on the black market. Although the MMA expects a short-term boost to reserves, MATI cautions that the long-term effects could destabilize the sector, pushing up living costs and reducing the Maldives' competitiveness as a tourism destination.

As the high season approaches, MATI calls for urgent dialogue with authorities to revisit the policy, urging a more balanced approach to safeguard the tourism industry’s stability and future growth. Without a shift in policy, the Maldives risks undermining its position as a top travel destination.