​Bonaire.
In 2020, tourism in the Caribbean Netherlands declined sharply due to the measures and flight restrictions as a result of the coronavirus pandemic. Because the islands are relying on various measures to ward off COVID-19, the upturn in tourism differs per island. In June 2021, tourism on Bonaire had already reached almost 75 percent of the level of June 2019. On Saba and St. Eustatius, it was 43 per cent and 33 per cent, respectively, of the level of June 2019. From the start of the pandemic up to and including June 2021, not a single cruise passenger has arrived on Bonaire. This is evident from new figures released by Statistics Netherlands (CBS). Please note the 2021 numbers are provisional and subject to change.
On Bonaire, tourism gradually increased from November 2020 but declined again in January 2021 and later in March due to government measures.
Since April 2021, tourism has picked up again from 3,400 visitors in April to 9,100 visitors in June. This increase can mainly be attributed to the fact that almost all airlines started flying again as they did in June 2019. 

Due to the travel restrictions in place in many countries, the proportion of visitors with Dutch nationality increased significantly, from around 57 percent in 2019 to 75 percent in 2021. The share of visitors with US nationality decreased sharply, from 25 percent in 2019 to 9 percent in 2021.

​Saba
Compared to 2020, tourism on Saba increased in the months of April, May and June. However, the number of visitors was still lower than before the coronavirus pandemic.
In June 2021, Saba attracted 300 visitors: 43 percent of the number in June 2019 (700 visitors). In the first three months of 2021, there were 100 visitors per month. This was due to strict entry restrictions on Saba, resulting in fewer flights to the island than before the coronavirus pandemic. On 1 May, Saba started reopening the island, which is reflected in the number of visitors.

​St Eustatius
St Eustatius links the relaxation of the restrictive measures for tourism to the vaccination rate of the population. In June 2021, there were 300 visitors, whereas in June 2019, there were still 900 people who visited St Eustatius. The proportion of visitors with Dutch nationality was 70 percent in 2021, versus approximately 50 percent in 2019. This can be explained by the fact that in the second phase of the reopening of St Eustatius, vaccinated residents of Saba, St Maarten, Aruba, Curaçao and Bonaire were admitted to the island without quarantine.

August 16, 2021
By Peggy Lee, Chariss Kok Xin, Hok Yean CHEE
HVS Singapore.

Key Highlights in 2020
The Republic of Maldives is located in the Indian Ocean, southwest of Sri Lanka and India. The country comprises 1,192 coral islands, which are divided into 26 major island rings, known as atolls. For administrative purposes, these 26 atolls are organised into nineteen administrative districts across an area of 90,000 square kilometres in the Indian Ocean.
Famous for its natural beauty with white sand beaches and crystal-clear waters, the Maldives is ranked as one of the best diving destinations in the world. Tourists seeking leisure and relaxation are especially attracted by the breath-taking scenery, peace, and quietness of the Maldivian islands.
Due to the COVID-19 pandemic, the Maldives’ overall economy has contracted by 18.6% in 2020. This is attributable to its strong dependence on international tourism, which has been negatively impacted worldwide due to lockdowns and travel restrictions.
According to the World Travel & Tourism Council (WTTC), the total contribution of tourism to the Maldives’ Gross Domestic Product (GDP) in 2019 was 11.5%.
Tourism arrivals have slumped from approximately 1.7 million in 2019 to approximately 555,000 in 2020 due to the travel disruptions caused by COVID-19.
The Maldives hotel investment market recorded zero transaction volume in 2020 amidst the global economic uncertainty, the only year in the last five years (2016 to 2020) to record zero transaction volume.
Economic Outlook
In 2020, the global economic growth was rocked by the COVID-19 pandemic that caused countries to go into lockdown and stock markets to plunge. Activities around the world have seemingly come to a halt with travelling restricted and work-from-home becoming a new normal. US-China political tension continues to be uncertain, along with the plans for Brexit. With growing uncertainties in the geopolitical landscape and global market pressures, international trade and investment activities have softened and are expected to remain subdued. According to the World Bank, global economic growth is projected to expand at 4% in 2021, albeit a slow recovery.
 
Figure 1: Economic Outlook

Source: International Monetary Fund, World Bank, August 2021

Economic Performance & Outlook
Given the reliance of the Maldives’ economy on international tourism and related development, the slowing of the travel industry and construction activities due to COVID-19 has resulted in a 32.2% contraction in real GDP growth in 2020. Recovery is expected in 2021 with an expansion of 18.9% as economic activities gradually resume and consumer sentiment improves with the administration of the vaccine. Furthermore, the Maldives has one of the most relaxed regulations for international visitors, and the “one-resort-one-island” concept helps to enhance exclusivity amidst social distancing regulations.
Currency Account Balance
In 2020, the Maldives’ current account balance (% of GDP) has declined from -20.4% in 2019 to -24.4% in 2020. This is likely attributed to the loss of income from tourism activities on the back of a weaker international travel market and slowing of construction activities, on which the Maldives is heavily dependent.
Inflation
Due to the pandemic, consumer price inflation for Maldivian rufiyaa has declined from 1.3% in 2019 to -1.6% in 2020. This is due to a decline in global oil prices in 2020 and the sluggish recovery of domestic demand. The country is largely dependent on imports, including fuel, to meet its domestic demand. Consumer prices are therefore responsive to movements in international commodity prices, particularly oil prices. Moving forward, International Monetary Fund (IMF) expects the inflation rate to increase to 1.6% in 2021 as it emerges from a low base. This is owing to the recovery in global energy and nonenergy prices and the general recovery of the economy. IMF forecasts that inflation will rise by an annual average of approximately 2.0% in the next four years from 2022 to 2025.

​Infrastructure Developments
2020
Horafushi Airport: Horafushi Airport: A domestic airport serving the island of Hoarafushi, in the northernmost Haa Alif Atoll. The new airport is constructed on reclaimed coastal land.
Funadhoo Airport: A domestic airport that serves the inhabited islands of the Shaviyani Atoll. The airport is located on the nearby island of Farukolhufunadhoo.
Maavarulu Airport: A domestic airport serving the Gaafu Dhaalu Atoll.
 
2021
Madivaru Airport: A domestic airport expected to serve the island of Madivaru, Lhaviyani Atoll.
Fari Islands: A multi-resort concept that features three international hospitality brands, Capella, Patina, and The Ritz-Carlton. The development is located in North Malé Atoll, 50-minutes by speedboat from Malé International Airport. The archipelago also features the picturesque Fari Marina, built around a vibrant Fari Beach Club, charming boutiques, and a selection of handpicked, upscale food and beverage options. The ongoing development has opened the 100-key Ritz-Carlton Maldives on 1 June 2021.
 
2023
CROSSROADS Maldives: Situated amongst the Kaafu Atoll and Emboodhoo Lagoon, CROSSROADS Maldives is the first extraordinary multi-island, fully integrated leisure destination. The development has opened two resorts: 198-key SAii Lagoon Maldives – Curio Collection by Hilton and 178-key Hard Rock Hotel Maldives. The islands are connected by footbridges for guests to explore the integrated hub. It features shopping, dining, a marina, spas, the Marine Discovery Centre, and more. The development is expected to inaugurate an 80-villa SO/Maldives on Island 3 in 2023.
 
Other Notable Projects (No Specified Completion Date)
Hanimaadhoo International Airport Expansion: The airport expansion is considered one of the largest infrastructure and connectivity projects in the northern Maldives. The project includes the upgrade of terminals, fuel farms, and the fire station, as well as the extension of the runway to 2200 meters, allowing accommodations for A320s and Boeing 737s.
Hulhumalé: This ongoing development located in the south of North Malé Atoll aims to act as an expansion of Malé City. The city will adopt a global lifestyle, focused on investing for the long-term future, nurturing the youth, and forming new traditions for the anticipated 240,000 residents of the city.
Greater Malé Connectivity Project: The USD 500 million ongoing project aims to connect three neighbouring islands, namely, Villingili, Gulhifahu, and Thilafushi through a 6.7-kilometre bridge and causeway network. The project will boost economic activity, generate employment and promote urban development in Hulhumalé, Hulhule, and Malé with the proposed Gulhifalhu Port and the Thilafushi Industrial Zone.
Velana International Airport Expansion: The ongoing USD 1 billion airport expansion comprises a 78,000-square-metre international passenger terminal building that will have the capacity to accommodate up to 7.5 million passengers a year upon its completion in 2022. The airport handled more than 4.8 million passengers and 54,000 flight movements in 2019. A new 3,400-metre-long and 60-metre-wide code-F runway is also being built to accommodate wide-body aircraft such as A380. The runway is expected to resolve the issues related to space and flight delays.

​Figure 2: Infrastructure Developments in the Maldives

Source: HVS Research
 
Maldives Tourism Landscape
International Visitor Arrivals
According to the Maldives’ Ministry of Tourism (MOT) figures, international visitor arrivals have increased for four consecutive years to reach a record of approximately 1.7 million visitor arrivals in 2019 before decreasing by 67.4% to approximately 555,000 in 2020 due to the travel restrictions brought about by COVID-19.

Figure 3: International Visitor Arrivals (2016-2020)

​Source: Ministry of Tourism Maldives

Seasonality
The seasonality in the Maldives is rather volatile but consistent due to visitors’ travel patterns. From December to March, the Maldives experiences a higher volume of visitors due to occasions such as Christmas, New Year, and Valentine’s Day. The Maldives has the best weather between November and April as it is cooler. The monsoon runs from May to October, peaking around June which explains the trough in May and June.
In 2020, the Maldives has exhibited abnormal seasonality due to the lockdown from 27 March 2020 to 15 July 2020. Since the reopening in July, the Maldives has recorded gradual growth in arrivals for the remaining months of the year.

Figure 4: Seasonality

Source: Ministry of Tourism Maldives
 
International Source Market
In 2020, India overtook China as the top international source market after China has dominated as the top source market for the past four years. This may be attributed to the restrictions imposed on Chinese visitors when the COVID-19 virus was first recorded in China in December 2019. Aside, Russia has emerged as one of the top five source markets due to the availability of flights from Russia to the Maldives in 2020.
The top five international source markets to the Maldives in 2020 were: India (11.3%), Russia (11.1%), United Kingdom (9.5%), Italy (8.4%), and Germany (6.6%). The five markets made up almost half of the total visitor arrivals to the Maldives in 2020.
Due to the social distancing measures imposed globally, the Maldives has capitalised on its unique concept of “one-island-one-resort” to emphasise its exclusivity to promote the destination.

Figure 5: Top Five International Source Markets (2020)

Source: Ministry of Tourism Maldives

Average Length of Stay (ALOS) increased by 0.9 nights, reaching 7.2 nights in 2020 due to extension of stays to avoid restrictions in guests’ home country, whereas some guests were stuck on the island during the lockdown in the Maldives.
 *April, May and June 2020 average stays are estimated due to lockdown
 
Maldives Hotel Market
2020 was a quiet year in terms of hotel supply growth in the Maldives. The marketwide room supply only grew by 1.9%. HVS noted the opening of Radisson Blu Resort Maldives and Brennia Maldives, which added 128 and 193 rooms to the market, respectively. Properties such as Ritz-Carlton Maldives Fari Islands and Capella Maldives that were supposed to open in late 2020 were delayed due to the pandemic.
Based on the figures from MOT, there was an average of 966 registered accommodation establishments in 2020, however only an average of 389 establishments was operational, which equates to approximately 40% of the supply. In comparison to 2019, there was an average of 886 registered accommodation establishments and 873 were operational, which translates to approximately 99% of the supply. This has demonstrated a stark difference in the change of operational supply during COVID-19.
Moving forward, HVS will track the opening of six properties in 2021, which will introduce 1,170 rooms into the market. Between 2022 and 2025, an additional 1,593 rooms are expected to be added to the Maldives’ hotel supply. The hotels slated to open are mainly positioned in the upscale and luxury segments.

Hotels Opening in 2021:
AVANI Fares Maldives Resort, 200 keys
Gran Melia Huravee, 96 keys
Indus Maldives Resort & Spa, 170 keys
Le Meridien Maldives Resort & Spa, 154 keys
Oblu X Malé Atoll, 350 keys
OZO Maldives, 200 keys
 
Hotels Opening in 2022:
Alila Villas Maldives, 80 keys
Amari Kudu Kurathu Maldives, 200 keys
Capella Maldives, 64 keys
HYDE Maldives Feydhoo Finolhu, 125 keys
Oblu South Malé Atoll, 150 keys
OZEN Retreat South Malé Atoll, 30 keys
The Chatwal Maaga Maldives, 88 keys
 
Hotels Opening beyond 2022:
Centara Kassanaufaru Resort & Spa Maldives, 130 keys
Centara Hotels & Resorts Maldives, 165 keys
Centara Lagoon Family Island Resort & Spa Maldives, 145 keys
Centara Grand Muthaafushi Resort & Spa, 101 keys
JW Marriott Maldives Malé Atoll Resort & Spa, 80 keys
Mondrian Feydhoo Finolhu, 125 keys
Novotel Maldives Keredhdhoo, 110 keys
SO/Maldives, 80 keys
 
Figure 7: Maldives Hotel Rooms Pipeline (2021 to >2024)

Source: HVS Research
*All count includes independent properties
 
Maldives Hotel Market Performance
With the growth of international arrivals from 2016 to 2019, the Maldives has exhibited an upward trend in occupancy, registering a compounded annual growth rate (CAGR) of 2.0% between 2016 to 2019 despite having a strong pipeline of hotels. On the other hand, the Average Room Rate (ARR) has shown a downward trend as hotel supply, particularly midscale products, continues to grow in the Maldives, increasing the competition level in the accommodation market. As a result, the RevPAR has shown some fluctuations between 2016 and 2019. The RevPAR increased 2.5% in 2017, while 2018 and 2019 have recorded a declining performance, registering a CAGR of -7.4% in the two years.
In 2020, the Maldives recorded its worst performance in terms of occupancy in the last five years. This is attributable to the travel disruptions caused by the COVID-19 pandemic. Marketwide occupancy declined by 33.7 percentage points (p.p.) while ARR increased by 44.3%. Overall, RevPAR decreased by 29.8%, the sharpest decline over the past four years.
The Maldives has managed to achieve an abnormally high ARR in 2020 due to resort closures and the selling of higher room categories when travel restrictions were introduced globally. With the high ARR, the Maldives has managed to bolster its RevPAR in 2020. This may also be a result of the MOT’s marketing effort to capitalise on the “one-island-one-resort” concept to incentivise tourist arrivals into the nation. In November 2020, the MOT has launched its marketing campaign with the tagline, “Isolation never looked this good.” Furthermore, the Maldives has by far imposed one of the most relaxed travel regulations for international visitors. The destination has recorded a strong increase in visitor arrivals since the reopening of its borders in mid-July 2020, albeit at a lower number than before.
Moving forward, with many countries still implementing travel restrictions and the limited availability of flights worldwide, the tourism sector in the Maldives is likely to be negatively impacted in the short term but should still fare relatively well in the Asia-Pacific. Until the vaccine has been largely administrated globally, the uncertainty of resurgence in infections and reimposition of lockdowns will remain, which can result in dampening of business and consumer sentiments and impact visitors’ decision to travel.
 
Figure 8: Maldives Overall Hotel Performance (2016-2020)

Source: HVS Research
 
Tourism Models in the Maldives
 Workation and Long-Staying Tourism in the Maldives
Due to the ongoing COVID-19 pandemic, remote working has become a norm and accommodation establishments have rolled out a series of long-staying and work-from-home packages. The Maldives benefits from the “one-island-one-resort” concept which allows for social distancing among travellers as each island operates like its own resort. The Maldives is also among the first countries to initiate vaccine tourism with the 3V (Visit, Vaccinate, Vacation) Campaign which further promotes long-stay. The greater emphasis on flexibility and work-life balance may spur the rise of bleisure — a segment of long-staying workationers. In April 2021, Tourism Minister Dr. Abdulla Mausoom has stated that the government is making arrangements to extend tourist visas up to one year.
First introduced in 2011, Maldives-based Soneva Resorts and Residences was the first and only company to offer Maldivian real estate to foreign buyers through the Soneva Villa Ownership Program. The benefits include discounts on all Soneva resort services, flight transfers, owner benefits, exchangeability of owner’s days within all Soneva Resorts, income sharing in a Villa Rental Program, and the privilege to allow for interior villa customisation.
Just last October 2020, Singapore-based Banyan Tree Holdings Limited has rolled out a new extended-stay product known as Habitat. The new offering aims to bring in a new way of living, working, and travelling for seasonal travellers, families and remote workers. Using the Habitat Pass, guests have access to 35 hotels in more than 30 destinations under the group’s house of brands: Banyan Tree, Angsana, and Cassia. Valid for twelve months, they can purchase from one to four units at a time, granting stays ranging from seven to 28 days in multiple properties across different destinations. Credits ranging from USD 150 to USD 700 are given based on the number of units purchased, which can be used for food and beverage, spa and wellness activities, laundry services, and airport transfers.
On 5 November 2020, Anantara Veli Maldives Resort offered the ‘Unlimited Stays in Paradise’ package for bookings till 30 November 2020, which allows unlimited nights at the resort for a one-time fee priced at USD 30,000, inclusive of all taxes and service charges, for two persons sharing one Over Water Bungalow. The package is valid for stays from 1 January 2021 to 23 December 2021 and includes daily breakfast for two, a 25% discount on spa services and dining, and complimentary WiFi.

Figure 9: Habitat by Banyan Tree

Source: Banyan Tree Holdings

Another move to diversify the Maldives’ product offering can be seen from the first multi-island integrated resort CROSSROADS which was launched in September 2019. Developed by Thailand-based Singha Estate Public Company Limited, the project comprises nine artificial islands connected by footbridges. Phase one of the project has been completed with 198-key SAii Lagoon Maldives, a Curio Collection by Hilton, 178-key Hard Rock Hotel Maldives, Maldives Discovery Centre, Marine Discovery Centre, the Marina, and the 326-square-metre event hall. Phase two of the project will take another five years to complete, featuring a mix of hotels and long-stay residences, details of which have not yet been disclosed. Just last July 2021, it was unveiled that the 80-key SO/Maldives will be the jewel of the third island on CROSSROADS. The first co-working space in the Maldives will also be featured as part of the CROSSROADS project.
However, concerns about rising sea levels may impact the interest of potential investors in these long-stay tourism models in the Maldives. More funding is required for coastal protection works and to build critical infrastructure like sea walls. In May 2021, it was announced that the Maldives is creating an innovative floating city that mitigates the effects of climate change. Designed by Netherlands-based Dutch Docklands, The Maldives Floating City will feature thousands of waterfront residences, hotels, shops, restaurants, a hospital, a school, and public spaces floating along a flexible, functional grid across a 200-hectare lagoon. Construction is slated to commence in 2022 and the development will be completed in phases over the next five years.
Guest House Culture in the Maldives
The Maldives offers various types of accommodation to cater to different preferences which are categorised into resorts, hotels, guest houses, and safari vessels.
The relaxation of its tourism rules which was restricting all tourism to resorts on uninhabited islands has sparked the growth of guest house tourism over the years. Apart from the differences in service, quality, and product offerings, the main difference between guest houses and resorts are that guest houses do not own their own island. Similar to resorts, there are opportunities to engage in excursions, watersports, diving, and other activities. Tourists in the guesthouses will be able to experience living like a local and are expected to be respectful of the local community. Guest houses have boosted the growth and development of mid-market tourism, offering an alternative to budget-conscious and cultural travellers. In 2021, the Maldives has been actively promoting local tourism and guest houses as part of their economic diversification plans.
It is also noted that a reliable and affordable public transport service, good service quality and safety standards are essential for the growth of guest houses.

Hotel Transactions and Investment
Zero Transaction Volume in 2020
Hotel investment in the Maldives has exhibited a fluctuating trend in the past four years, between 2016 and 2019, registering an average of three transactions annually. In 2019, the Maldives recorded five transactions in total, the highest number of transactions between 2016 and 2019. Generally, the Maldives’ hotel investment market has been dominated by foreign investors.
In 2020, the Maldives has recorded zero transaction volume in the hotel investment market. The market has been active throughout the past four years, with investment volume peaking in 2019 at USD 438 million.
However, in 2020, the global economy has slowed, consumer sentiments have weakened, and the accommodation market was negatively impacted by travel disruptions. As a result, the hotel investment market has been quiet in 2020.
 
Notable transactions in 2019:
151-key Conrad Maldives Rangali Island at USD 180 million (USD 1.19 million/key)
110-key Anantara Dhigu Maldives Resort at USD 97 million (USD 883,000/key)
67-key Anantara Veli Maldives Resort at USD 59 million (USD 883,000/key)
As of YTD August 2021, Maldives has recorded one transaction. The 80-key Kanuhura Maldives has been acquired at USD 41.5 million (USD 519,000/key). This suggests that investors’ confidence in the Maldives hotel market has recovered to some extent.
  
Figure 10: Maldives Hotel Transactions (2016 – 2020)

Source: Real Capital Analytics (RCA)
 
Inbound Hotel Investment Dominated by the United States
From 2016 to 2019, inbound investment in the Maldives has been dominated by investors from the United States. They have acquired a total of five properties, amounting to a total investment volume of approximately USD 378 million, equivalent to USD 944,000 per unit.
This is followed by Singapore and Thailand, which have acquired three properties each, with a total investment volume of USD 161 million and USD 84 million, respectively. The remaining countries, namely, Germany, Japan, and Sri Lanka have acquired one property each.
It is evident that the United States investors have been actively investing in the Maldives market, which averages to approximately one hotel acquisition per year.
In terms of investors’ profile in totality, Asia-Pacific leads the way with four out of six countries belonging to the Asia-Pacific region. Europe, the Middle East, and Africa regions are shown to be less active in the Maldives hotel investment market. As of YTD August 2021, the transaction of the 80-key Kanuhura Maldives was made by a Singapore investor.
 
Figure 11: Investor Profile for Maldives Inbound Hotel Transactions

Source: RCA
 
Covid-19 Timeline
   
Figure 12: COVID-19 Timeline

Source: HVS Research
  
Outlook
In 2020, the Maldives market recorded its greatest decline in international arrivals and poorest hotel performance in recent years due to the travel restrictions brought upon by the COVID-19 pandemic. The Maldives has recorded a decline of 33.7 p.p. in occupancy and an increase of 44.3% in ARR, contributing to an overall decrease of 29.8% in RevPAR. With many countries still implementing travel restrictions to control the spread of the coronavirus, the demand for tourism in the Maldives is likely to remain subdued in the short term due to the lack of international visitor arrivals. . Until the vaccine has been largely administrated globally, the uncertainty of resurgence in infections and reimposition of lockdowns will remain.
As a prominent beach destination in Asia-Pacific, the Maldives has strong mindshare in couples looking for a honeymoon destination, diving enthusiasts searching for diving spots that feature rich marine biodiversity, and families seeking private and exclusive bonding time during vacation.
The Maldives have won multiple travel accolades in 2020 itself, this includes: “Indian Ocean’s Leading Beach Destination”, “India Ocean’s Leading Dive Destination”, “Indian Ocean’s Leading Cruise Destination” and “Indian Ocean’s Leading Destination”.
In terms of supply pipeline, HVS notes that there is an additional 20 resorts in the pipeline that will be opened by 2025. It is anticipated to add 2,763 rooms to the market. The hotel market in the Maldives is expected to remain competitive over the next few years as upscale and midscale properties continue to expand their footprint in the market.
In 2020, the Maldives did not record any transaction volume, the only year that recorded zero transactions in the past five years between 2016 to 2020. This illustrates investors’ uncertainty in hotel investment due to the ongoing fight with the COVID-19 pandemic.
To bolster the Maldives’ tourism market, the Maldives government has established one of the most relaxed regulations on international visitors in 2020. The MOT has also launched several marketing campaigns to emphasise the safety and unique selling points of the destination.
Moving forward, demand generation for the Maldives will be supported by the newly built airports and airport expansions. Large-scale developments such as CROSSROADS Maldives and Fari Islands are also likely to help induce demand.
The Maldives’ hotel market outlook is expected to continue facing turbulence on the back of a rocky global environment and the COVID-19 pandemic in the short term. However, the Maldives government and MOT are committed to supporting the tourism industry and have introduced initiatives to keep the tourism industry afloat during COVID-19. This includes hotel lease deferments and marketing efforts.
In the mid-to long-term, several tourism and national development plans have been put in place to ensure that the Maldives is set on the road to strong recovery when the economic situation improves. This includes new tourism concepts like CROSSROADS and Fari Islands.
ABOUT PEGGY LEE
Peggy Lee is a Senior Analyst with HVS Singapore She graduated from Singapore Institute of Technology with a Bachelor’s Degree in Hospitality Business. Since joining, she has been engaged in numerous market research, feasibility studies and valuations in the Asia Pacific region that include Australia, China, Indonesia, Malaysia, Maldives, Singapore, Thailand and Vietnam. For further information, please contact: plee@hvs.com
ABOUT CHARISS KOK XIN
Chariss Kok Xin is a Manager with HVS Singapore. She graduated from Glion Institute of Higher Education with a Bachelor of Arts in Hospitality Real Estate Finance and Revenue Management. Since joining, she has been engaged in numerous market research, feasibility studies and valuations in the Asia Pacific region that include Australia, Indonesia, Malaysia, Maldives, Papua New Guinea, Philippines, Seychelles, Singapore and Vietnam. For further information, please contact: xkok@hvs.com
ABOUT HOK YEAN CHEE
Hok Yean CHEE is the Regional President of HVS Asia Pacific. She has 30 years of experience in more than 30 markets across 19 countries in Asia Pacific, providing real estate investment advisory services for a wide spectrum of property assets. Her forte lies in providing investment advisory on hotels and serviced apartments including brokerage, strategic analyses, operator search, market feasibility studies, valuations and litigation support. For further information, please contact: hychee@hvs.com

BY CIARA NUGENT TIME Magazine.
AUGUST 18, 2021 9:16 AM EDT
Turkish tour guide Erkan Sehirli likes to take his American and European visitors to the gulf of Gökova region on his country’s southwestern coastline. Together they hike trails that pass through ancient ruins, overlooking picturesque bays where cruise ships drop their guests for lunch. Sold as “the place where green meets blue,” Gökova is an upscale, boutique destination and one of the region’s most beloved natural attractions.
Or it was, until wildfires tore through the area in late July amid one of the worst heat waves to hit the southern Mediterranean in decades. “You can’t be there any more. It’s all grey. It’s like walking on the moon,” Sehirli told me over the phone from the nearby town of Bodrum last week. “One day you’re in heaven, and the next day everything is gone.”
This summer, the climate crisis has made itself increasingly visible through a torrent of extreme weather events across the world, and the places we go to get away from it all have not been spared. The Mediterranean fires have destroyed landscapes and forced dramatic evacuations from beach resorts in Turkey, Greece and Italy. Germany’s historic floods have washed out mountain trails in Bavaria. A historic drought in the western U.S. has forced inns in Mendocino to rely on portable toilets, and vacation operators in Arizona to cancel houseboat bookings for dried up Lake Powell. These events are a kick in the teeth for local tourism industries that are just beginning to recover from COVID-19.
They’re also a sign of the sector’s extreme vulnerability to climate change. The growing number of natural disasters each year—which have already quadrupled between 1970 and 2016—are threatening the natural and cultural heritage that tourism destinations rely on to lure in visitors. Warming global temperatures are lengthening the period of summer that is unpleasantly hot in beach resort regions, and shortening ski seasons in mountain retreats. Rising sea levels are eroding beaches in coastal communities. Increasing water scarcity in warmer regions is sowing potential for conflict between locals and the resource-intensive tourism industry. And some travelers are beginning to confront the looming question of whether or not to keep flying when the technology to decarbonize aviation is decades away from being used at scale.
A reckoning for the tourism industry could come soon. In July, G7 leaders threw their weight behind a burgeoning movement in the finance world for mandatory climate risk disclosure, which would force companies and their financiers to tell investors how their business is exposed to climate change. The tourism industry is “not at all” prepared for the level of risk that process might expose, says Daniel Scott, a professor of Geography and Environmental Management at Canada’s University of Waterloo, who has spent two decades researching the interaction between climate change and tourism. “They’ve got to do a lot in the next little while—probably the next three to five years—to understand both what the changing physical climate means for them, but also the transition to net zero”
Climate change won’t necessarily kill tourism. The industry has proved adept at adjusting its seasons and offerings to suit new weather patterns. Canada’s Whistler ski resort, for example, has been so successful expanding its snow-free activities that it now makes more money in the “green season,” Scott says. In Turkey, Sehirli still has plenty to show visitors outside of Goköva, like the ancient city of Ephesus. And, if the unpleasant heat of late summer stretches further into September, he says he expects Europeans and Americans will just start coming more in winter.
But climate instability will disrupt the industry in painful ways. And unfortunately, everything points to the biggest losers being those with the fewest resources. Because it opens up flows of foreign exchange and encourages investment in local infrastructure, tourism is often touted as a route to prosperity and stability for struggling countries. According to the U.N., it is a principal export for 83% of developing countries and the biggest export in a third of them. Development experts often call the industry the largest voluntary transfer of wealth from rich to poor, with the sums moved dwarfing aid budgets.
Where the tourism industry relies on coasts and other areas of natural beauty, it may be particularly vulnerable to climate impacts, like sea level rise, glacier melt or extreme weather. Low-lying island nations in the South Pacific are losing their beaches to sea level rise and their coral reefs to ocean warming. In the Himalayas, snow and glacier melt is making the mountains more hazardous and destroying the ecosystem’s natural beauty. In the Caribbean, where tourism makes up 20-30% of GDP in many countries, research by the World Travel and Tourism Council (WTTC) has found that the unusually strong 2017 Atlantic hurricane season cost the region 826,100 visitors, who would have generated $741 million. The storms triggered hikes in insurance premiums of up to 40%, increasing a key cost for the area’s hotels.
There will be some winners in this dynamic. For example, destinations with cooler climates, like Scandinvavia, could welcome more visitors as they warm. And across the globe, larger companies with deeper pockets might be able to weather increased costs of doing business, and spread their risk across different destinations. But more than 80% of the tourism industry is made up of small and medium-sized businesses, per the WTTC. They may struggle to survive if they lose physical assets to extreme weather or if the risks of a more volatile climate drive up the cost of doing business.
There are solutions to stem the damage, like coastal adaptation to protect communities and landscapes that draw tourists. Better forest management can reduce the spread of wildfires. Government financial support can help small businesses bounce back when disaster strikes.
But for those of us lucky enough to travel abroad, the ethics of vacationing are getting ever more complicated. Should I fly on a fossil-fueled plane to a Caribbean island so my tourist dollars can help rebuild part of the local area that was recently destroyed by a hurricane? Should I patronize a coastal restaurant and enjoy carbon-intensive surf and turf as their beach is washed into the ocean? Should I just stay home and send my money abroad? Probably, yes. But will I? 

​Destinations across North America are at different stages of tourism development.
However, one common factor between the United States, Mexico and Canada is that the effects of the Covid-19 pandemic in 2020 have been felt hard.
That is according to GlobalData, a data and analytics company.
A report, Tourism Destination Market Insight: North America (2021), found that total international arrivals to the region declined 67 per cent year-on-year in 2020 and inbound expenditure by 74 per cent.
North America’s forecast recovery follows the general global travel consensus that domestic tourism will recover first (2022), but international arrivals will not recover until 2024.
Forecasts for inbound tourism expenditure, however, suggest this will not surpass pre-pandemic levels until after 2025. 

​Johanna Bonhill-Smith, travel and tourism analyst at GlobalData, commented: “Covid-19 can still be identified as the greatest threat to growth within the travel sector, and in North America this is no different.
“The loss of inbound tourist spending in 2020 to North America was significant.
“GlobalData’s forecast suggest this is not expected to fully recover until after 2025, and this will be one of the greatest factors affecting economic recovery for the region over the next few years.”
One of the major benefits of inbound tourism is spending, which can boost economic revenues, stimulate employment and act as a catalyst for infrastructure development.
Each destination does hold a strong domestic tourism offering, but this cannot be relied upon alone to offset the collapse of international travel.
Bonhill-Smith continued: “Travel to North America from other destinations worldwide can be expensive.
“GlobalData’s survey found that 23 per cent of global respondents have reduced their household budgets in the past year and 27 per cent have ‘somewhat’ reduced them.
“Reduced budgets mean less expenditure on recreation affecting the ability to travel.
“Budget constraints are going to be more important in purchasing travel experiences over the next few years, which could jeopardize North America’s tourism recovery in comparison to other regions worldwide.”
Due to proximity, connectivity and competing low-cost carrier operators, travel between the US, Canada and Mexico can be relatively low-cost, spurring travel across the destinations.
Intra-regional travel will be vital in North America’s tourism recovery.
Each destination already relies heavily on neighbouring destinations as important sources for economic income.