Business Tourism

Maldives, a Destination for the 1%, Chases the Backpacker Buck

Photo: Ashwa Faheem for The Wall Street Journal

In the Maldives, there are official rules for tourists on inhabited islands: no alcohol and no revealing clothes, except on designated ‘bikini beaches.’

UKULHAS, Maldives—One of the world’s most expensive tourist destinations, known for overwater villas and beach-chic spas, is counting on an unlikely force to transform its economy: budget travellers.

The Maldives has long lured the ultrarich to luxury resorts set on tropical islands accessible only to guests and hotel staff. But in recent years the archipelago’s inhabited islands—once off-limits to tourists—have begun offering low-cost getaways in modest guesthouses.

On remote Ukulhas island, former tuna fishermen are striving to master room service. Signs point to the bikini sections of beaches that the predominantly Muslim Maldivians avoid. For one islander, the arrival of Thai food popular with tourists encapsulates the change.

“I could never have imagined that I would be eating tom yum soup here,” said Mohamed Anwar, 33, a onetime fisherman. His income has grown fivefold, he said, since he opened guesthouses that cater to European couples, Russian families and Singaporean sport-fishing enthusiasts.

Mohamed Anwar, a onetime fisherman, now owns guesthouses that cater to tourists in the Maldives.

Mohamed Anwar, a onetime fisherman, now owns guesthouses that cater to tourists in the Maldives. Photo: Ashwa Faheem for The Wall Street Journal

The Maldives’ new government wants to boost lower-end tourism to unlock development across the Indian Ocean nation, where most residents live on neglected islands. President Ibrahim Mohamed Solih, elected last year, has promised loans to aspiring guesthouse owners and plans to pitch his country as a holiday hot spot to what he calls the “middle-class market.”

That marks a striking change. The Maldives’ popularity was built on a carefully cultivated image as a high-end retreat where princes and presidents pay thousands of dollars a night and Hollywood stars honeymoon under discreet aliases. Brands like Louis Vuitton, major U.S. hotel chains and Czech billionaires invested in resort properties.

Islands in the Sun

Many Maldivians live on small, far-flung outposts that are slowly opening up to tourism.

“Luxury is the cornerstone of our tourism story,” said Ibrahim Munaz, secretary-general of a Maldives travel agents’ association. “Now the question is, how are we going to present both faces? What is the brand of the Maldives—premium, or budget, or premium plus budget?”

Some fear a muddled message and a flood of backpackers could dim the allure for high-end travellers, with Indian Ocean rivals Mauritius and Seychelles ready to take advantage.

But the government argues bargain-seekers will increase the flow of foreign cash to the country—where tourism accounts for a quarter of gross domestic product—and channel money to citizens beyond the resort-owning elite.

The Maldives has 8,000 guesthouse beds compared with 30,500 in resorts, official figures show. One strategy, Mr Munaz said, was to rebrand guesthouses as “boutique hotels,” adding buzzwords like “sustainable tourism.”

A tourist from Argentina participating in the making of a local dish using breadfruit.

A tourist from Argentina participating in the making of a local dish using breadfruit. Photo: Ashwa Faheem for The Wall Street Journal

The country’s new tourism-promotion chief is planning a publicity push for low-cost offerings, including roadshows in India and Southeast Asia and exposure at Berlin and London trade fairs.

“My task is to give guesthouses a promotion edge, but without losing the Maldives’ luxury segment,” said the chief, Thoyyib Mohamed. “It’s going to be very difficult.”

Until a decade ago, islands inhabited by Maldivians weren’t open to the tourism trade. The then-leaders of the Muslim country argued that a tide of foreigners would threaten traditional values.

Under its first democratically elected president in 2008, the Maldives removed that prohibition. But diving into an unfamiliar business wasn’t easy for communities tied to fishing and farming for generations. Islands lacked regular ferry service, with even basic supplies arriving erratically.

And there was pushback from the pious, who feared women sporting beachwear would infiltrate public spaces.

Unlike resort-goers who have private pools and butlers, guesthouse visitors meander through where Maldivians live and pray. There are official rules for tourists on inhabited islands: no alcohol and no revealing clothes, except on designated “bikini beaches.”

A notice board at Mr. Anwar's guesthouse reminds tourists about the strict local rules regarding clothing.

A notice board at Mr Anwar’s guesthouse reminds tourists about the strict local rules regarding clothing. Photo: Ashwa Faheem for The Wall Street Journal

For Katya Viola, a 32-year-old office receptionist from Sicily, these were minor inconveniences. The resorts were too expensive, she said. Instead, she booked seven nights for $510 in a basic guesthouse and packed calf-length pants.

But Russian ballerina Alexandra Karlova and her husband Daniil Karlov, who are in their 20s, didn’t know the Maldives was Islamic, or that alcohol was limited to resorts when they booked a two-week honeymoon on Ukulhas.

“We thought the Maldives was like India, the land of Buddha,” said Mr Karlov, who works at a company that makes vodka bottles. India is a majority Hindu country.

The low-key accommodations appeal to some. A French couple on honeymoon said they wanted to experience the local culture and shunned lavish hotels.

“Who would want to travel all this way to lounge in a swimming pool with a cocktail right next to the ocean?” said 27-year-old Kahina Bensaid.

Mr Karlov said he wouldn’t turn down the offer.

The first guesthouse on Ukulhas, a small, sand-rimmed island home to 1,000 people, opened in 2012. It wasn’t until 2016 that denizens began turning in large numbers from fishing to handling check-ins, baking doughnuts and taking tourists swimming with manta rays.

Early adopters persuaded residents to invest in a speedboat service and opened a dive centre, both unprofitable at first but necessary to avert negative online reviews. They also formed a union to manage interactions between tourists and locals, said Ramiz Ibrahim, 28, one of the group’s leaders.

Mr. Anwar walking in front of his guesthouse on the island of Ukulhas.

Mr Anwar walking in front of his guesthouse on the island of Ukulhas. Photo: Ashwa Faheem for The Wall Street Journal

Transgressions by visitors provoked angry reactions. In 2016, residents snapped pictures of two Swedish teenagers walking in bikinis and posted them on social media, expressing alarm about shifting standards of public decency, Mr Ibrahim and other locals said. The Swedish family was livid, as were conservative residents, leaving Mr Ibrahim to douse tempers, they said.

Now signs clearly indicate bikini zones, and check-in procedures include briefings on cultural sensitivities. Investors from Male, the capital, to Malaysia, are sniffing for opportunities. Restaurants dot the island—a far cry from 2015 when one entrepreneur said he turned to YouTube to learn how to cook chicken kebabs.

The intensifying construction has some locals worried. “Tourism is good, but not too much tourism,” said Abdulla Muaz, 34. “We need balance.”

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