Hilton’s property has become the companies “benchmark” resort for quality.

Courtesy Hilton Maldives Resort and Spa Rangali Island

The Four Seasons is one of the high-end resorts looking to expand.

Courtesy Four Seasons Resort Maldives at Kuda Huraa

Maldivian tourism is at a crossroads. The Maldives are evolving towards becoming an indisputably upmarket destination, and the management of their growth into a mature, high-end brand is a task being learned by experience and the contribution of foreign partners, as recognized international brands continue to raise the profile of the country.

Over the last eight years the sector has seen many three and four-star hotels becoming boutique operations, an exclusive, more ecologically harmonious type of hotel. The change is largely due to the evolving desires of consumers, and the recognition that this is a product the Maldives can offer as its specialty. Most now agree that this is the area where the Maldives can grow and find room for opportunity.

“Now we must concentrate on getting more value-added products in the system,” says Ahmed Saleem, Director of Crown Company, which now runs two of its resorts while Hilton Hotels manages its third. He explains that it is critical to broaden the base and mix of visitors through the development of new markets as well as new tourism products.

It is accepted that the country should continue to have three, four and five-star facilities. But “the sector is evolving from a medium-top charter destination to a scheduled destination,” says Mohamed Ali, Chairman of Sultans of the Seas, which owns Reethi Rah Resort, a three-star facility located (and under development) in the Male’ Atoll area. “Charters will die out as resorts get smarter and better their products,” he predicts.

Resorts like Ali’s are often redesigned at regular intervals, becoming more upscale each time. “The idea is to provide better service with the same product,” says Ali. His own, now the only underdeveloped island in the Male’ Atoll area, will soon see an investment of between 40 and 50 million dollars, and will be developed jointly with Kerzner International, to be operated and managed by them. “This is going to be the top product in the Maldives and, probably, the region,” Ali says. “We are going to revolutionize the market.”

Ali explains that although he was able to raise financing from three different Islamic banks, he decided to join with an international operator for its experience. “We did not want to make a mistake," he says. "When you put a brand name in the project, returns are much higher."

Opening to international business
International brands (those with a high-end presence so far include Hilton, Four Seasons, Banyan Tree, Six Senses and Kerzner International, among others) have primarily entered the market with management contracts, subleases or partial ownership and are seeing returns as high as 30 percent on their investments. This phenomenon has placed substantial control of tourist-sector businesses in the hands of foreigners: 22 percent are foreign-owned or with foreign partnership, and 48.3 percent are foreign-run.

Michael Luible, General Manager of Kanuhura Resort, managed and partly owned by Kerzner International, explains that the islands are the company’s “door to development in Asia.” Carsten Schieck, General Manager of the Hilton Maldives Resort and Spa Rangali Island, agrees, adding that Hilton has not been associated with resort hotels before, but aims to expand in the area. “This is our premium property,” he says, “our benchmark as far as quality is concerned.”

While the Four Seasons is looking for a second resort to run, many recognized international brands are now busy shopping for their first; Ritz, Sheraton, Marriott and Meridian are just a few. “Everybody wants to come, and they offer deals that should be very attractive for local owners,” says Armando Kraenzlin, General Manager of the Four Seasons Resort Maldives at Kuda Huraa. But until the government’s projected expansion of opportunities goes ahead, the only way for them to do so is by subleasing or obtaining management contracts from local operators.

Domestic businesses still feel reluctant to sell off to foreigners, while equally many are doing too well on their own to open up to other companies. “It takes time for local owners to accept the expertise of foreigners in running what they perceive as their business,” Kraenzlin says. “They see it as selling out, but it isn't at all. You make more money with an international company managing your product.”

M.W. Deen, Managing Director of Orchid Holdings, a pioneer in the tourism industry who was involved in bringing the Four Seasons to the Maldives, says domestic operators have passed the stage of running resorts. “We should let international brands run the properties. You are giving up the housekeeping, but you still own them.”

Raising domestic standards
International brands have put the Maldives on the map. "They have raised the standards for the nation’s resorts,” Deen says. Perhaps most importantly, they are now importing the management and development skills that are necessary to the industry. “We bring in all the sophistication, the fine tuning of service – basically the software,” says Luible of Kanuhura Resort.

Training programs are reforming the sector, both in terms of in-house programs and staff training abroad. Minister of Tourism Hassan Sobir agrees, noting that the Tourism Act stipulates that investors must hire at least 50 percent local workers to staff each resort, but are exceeding the requirement. “The Hilton, for example, has over 60 percent Maldivian staff,” he says.

Schieck says training Maldivian staff so that they can rise in the company is part of Hilton’s responsibility. “We are setting the trends and the standards to train local Maldivians to become managers.” He adds that the company aims to increase the proportion of Maldivian staff to 75 percent by the end of 2002. “We are aware of our obligations,” he says. “We have a responsibility towards not only the country, but the owning company as well.”

The Four Seasons Resort Maldives at Kuda Huraa runs an innovative apprenticeship that has trained 23 Maldivians so far, after a search that took senior hotel managers to communities in the remotest parts of the archipelago. “We create awareness in the community, and we undertake hundreds of one-on-one interviews to identify the future trainees,” explains General Manager Armando Kraenzlin.

When the program is completed, the trainees can decide whether they would like to remain at the resort or use the skills they have gained over the year to make their mark with another company. “You are welcome to apply at the Four Season three months after completion, but you are also free to go.” He says this is one way his company can give something back to the Maldives.

Gaining style and substance
The imposition of international standards on the Maldivian market is setting the bar high for domestic companies who want to compete with foreign brands. “The beauty of our islands is such that we have a unique product,” says Shabeer Ahmed of Sunland Hotels, a local company with two resorts which cater to the high-end niche market. “So if properly combined with other services and marketed well, we can compete with the high-end properties of the world.”

His brother Hussain Hilmy explains that there exists a peculiarly Maldivian concept of a resort, where architecture blends with nature and facilities are excellent. “We are going back to the original concept of harmony with nature, of developing a property while keeping its character intact. You end up with a high-end property against traditional thinking.”

He notes that although they have been able to follow the high-end trend it is difficult to market such a different product, explaining that companies like Sunland face intense competition from other international resorts. "The Maldives must market itself as a destination with strong brand identity,” Hilmy says. “What we need is software. What makes you top-end, really, is the service.”

Attracting US customers
The Maldives attracts visitors from all over the world: European countries contribute 79 percent of the total, followed by Asia, Oceania, and the Americas. Meanwhile, Italy and Germany still constitutes the country’s premier markets, with a 25.1 percent and 14.3 percent respectively. Though the total contribution of the Asian countries may be less than Europe’s, Asia is believed to be a growing opportunity.

The holy grail for the Maldivian industry, however, is the ability to appeal to US visitors. Qasim Ibrahim, owner of Villa Hotels (the largest resort owner and operator in the Maldives) has been a pioneer in opening the Chinese and Korean markets, and plans to address the US market next. He admits it is difficult to market to Americans, but strongly believes that “if we create awareness, if we create demand ... it is a very doable market.”

Shabeer of Sunland Travel agrees, adding that there is strong potential to link the Maldives with other Asian destinations popular with Americans. “The Maldives has good air connections with Dubai, Malaysia and Singapore, so I am trying to get Americans to combine the Maldives with those destinations,” he says. “We are getting organized to tap into certain segments of the US market, especially the high end.” Another factor that may help is Emirates’ announcement of a new regular flight from New York to Dubai – a move Maldivians see as likely to bring more Americans to the islands.

Kraezlin says that in August the Four Seasons resort hit a record high in terms of American visitors arriving directly from the US. “We believe that the US market can develop,” he says, “and we have started to see that.” With hundreds of US visitors now arriving every month, the prospects for such an expansion seem good. With its sights set on worldwide recognition, the market seems to be both aiming high, and learning to achieve its goal.