Description
This project thesis will highlight about the growth of guesthouse ( budgeted hotels) in Maldives and factors contributing for the growth and its effect on local community development
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GROWTH OF GUEST HOUSE BUSINESS IN MALDIVES
BACHELOR THESIS FOR OBTAINING THE DEGREE
BACHERLOR OF MAMANGEMENT STUDIES
(2015-2016)
UNIVERSITY OF MUMBAI
PROJECT GUIDE: PROFESSOR RAHUL MUKHARJEE
SUBMITTED BY:
IBRAHIM JALEEL
MUMBAI, 04
th
DECEMBER 2015
CHIKITSAK SAMUHA’S
S.S & L.S PATKAR COLLEGE OF ARTS & SCIENCE
AND
V.P VARDE COLLLEGE OF COMMERCE & ECONOMICS
S.V ROAD. GOREGAOM (WEST), MUMBAI- 400062
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CHIKITSAK SAMUHA’S
S.S & L.S PATKAR COLLEGE OF ARTS & SCIENCE
AND
V.P VARDE COLLLEGE OF COMMERCE & ECONOMICS
S.V ROAD. GOREGAOM (WEST), MUMBAI- 400062
CERTIFICATE
This is to certify that Mr.Ibrahim Jaleel of bachelor of Management Studies has successfully
completed the project on Growth of Guest house business in Maldives under the guidance of
Professor Rahul Mukherjee as part of fulfilling the degree course during the year 2015-2016.
Course Coordinator Vice Principal
Prof. Swathi Takkar Dr. Mala khakar
Project guide/ Internal Examiner External Examiner
Prof. Rahul Mukerjee
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DECLARATION
I hereby affirm that this Bachelor?s Thesis represents my own written work and that I have used
no sources and aids other than those indicated. All passages quoted from publications or
paraphrased from these sources are properly cited and attributed.
The thesis was not submitted in the same or in a substantially similar version, not even partially,
to another examination board and was not published elsewhere.
Date Signature
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Acknowledgments
First I would like to thank my government and ICCR for giving me the opportunity to study at
Mumbai University. Their love and support enabled me to travel to India and to get an
opportunity to study managements studies and learning about new cultures.
Next, I would like to thank my parents for their endless patience, love and support in every
situation of my life. My heartfelt thanks go to the coordinator and all the respected faculties
who support me in my project and advised me but who realized me that I should not stop
believing in myself.
This thesis would not have been completed without the help of all the respondents who filled out
my questionnaire, I am very thankful for their help. My thanks are outstanding for Professor
Rahul Mukherjee who has been a supportive supervisor and I am more than grateful for all his
advises.
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Executive Summary
Tourism plays an important and often central role form any local economies, particularly in
developing countries like the republic of Maldives. Often there Is a price pay: in one concept of
tourism and uncontrolled tourism developments can have a very negative impact towards local
community. This this because tourism cannot play a direct role in the development of local,
communities due to the fact that archipelago arrangement of this island nation becomes an
obstacle. This creates and make further in the in equalities and the distribution of resources
among all the levels of the society in Maldives. As a result there will not be any sustainable
development of this industry in regards of the local communities.
Concurrently the responsibility of the tourism developments in Maldives lies more and more
with central authorities , despite of the effective local government authority (LGA), as
governance structures become more centralized in certain areas like tourism sector, despite of the
a decentralized system in effective. Many policies that have an effect on sustainable tourism
developments such as tourism zones in Maldives ,environmental impact assessments ,
regulations licensing, leasing, and economic incentives are often in the hands of central
authorities. In other words local council roles towards guest house business in not yet proceed.
Local authorities are also privileged partners in the development of sustainable guest house
tourism concept in local islands or the development of island tourism. When they legitimately
represent the interest of their citizens, local authorities will show that they can provide effective
leadership in sustainable guesthouse business.
Ensuring the tourism follows a path of sustainability and requires a clear and straight forward
leadership from local councils and authorities and efficient mechanism that involves all levels of
the stakeholders- most importantly the local citizens the of the communities. There should be
process and mechanism and cooperate approach to identify communities goals for guesthouse
business for their economic development in relations with the government manifestos.
The purpose of this thesis is, to identify the growth the guest house business and its potential
market segment for local and island tourism, second if destination management organization
should target budgeted tourists as well regarding island tourism under the concsept of budgeted
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travel. Today?s research focuses on establishing an official definition of guesthouse tourism and
budget tourist tourists, as the impact on local life lifestyle due to its growth.
Furthermore, Maldives slowly recognize the benefits of guest house of business and research is
conducted regarding tourist arrivals, marketing strategies this paper will highlight the key
findings of the study regarding the travel profile of tourists, the importance of guest house and its
effect on local environment on both economy and employment. The respondents? likeliness to
participate in guesthouse tourism activities are due to to the low-price offered from the guest
houses in comparison with the tourist hotels and resorts. To achieve the aim of this study, the
author conducted an online survey where a sample of 30 respondents from customer side
provided data for an analysis and 30 guesthouses were also given questionnaires
The findings are compared to previous studies and to the general literature. The main results of
the study demonstrate the high interest of the respondents in guest house business and budgeted
travels during their holiday as well as the strong willingness of the respondents in participating in
guest house tourism activities.
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GROWTH OF GUEST HOUSE BUSINESS IN MALDIVES
Photo courtesy: UNDP Maldives
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Table of contents
Declaration ................................................................................................................................................... 3
Aknowledgement….…………................................................................................................................... ..4
Executive Summary…………................................................................................................................... ..5
Table of Contents.......................................................................................................................................... 8
List of Tables ................................................................................................................................................. 12
List of Figures ............................................................................................................................................... 13
List of Abbreviations ................................................................................................................................. 14
Chapter 1 Introduction....................................................................................................................... 15
1.1 Background of the Study............................................................................................ 15
1.2 Problem Statement......................................................................................................... 17
1.3 The Aim of the Study ........................................................................................................18
1.4 Objectives of the Research Study.............................................................................19
1.5 Outcomes of the Study ....................................................................................................20
1.6 Research Design……..… ...................................................................................................21
1.7 Use of Terminology…... ...................................................................................................21
1.8 Chapter Outline………… ...................................................................................................22
Chapter2 Literature review .......................................................................................................... 23
2.1 The Study Context…………………...................................................................................23
2.2 The Industry Environment……....................................................................................24
2.3 Small and medium Enterprises……...........................................................................26
2.4 Three layers of guesthouse Business ……..............................................................26
2.4.1 Category One: First layer of success: Sector entry and start-up........... 27
2.4.2 Category Two: Second layer of success: Survival to year three........... 27
2.2.3 Category Three: Third layer of success: Long-term sustainability ….. 29
2.5 Factors important to sustainable competitive advantage............................30
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2.5.1 Market access........................................................................................................ 32
2.5.2 Economic and social factors………............................................................... 32
2.5.3 Growth and competitiveness............................................................................ 33
2.5.4 Industry Clusters................................................................................................ 34
2.5.5 Management of risk factors.............................................................................. 36
2.6 Maldives overview............................................................................................................37
2.6.1 Geography.............................................................................................................. 37
2.6.2 Population and demographics ……….............................................................. 38
2.6.3 Economy................................................................................................................. 38
2.6.4 Tourism in the Maldives.................................................................................... 43
2.6.5 Analysis of the importance of tourism in Maldives................................ 44
2.6.6 Tourism facts and figures.................................................................................. 45
2.6.7 Challenges of tourism in the Maldives.......................................................... 45
2.7 Impacts of Tourism...........................................................................................................48
2.8 Island Tourism Environment.......................................................................................50
2.9 Island Tourism Communities.......................... ..........................................................51
2.10 Island Tourism Economics............................................................................................52
2.11 Introduction of Guesthouse in Local Islands…....................................................53
2.11.1 History of Guesthouse Business...................................................................... 54
2.11.2 Challenges & opportunities of the tourism sector for the Islands....... 55
2.11.3 Opportunities of Guesthouse tourism in the Maldives………….………... 55
2.12 Economic Importance of Guesthouse and Small medium enterprises...56
.
2.13 Economic Importance Small medium enterprises…..........................................58
2.14 Determinants of tourism demand………………........................................................60
2.15 Supply, Distribution & demand for growth of guesthouse business…...61
2.16 Theoretical Perspectives……………………………………….........................................62
2.16.1 The „three layers of success? and Porter?s models....................................... 63
2.16.2 The triple bottom line approach ………………………………………………...... 65
2.16.3 The role of tourism in communities …………………………….….…….…….... 66
2.16.3 Conclusions from the theoretical overview ……………………………….….. 68
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Chapter 3 Research Methodology................................................................................................. 70
3.1 Introduction……………….…………....................................................................................70
3.2 The Research Apporach…………....................................................................................70
3.3 Research Design……............................................................................................................71
3.4 Limitation of this Study ……............................................................................................72
3.5 Sampling and Area of the study ( Maafushi Island)…………………………….....73
3.6 Data Collection Method…………......................................................................................76
3.6.1 Primary Data Collections..………………………………….………….………..…..... 76
3.6.2 Secondary Data Collections ...……………………………………….………….…... 77
3.7 Data Verification……...........................................................................................................77
Chapter 4 Data Analysis and Interpretation................................................................................ 78
4.1 Finding of the study and Anaylsis of survey results …......................................78
4.2 Summary of the survey results……............................................................................101
4.3 Conclusion…..........................................................................................................................102
Chapter 5 Futher Recommendation.............................................................................................. .104
Chapter 6 Appendices...............................................................................................................................109
Chapter 7 References and Bibilography..........................................................................................114
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List of Table and Graphs
Table 1: Economic data?s of the Maldives. ………………………………………………...…79
Table 2: Frequency of the visit…………………………………….……………………….…...80
Table 3: Average size of the members ………………..…………………………………..….…81
Table 4: Purpose of the visit to Maafushi island …………………………………………...…...82
Table 5: Tourists purpose of the holiday in Maafushi island.…………………………….….….83
Table 6: Season of the year to visit Maafushi island …………..….…………………….…..…..84
Table 7: Average spending per person during the holiday in Maafushi island……….……..…..85
Table 8: Break down on services which was spend from money…………....………..…….…...86
Table 9: Most appealing activities and facilities found in Maafushi island ………...…….……87
Table 10: Activity or Facility which would like to see in future…………...………………...….88
Table 11: Form of marketing which influenced the visitor……………………………….….….89
Table 12: Value for Money Perception about Maafushi …………………..……………...….….90
Table 13: Type of tourist facility operating in Maafushi island..…………………...…..….……91
Table 14: The services offered by the service operator …..……..…..………………..…….…..92
Table 15: Number of years in the business……………………………………...……..….……..93
Table 16: Occupency rate during the financial year 2013 - 2014…………....………..….……...94
Table 17: Average charge on per person during their vacation…………………..……..….……95
Table 18: No of rooms and its correspondents bed capacity…….…..……......………..….…….96
Table 19: No of available rooms………………………………….…………………..……....….97
Table 20: Comparison of receipts that of expenses of the gueshouses ………………..…..…….98
Table 21: Type and the budget for the marketing………………..……………………...…....….99
Table 22: Type and the budget for the marketing………………..………………….……....….100
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List of figures
Figure 1: Industry boundaries and the fuve forcesof Industry competition……………………….…..25
Figure 2 : Basic strategic management process……………………………………………………………………..30
Figure 3 : Advantage offered to members by he clusters……………………………….……………………..35
Figure 4: Comparison of Expatriates and local Employement by Industry in March 2006 …...21
Figure 5: Calculating Economic Impact of tourism……………………………………………56
Figure 6: Economic Effects of Tourism; Direct, Indirect…………………….……………..…………..……..57
Figure 7: Industry context,Supply,demand and competition…………………………………..……….……..57
Figure 8: Supply, distribution and demand: key market segments ………………………..…………….…61
Figure 10: Three layers of success ………………………………………………………………………....……….….…64
Figure 11: Areas that success factors emanate from, or are located in …….………….....………..……64
Figure 12: Triple Bottom line Method ……………………………………….……………………..…………………..65
Figure 8: Relationship of guesthouse and its stakeholder………….…………………………….………….…..67
Figure 9: Four alternative research Approach .…………………………………………………………………….…71
Figure 10: Types of data collection methods………………..………………………………………………………. 76
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List of Abbreviations
B&B Bed and breakfast
CPI Consumer price Index
GDP Gross Domestic Product
IFC International Finance Cooperation
IMF International monetary Fund
MMA Maldives monetary Authority
LGA Local Government Authority
PPP Purchasing Power parity
MV Maldives
R&D Research and development
UNWTO United Nations world Tourism
Organization
SME Small medium Enterprise
WTTC World Travel and tourism Council
MoT Ministry of Tourism
MMPRC Maldives Marketing and Public Relations
Corporations
SME Small medium Enterprises
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CHAPTER1 INTRODUCTION
1.1 Background of the study
Tourism in the Maldives took off in the early 1970s when an Italian tour organizer came across
Maldives while looking for new destinations in untouched tropical places. The first group of 22
Italian tourists arrived on a chartered flight of Air Ceylon. By 1972, two islands had been
developed as resorts with a capacity of 280 beds. That year, a total of 1,000 tourists visited
Maldives. Hulhule? Airport was the gateway. Resort islands were developed in close proximity.
By the late 1970s, with Europe's interest increasing, international tourism had become an
important source of income for Maldives.
Throughout the history of Maldives tourism, development has been driven by the private sector.
Industry pioneers made the best of the minimal infrastructure. Originally packaged together with
culture-oriented Sri Lanka, Maldives soon established itself as a destination in its own right. The
market changed from specialized segments, especially divers, to the broader scope of beach
holidays. Maldives became synonymous with luxurious sun, sea and sand holidays.
The Maldives has always been, and continues to be, a high-end sun and sand destination. The
GFC in 2008 hit the entire industry hard with significant declines in all market segments. In
2010, tourist arrivals to Maldives improved considerably by increasing 20% over the previous
year. The contribution of tourism to the country?s GDP remained at an average of 31% in the
past five-year period (2005-2010).
The bulk of tourist arrivals traditionally have originated from Europe, but due to several factors,
including the GFC, that market is shrinking. Asian and Pacific markets, particularly China, have
been filling the gaps in demand. In 2012, Chinese travelers to the Maldives accounted for almost
25% of the total visitors20. The segmentation shift presents a unique opportunity for new
product development and economic growth in the Maldives.
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The bulk of tourist arrivals traditionally have originated from Europe, but due to several factors,
including the GFC, that market is shrinking. Asian and Pacific markets, particularly China, have
been filling the gaps in demand. In 2012, Chinese travelers to the Maldives accounted for almost
25% of the total visitors 20%. The segmentation shift presents a unique opportunity for new
product development and economic growth in the Maldives.
Guesthouses on an inhabited island are only permitted on land designated for residential use.
City hotels are typically on designated public land. Due to the strong historic emphasis on resorts
in the Maldives, the secondary accommodation market has suffered and lacks a clear direction.
Where oblivious markets exist, especially around transport hubs, a quality controlled but
otherwise relatively free marketplace should be encouraged in the development of guesthouses
and small hotels. In other places, where no obvious international tourist markets exists, numbers
of guesthouses should be restricted to the level necessary for the business and the domestic
tourism market.
Local communities have had limited engagement in the tourism sector compared to other
Countries and island nations. This has mostly occurred by design with the bulk of tourism
activities taking place on uninhabited islands. Two new types of organizations have emerged that
offer a pathway for communities and SMEs to better integrate into the tourism industry:
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1.2 Statement of the Problem
Since the establishment of tourism industry in Maldives in 1972 there was only one concept of
tourism based on one island, one resort hotel. But after 40 years of the service, new concepts
have emerged to this industry and one of this is guest house or island tourism. Unfortunately
there is lot of debate of this concept and its growth and there is no proper model and benefit
realized from the government and the private sector about the importance of this business and its
benefits to local people.
The study is concerned with the problem of the long-term growth and success, sustainability in
the guesthouse business in Maldives due to the introduction of island tourism ( local tourism) in
relation to budgeted travels, operating environments and finding the areas growth in which this
concept of tourism can be developed.
Ministry of Tourism of Maldives (MoT) and Maldives Marketing and public relations
Corporation (MMPRC_ has spent much effort researching visitor trends, both at a national level
and provincial level. This research effort includes visitor spending per person per day. Tourism
in local Islands analyses tourism trends in the province for different tourism regions. “In order to
plan and market effectively for tourism, readily available information on the volume of visitors
to an area and their economic impact on the local economy is essential” (Southern Tourist Board,
2001: 4).
According to a publication by the Southern Tourism Board (2001: 4), estimating the economic
impact of tourism at a local level is often impeded by an absence of meaningful data. Generally,
tourism data is collected at a national level. Local surveys may vary in “quality, reliability and
comparability” (Southern Tourist Board, 2001: 4).
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1.3 The Aim of the study
The study is designed to serve two aims. First, the goal of this study is to evaluate the degree of
importance of tourism to the archipelago and to assess the situation of the Maldives, when facing
the consequences of global warming. In other words, the first goal is to evaluate how and if the
Maldives can cope with the increasing demand of tourism and the growth the guest house
business.. Moreover it evaluates the question as to why the archipelago continues to pursue
tourism when facing the associated consequences.
In exploring answers to this question, this research will secondly focus on finding successful and
sustainable solutions, to continue tourism development while maintaining the natural and social
environment for the Maldives.
The other aims this study is to:
Estimate the economic growth of local tourism to the island of Maafushi
Investigate factors that may contribute to the economic growth impact of tourism in the Male
Atoll ( Maafushi is one of the local island in Male Atoll).
Make recommendations to increase the economic growth impact of guesthouse tourism in the
Atoll
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1.4 Objectives of the Research study
The main objective of this research is to study and understand the diversification of tourism
industry in Maldives, its benefit towards the local community through local tourism and
guesthouse business.
Apart from this, other relevant objectives include;
1. Identify the benefit from tourism industry to be distributed whole nation on a broader
concept.
2. To open doors for the participations of local community to tourism sector.
3. Introduction of Island tourism and local tourism in Maldives and to increase gross profit
on domestic tourism and its direct effects on households.
4. Ti identifies the impact on social and infrastructural changes in island life due to local
and guest house business.
5. To involve the local communities in tourism investments in order to produce competition
among them.
6. To identify the ways to develop human resources capability and training opportunities.
7. The effect on employment through this nature of business in local community and fight
against unemployment for youths.
8. To understand the ways in which heritage sites of the country can be protected and
maintain such places and introduce heritage and know the benefit of cultural in the
tourism sector.
9. Linking the industries like agriculture, fisheries and small medium enterprise to tourism
sector and understand the benefit as a whole.
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1.5 Outcomes of the study
The aim of this study is to identify and estimate the growth contribution of local tourism though
guesthouse business to the island and the Atoll respectively. To date there has been no such
estimation of guest house business at a local level and the only few information available is at a
broader National level
Since it is of primary importance to all residents in the district of Underberg that tourism grows
(which in turn contributes to economic growth), it is also important to gain insight into the
factors that may influence the economic contribution of tourism to the atoll. The study will
elaborate more on these factors and explain how they influence the economic growth impact of
tourism.
The main outcomes of this study will include:
• Estimations of the direct economic growth impact of tourism in the Island and the atoll
• Estimations of the indirect impact of tourism in the island
• Developing a greater understanding of the factors that influence the growth of tourism in the
island. If understood, these factors can be manipulated to increase the economic impact.
• The development of a set of recommendations that may increase the growth of Guesthouse
busiess in the region.
Although outside the scope of this study, it is important to understand that local tourism may
have many other impacts that cannot be quantified by economics alone (Keyser, 2009: 27).
Taking the above into account, it is hoped that the information is used to make decisions that will
ultimately lead to an increase in tourism to benefit the island of Maafushi, the communities and
the people who are involved in the tourism business while ensuring a sustainable environment to
which visitors can return
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1.6 Research design
The study required broad approach ad was therefore conducted with a view of constructive and
informative approached. A case study was the methodology of choice, as it allowed examination
of research subjects, the five guest houses within the context of their operating environments. An
easy and understandable approach was used for data collection through both quantitative and
qualitative data collection methods. The location of the study that is K. Maafushi, a developing
island with guest house business was selected by taking the objectives of the study in relation
with the statement of the problem. All the data was collected from the fie guest houses with their
various in both service operation and nature were selected for sampling.
1.7 Use of terminology
The terminologies used in this study includes relative terms and words recognized in the context
of tourism industry such as B &B, Accommodation, Occupancy etc. the purpose of it is to
provide the best terms used in the industry and flexible reading to the readers.
Guest house is word is used to refer small private and affordable accommodations mostly, but in
some parts of the word its referred as boutiques, lodges, B&Bs. This this to define the
differences and categories it compare to other types of tourism accommodations.
In Maldives, guest house are referred mostly the hotels reside in local islands whereas mostly in
city we find hotels. But there are few guest houses which provide day use for visitors.
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1.8 Chapter outline
Chapter one offers and introduction of the study and a brief overview about the importance of
guesthouse business as tourism industry of Maldives in relation with its economic and social
developments. By highlighting the statement of the problem with the objectives of research study
a a research design were conducted. The research methodology and use of terminology are also
included in the chapter. Chapter two proceed with the literature view of guesthouse business,
tourism industry and the theoretical framework of the research study. Chapter three will outlines
the research design used in the study. Chapter four present the results of the study with graphical
analysis and its inference and chapter five provides the interpretation of the results. Chapter six
ends with the conclusion and recommendation the study.
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CHAPTER 2 LITERAURE REVIEW
This chapter will explore the literature, which is necessary to understand the topic. The first
chapter of the review of the literature will cover the history of the Maldives, followed by a
research on tourism and its importance to the archipelago. Moreover, global warming in general
and how climate change has an impact on the Maldives tourism industry will be discussed.
However, there is a big conflict, as ecotourism cannot exist without the environment, and the
environment cannot ignore the vigorous effects the industry is having on it. The observation of
social, environmental and economic criteria is therefore essential to strike a balance. Last but not
least, global warming continues to be a main issue of political debate; therefore the situation and
the role of the Maldivian government will be analyzed.
2.1 The study context
The study at hand examines the „success? of small and medium enterprises at three different
points in the business lifecycle, namely at entry, in the first three years and in the long-term. The
selected businesses are examined within the „context? of their operating environments. The
reviewed literature, selected theory, results of the study and the interpretation of findings are
discussed from the perspective of these three interlocked environments. It is, therefore, important
at the outset to address the manner in which the „operating environments? and their complexity
are dealt with in the study. The three overarching environments that are considered in the study
are the „macro?, „industry? and „micro operating environments? Bateman & Snell, 1999; Pearce
& Robinson, 2005).
.
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2.2 The Industry environment
There are various views of what constitutes an „industry?. Porter?s (1980) wider and somewhat
more flexible definition of industry was adopted for this study. Porter (1980:5) defines industry
as “… the group of firms producing products that are close substitutes for each other”. Porter
(1980) recognises the „problems? posed by defining the term industry, but does not see it as an
obstacle, as he separates the definition of a firm?s industry, or industries from the business the
firm wants to be in. Others support the view that the exact boundaries of industries are less
important than understanding the firm resources, strengths and weaknesses, or its product
markets (Slater & Olson, 2002; Teece, Pisano & Shuen, 2001).
Porter (1980) emphasises that industry boundaries are drawn in such a manner that the five
competitive forces, as described in his Five Forces Model (Porter, 1980
are clearly identified
and included. He sees industry boundaries as judgmental and temporary, and argues that changes
in the industry structure may change these boundaries. In the case of a fragmented and diverse
industry, such as the tourism industry, with its unique and complex product market structure,
industry boundaries may be drawn differently for each specific level of analysis performed, e.g.
the industry sub-sector under consideration, such as for the current research, the accommodation
sub-sector (Bennett et al., 2005; Middleton & Clarke, 2001; Porter, 1980).
In determining industry boundaries from the perspective of exploring and explaining firm
success, the aim remains to determine and understand the dynamics in the industry and the
sources of competitive threat to the firm. Figure 2.1 depicts the industry boundaries (as a broken
line), together with the five major forces of industry competition. In terms of the guest house
sub-sector, the industry sub-sector boundaries are drawn with their competitors, substitutes and
new entrants in mind, as the analysis is carried out on that level.
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Figure1: Industry boundaries and the five forces of industry competition
Source: Porter (1980: 187).
The current study was conducted within the tourism industry, a complex industry. The
compound nature of the tourism product, comprising various components and industries, and the
complex supply chain, makes it difficult to draw boundaries for the industry (Gunn, 2002).
Adding to the complexity is the fact that the industries involved in the supply of the tourism
product components (e.g. accommodation, food and beverage and transport), do not supply
exclusively to tourism markets (Mak, 2004; Sinclair & Stabler 1997). There has, therefore, been
much debate as to whether the tourism industry should even be regarded as an industry because
of its complexity and some argue that it should much rather be regarded as system (Gunn, 2002;
Bennett et al., 2005). However the traditional view of an industry does not exclude the view of
an industry as a system. For the purposes of this study, Porter?s (1980) view of the industry was
therefore deemed suitable.
The tourism industry is not only fragmented in nature, but is also an industry with strong global
supply and demand structures and, therefore, subject to all the threats that characterize global
trading environments.
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2.3 Small and medium enterprise
SMEs around the world play a key role in employment creation, as well as poverty alleviation
(IFC, 2004; Levine, 2005). SMEs are, however, vulnerable to failure and it is therefore important
to understand the factors critical to their success and failure (Bannock, 2005; IFC, 1997; IFC,
2004; World Bank, 1998). Small business comprises a wide range of business structures that
vary across countries, cultures, industries and sub-sectors of industries, as well as by
organizational objectives. Various definitions will be discussed in the next sections.
2.4 Three layers of Guesthouse business success
Bodies, such as the World Bank and IFC, initiate, direct, finance and support much of the
changes and growth in SME sectors in countries of both the developed and developing world.
Involvement of the World Bank and IFC and the growing importance, but continuing
vulnerability of SMEs, has given rise to much research. The research reviewed for this study is
grouped into three distinct categories, termed the „three layers of success? that are aligned to the
phases of evolvement of the sector and are also reflective of the growing understanding of the
problems the sector faces in terms of business start-up, survival, success and sustainability.
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2.4.1 Category One: First layer of success: Sector entry and start-up
The main focus of initial strategies and initiatives aimed at developing and growing the SME
sector around the world, was on removing the perceived main obstacles to growth of the sector
through lowering, or removing barriers to entry of the sector (first layer of success).
The „first layer of success and indicates that the focus in this layer is on elements, or factors
located both in the macro and micro operating environments of the firm. Literature discussed in
this section addresses the main obstacles to survival and growth that were identified through
projects in various countries, including MV. These factors include a supportive regulatory
framework, access to finance, access to markets and acquisition of business skills.
World Bank (World Bank Group, 2000) research, and the strategies following that, resulted over
the past ten years in increased support and initiatives, around the world, to improve the macro
trading environment for SMEs by providing a more supportive regulatory framework, better
access to funding and lower cost of SME finance.
However, research into the funding practices of SMEs, or the avenues accessible to them
revealed that most SMEs financed themselves, or through loans from families and friends.
2.4.2 Category Two: Second layer of success: Survival to year three
There are various studies that have been undertaken in individual countries in an attempt to
find ways in which small enterprises could operate more successfully in that particular country in
order to improve survival during the first three to five years (Second layer of success). The
„second layer of success Unlike the „first layer of success?, that addresses both the macro and
internal environments of the firm, the second layer mainly addresses the internal, or micro
environment of the firm. Success factors identified in this layer relate to operational issues,
marketing, management acumen, training and product quality. Literature in this regard
is reviewed in this section. The second layer further focuses on the period most likely for
SMEs to fail, namely the first three years. Bannock (2005:94) points out that there are
28
several danger periods in the life of a small business and argues that “…the first three years, for
that reason, are certainly the most crucial, since that is when failure rates are highest”. Studies
relating to the second layer of success deal with different functional aspects of business
operations, product, marketing, or management (i.e. the focus is on operational effectiveness).
Here the focus is on what occurs in small businesses in a particular industry, time and place and
what could make it more operationally effective in order to compete more successfully. These
studies tend to be narrow and focused and provide little insight into the interrelation between key
factors contributing to success, or failure. Neither do they provide insight into factors that come
into play within a particular region, or industry, or under conditions of stability (as in protected
local conditions), or turbulence (such as under rapid changing and hostile global market and
industry conditions), or turbulence from any other sources (such as with tsunamis, hurricanes,
political instability, terrorism, disease). There are various examples of studies investigating
specific aspects of the small business. Bannock (2005) provides an overview of the most
common factors among small businesses contributing to success, or failure, as identified across
industries, and from various countries, which sheds some light on problem areas by region.
However, interrelation of factors is not addressed. Tourism SMEs are not addressed by Bannock
(2005). In SA the DTI (2007) identified various common problems in the quest to improve SME
success rates, but here, too, the interrelation of factors is not addressed.
Bieger, Laesser and Liebrich (2004) argue that tourism SME owners and managers are often
unable to attend courses and manage the business. According to them, e-learning therefore The
sm all size of SMEs, the management style, the choices that their managers make and their
informal nature often exclude them from the necessary resources that contribute to business
success, such as leadership, mentorship, education, training, funding, network membership, and
critical information about their operating environments (Bannock, 2005). This makes them
vulnerable to continued failure and these broader issues form the basis of the third layer of
success.
29
2.4.3 Category Three: Third layer of success: Long-term sustainability
The „third layer of success? is portrayed in Figure 2.2 (refer section 2.1.4; label 15). Unlike the
other two layers, this layer addresses elements, or factors in the macro, industry and micro
operating environments. Instead of only dealing with one or more individual factors, the
emphasis here is on the interrelation between factors, or groups of factors, as indicated by Porter
(1990) and how they facilitate success in conjunction with one another. Research questions in the
„third layer of success? address issues related to ongoing SME failure, or limited success, based
on various premises. The first premise holds that SME success, or failure, sustainability and
growth are not simple and easy to understand, predict, or remedy (Ayyagari et al., 2005). A
second premise related to the first, is that merely having an operational business entity
(acceptable product, management skills, initial finance and favorable regulatory environment), is
not the only ingredient required for success (Ayyagari et al., 2005; Porter, 1996; 2000). A third
premise is directly related to the turbulent global and hostile operating conditions to which SMEs
are exposed in the 21st century. Studies in this regard indicate that, even if all other factors were
perfectly in place, these turbulent and hostile conditions present complications for business
survival and success (CEML, 2002 Expert Group on Future Skills Needs, 2005; Porter; 1996;
2000; Storey, 2003).
In the „third layer of success? the proverbial net is therefore cast wider to search for answers and
solutions in areas either neglected, or not considered previously. Such areas include
environmental and institutional quality, innovation, degree of competitiveness, a healthy SME
sector, better and more effective access to markets, supportive enterprise networks, better access
to advanced technology, easy exit from the sector, scale economies and management.
30
2.5 Factors important to sustainable competitive advantage
According to Porter (Furman et al., 2001; Porter & Stern, 2001), innovation drives continuous
sustainable competitive advantage, all of which are fostered by a high quality environment (high
institutional quality, continued investment and upgrading). Porter (1996) indicates the
importance of a strategic management approach to achieving sustainable competitive advantage.
Bateman and Snell (1999: 131) distinguish six core components within the basic strategic
management process “… (1) establishment of mission, vision, goals; (2) analysis of external
opportunities and threats; (3) analysis of internal strengths and weaknesses; (4) SWOT analysis
and strategy formulations; (5) strategy implementation; and (6) strategic control …”.
They point out that businesses use a variety of terms, relating to strategic management, but the
tasks remain similar, and further argue that it is an ongoing and essential process, in which
involvement of all managers in the organisation is critical to success. In contrast, Bannock
(2005) postulates that the strategic management approach is not appropriate for SMEs, and that
they do not have the resources or capacity to follow such an approach to management, but he
also acknowledges that survival without it is difficult. Figure 2.3 depicts the elements of a basic
strategic management process
Figure 2 Basic strategic management process
Source: Based on various literature sources on strategic management
31
Closely linked to strategic management, is the concept of „organizational leadership? or
„visionary leadership?. Porter (1990; 1996) regards this as a key element in business success, as
leadership, according to him, determines the strategic choices made and how resources are used
and competitive activities carried out, to achieve a sustainable competitive advantage. Hough et
al. (2003) support this view, and see it as essential in global operating conditions. Adler (in
Hough et al., 2003: 219) distinguishes between leaders and managers: “… leaders help to shape
the organization?s vision, the meaning within which others work and live. Managers by contrast,
act completely within a vision …”; and of visionary leadership she says “… involves the ability
to inspire and influence the thinking, attitudes, and behaviour of they do not accept constraints
and know that they can change the nature of outcomes.” He argues that when leaders identify
something, they have the courage to act and his findings indicate that it is often the leadership
that determines which firms located in favourable conditions will succeed and which will fail.
Porter (2001) further argues that advanced technology is one of the keys to sustainable
competitive advantage. Others support the view that technology can facilitate faster and more
efficient delivery of services and makes it possible for small businesses to become more
competitive. Kirchoff (in Bannock, 2005) indicates that technology-based SMEs grew, faster and
performed better than those with a lower level of technology. In SA, Elliot and Boshoff (2005)
found that, under specific conditions, the internet can make a significant difference for SMEs in
their marketing. Conditions reported by Elliot and Boshoff (2005) include a knowledgeable
owner supportive of the project, a product champion and a network of contacts and alliances,
because of limited resources Porter (1990; 1996) further indicates that, without continuous, and
improving, productivity, competitive advantage is sustained with difficulty, and, he argues,
technology, superior and advanced input factors are central to superior productivity. Hough et al.
(2003) support this view, particularly for global operating environments, and they indicate that
developing regions spend less than two percent of budgets on research and development
(compared to ten percent in developed regions) that facilitate increased productivity.
32
2.5.1 Market access
The IFC (2004) indicates that competitiveness and good product quality alone will not ensure
SME success and Porter (1996) adds operational effectiveness to this. Porter (1996) emphasises a
strong competitive positioning, which directly relates to the markets the firm will access. Poor
market access was identified as a factor that contributed to poor SME performance and failure
(IFC, 2004). Much has been put in place to encourage governments and large business globally
and locally in SA to offer opportunities to small businesses, as for example through procurement
opportunities on large foreign investment projects, joint ventures and strategic alliances, and sub-
contracting opportunities. According to the IFC (2004), the small businesses often do not have
the knowledge and skills to capitalize on such opportunities and should be helped to do so
independently, or in strategic partnerships with other businesses. The DTI (2007) indicates that
in SA, initiatives to increase international market access in the tourism industry include
government sponsored advertising and brand building outside of the country and cost effective
participation in local and international trade shows. Little indication was found of initiatives in
the tourism industry to stimulate domestic market growth, which according to Porter (1990;
2000; 2001) vital to in initial growth and success of an industry cluster.
2.5.2 Economic and social factors
The economy and how a nation organizes itself in this regard may also impact the sustainable
success of small business operating in that economy. Porter (1990) with his Diamond Model
emphasizes the role of the economic factors in business success. Du Toit (2007) supports this
view and suggests that even when most of the factors considered so far (quality product,
favorable regulatory environment, high institution quality, innovation, technology, growth,
market access and a strategic management approach) are in place, the economy?s nature,
structure, health and stability, may prevent sustainable success. Du Toit (2007) argues that one
possible cause for business failure lies in the instruments used to regulate economic growth,
spending, saving, credit and balance of payment deficits. Her work demonstrates how a demand-
33
side approach within an economy creates a „poverty trap?, and she argues that failure can still be
eminent in an environment favorable to business start-up, successful skills transfer and market
access. Du Toit (2007) suggests a new paradigm, where „supply-side issues? rather than
„demand-side issues? are addressed. She advocates an approach that includes policy intervention
and investment in human capital and socio economic investment, i.e. investment in the operating
environments and particularly in socio-cultural institutions and communities. By improving
community quality, skills are raised, crime levels reduced, labor quality improved, values
improved, and so the ability of firms to succeed. Du Toit?s (2007) research thus supports Porter?s
(1990) findings with regard to the role of the quality of factor conditions and factors in
facilitating successful industries and firms.
2.5.3 Growth and competitiveness
According to Bannock (2005), the small size of SMEs can constrain their competitiveness,
because size may impact economies of scale and the ability of small firms to afford specialists.
Bannock (2005) reasons that they have to settle for generalists able to perform various functions.
He further indicates that small firms face more obstacles than do medium firms, and medium
firms more than large firms. Levine (2005) confirms the importance of firm size and growth of
SMEs, particularly in relation to funding. The deck is stacked, so to speak, against small firms
and, if they choose not to grow, or grow inadequately, it is imperative that solutions be found for
the problems and risks they face that stem from their size and the resultant inherent constraints.
Bannock (2005:47) acknowledges that smallness offers certain advantages “… small scale
confers certain advantages, notably initiative, flexibility, low co-ordination costs and the ability
to offer specialised and personal service, as we have seen, but the constraints are formidable”.
This is also illustrated by Burlingham (2005). Porter (1990) reasons that strategies, such as
enterprise networks and cluster support, may provide the support that businesses require to
succeed, particularly in fragmented (2005). Porter (1990) reasons that strategies, such as
enterprise networks and cluster support, may provide the support that businesses require to
succeed, particularly in fragmented industries that comprise primarily medium and small
enterprises. This is demonstrated and supported by Hiwasaki (2006).
34
2.5.4 Industry clusters
According to Porter (1980; 1990) industry networks play a key role in the firm?s sustainable
successful operation. Three types of networks are of particular interest to this study, namely
industry clusters, strategic groups and enterprise networks. Porter (1990; 2005) indicates that
„industry clusters? play a key role in facilitating healthy vibrant industries and at the same time
evolve from healthy vibrant industries, in an ongoing process. Porter (2000:254) defines a
cluster as “a geographically proximate group of process. Porter (2000:254) defines a cluster as “a
geographically proximate group of interconnected companies and associated institutions in a
particular field, linked by interconnected companies and associated institutions in a particular
field, linked by commonalities and complementarities”. Cluster boundaries are not static and
may vary, as the cluster evolves (Porter, 2000). Clusters may initially form spontaneously.
However, once depending on the perspective from which they are regarded, and may change
over time discovered, a cluster may be actively expanded and utilised to achieve firm and
industry goals (Porter, 1990; Porter, 2000).
Porter (1990; 2000) further indicates that clusters may be limited to one geographical location or
include any number of countries, and they may further vary in size, depth and sophistication, in
the types of membership businesses, as well as in formality. Unlike industry strategic groups
(Porter, 1980), clusters are not directly involved with strategic, or tactical decisions. Some
clusters function more effectively in some nations than in others as a result of culture, values and
norms in the nation (Porter, 1990). Porter (2000:259) argues that with clusters “the value as a
whole is greater than the sum of its parts”, and as such offers businesses that are located within
the cluster, a distinct competitive advantage.
Gilbert and Kusar (2006) support the findings on the flow of information through clusters and
the benefits to members. In global operating environments clusters provide the opportunity for
support in areas that benefit cluster members collectively (Porter, 2000), such as lobbying
government and industry and facilitating complementarities.
35
Porter (2000) further indicates that clusters play a critical role in stimulating competitive
advantage through increasing productivity, stimulating innovation and encouraging new business
formation (Porter, 2000). These benefits are critical to the long-term success and sustainability of
the firm and vibrancy of the industry. Figure 2.4 depicts the dynamic between cluster members
that facilitates productivity, innovation and new business formation, that, in turn, leads to
expansion of the cluster. The more the cluster evolves and strengthens, the greater the potential
benefits for members.
Figure : Advantages offered to members by clusters
Based on Porter (2000: Chapter 13).
36
2.5.5 Management of risk factors
Management of risk factors pose a risk to the survival of small businesses due to their size,
business structure and management practices (Bannock, 2005, Thompson & Strickland, 2003).
Firms are also at greater risk, as Porter (1990, 1996) indicates, when the macro and industry
environments are not adequately supportive to the firms in the environment, or firms are not
members of networks, or clusters. Thompson and Strickland (2003: 294) highlight why single
business firms such as SMEs are at risk in volatile conditions: “If the market becomes saturated,
competitively unattractive, or is eroded by the appearance of new technologies, or products, or
fast shifting buyer preferences, then a company?s prospects can quickly dim. It is not unusual for
changing customer needs, technological innovation, or new substitute products, to wipe out a
single-business firm.” Various studies (e.g. Bullen, 2005; Falkena, 2001; Hoyt & Hvenegaard,
2002; Ruggia, 2004) report on the impact of risk factors on firms, and to which tourism SMEs
are particularly vulnerable.
37
2.6 Maldives overview
2.6.1 Geography
Maldives, officially the Republic of Maldives and also referred to as the Maldive Islands, is an
island nation in the Indian Ocean consisting of a double chain of twenty-six atolls, orientated
north-south, that lie between Minicoy Island and the Chagos
Archipelago.
Maldives , officially the Republic of Maldives and also referred to
as the Maldive Islands, is an island nation in the Indian Ocean
consisting of a double chain of twenty-six atolls, orientated north-
south, that lie between Minicoy Island (the southernmost part of
Lakshadweep, India) and the Chagos Archipelago. The chains stand
in the Laccadive Sea, about 700 kilometres (430 mi) south-west
of Sri Lanka and 400 kilometres (250 mi) south-west of India.
Maldives consists of 1,192 coral islands grouped in a double chain
of 26 atolls, along the north-south direction, spread over roughly
90,000 square kilometres (35,000 sq mi), making this one of the
world's most dispersed countries. It lies between latitudes 1°S and
8°N, and longitudes 72° and 74°E. The atolls are composed of live
coral reefs and sand bars, situated atop a submarine ridge 960 kilometres (600 mi) long that rises
abruptly from the depths of the Indian Ocean and runs north to south. Only near the southern end
of this natural coral barricade do two open passages permit safe ship navigation from one side of
the Indian Ocean to the other through the territorial waters of Maldives. For administrative
purposes the Maldivian government organized these atolls into twenty one administrative
divisions
41
Maldives is the lowest country in the world, with a maximum natural ground level of only 2.4
metres (7 ft 10 in), with the average being only 1.5 metres (4 ft 11 in) above sea level, although
in areas where construction exists, this has been increased to several metres. However, more than
80 per cent of the country's land is composed of coral islands that rise less than one metre above
sea level.
2.6.2 Population and demographics
The population of the Maldives increased from 180,000 in 1985 to 330,000 in 2013. The
population growth rate between 1977 and 2005 appears to have fluctuated between 3.4 – 1.80
percent, the latter being the most recently reported value in 2005 census (MPHRE, 2005). The
high rate of growth of population is due to a reduction in the crude death rate that has resulted
from improvements in primary health care (IMR reduced from 128 – 20 per 1000 during the
period, 1978-2005). Thus, the Maldives has a relatively young
2.6.3 Economy
The Maldives with a per capita Gross Domestic Product (GDP) of US$ 4900 in 2014 (PPP
11300), economic life in the Maldives is now dominated by income from the tourism, hotel and
transport sectors. Fisheries have taken a much more backseat from what it was in the 1960 -
1980.Rapid economic growth is traceable to the quick growth of tourism which has increased
living standards yet hastened an increased cost of living. The impressive annual growth in the
economy since the latter part of the 70?s due largely to the increased receipts from tourism and
fishing as well as government investment in infrastructure, has been met with lethargy in the
decades since the 1990s. But the new Century has brought about a much faster growth as is
evidenced by the GDP?s expansion in 2014 to double what it was in 2000 (from 1 to 2.3 billion
(World Bank 2014)).
42
Table 1: Economic data’s of the Maldives.
Currency Rufiyaa
Trade organistations WTO,SATFA
GDP USD 1.3944 billon (
GDP per capital USD 8800 (2011) est
GDP growth 7.4% (2011 est
Population below poverty 4% (2008
Main industries Tourism , fishing, construction
Gross external Debt 943 million
Public debt 316 million
Revenue 758 million
Expensess 362 million
43
2.6.4 Tourism in the Maldives
The motivation for this study is to evaluate an answer to the question, if the Republic of
Maldives has the capability to handle the growing tourism demand, whilst facing the difficulties
of global warming. Working out the importance of tourism to the Maldives, will be the first step
to find the answer to the question.
One of the fastest growing sectors of the economy is the hospitality leisure and tourism industry,
which also has become the principal operation and resource of economic wealth. People travel
because of different reasons, such as: travel for visiting friends and relatives, pleasure,
entertainment, business, recreation education etc. Destinations compete to satisfy those different
needs by emphasizing the experience they have to offer to finally attract those customers to their
distinctive travel destination (Ritchie & Crouch, 2003, p19).
Tourism can be beneficial to a destination, in terms of employment, gross outputs and the input
tourism generates to the world economy. However, it also exerts impacts that are not favorable at
all, such as the require it makes on the global resources, directly or indirectly (Cater & Lowman,
1994, p.89). In order to minimize these negative events, the rate of growth of tourism
infrastructure needs to be controlled and the associated development must be carried out on a
sustainable basis (Zulfa & Carlsen, 2011, p.216).
44
2.6.5 Analysis of the importance of tourism in Maldives
Sun, exceptional and unspoiled white sand beaches, blue lagoons and colorful coral reefs. These
idyllic images pop up in one?s mind immediately, when thinking about islands tourism.
Tourism in the Maldives was first established by an Italian tourist operator named George
Corbin, who was supported by three adventurous Maldivians, Hussain Afeef, Ahmed Naseem
and Mohamed Umar Maniku (Zulfa & Carlsen, 2011, p.216). Today, out of those three
entrepreneurs, two own the two largest tourism organizations in the Maldives called Crown
Company and Universal Enterprises (Zulfa & Carlsen, 2011, p.216). Moreover, in 1982 Mr.
Maniku and Mr. Afeef established and participated in the Executive of the Maldives Association
of Tourism Industry, abbreviated MATI. „Under these two pioneers, the tourism industry in the
Maldives has transformed itself to an exemplary status, demonstrating the innovative ability of
Maldivians and the spirit of Maldivian enterprise? (Reimer cited from Zulfa & Carlsen, 2011,
p.216).
Due to the decisive growth in infrastructure and the considerable amount of new building
constructions, comprising mainly five star resorts, the archipelagos shifted expeditiously into a
high-class deluxe tourism destination. In the early stages of tourism, government leased out only
islands for the purpose of tourism, nearby the only international airport, located on the North
Malé Atoll on Hulhulé Island, away from the local inhabited islands (Zulfa & Carlsen, 2011,
p.217).
Later, under the Second Tourism Master Plan, the government released further atolls for the use
of tourism. New principles were agreed on under the Third Master Plan, where tourist
development was allowed to expand across the whole archipelago, implying new undertakings to
build domestic airports to interlink all atolls (MOTAC, 2012, p.10). Seaplanes and helicopters
are used to reach the atolls today, which is facilitating the journey to the different island resorts,
which also had well supported the development of tourism in the archipelago, as islands far off
have suddenly become within easy reach (Zulfa & Carlsen, 2011, p.217).
45
2.6.6 Tourism facts and figures
The Maldives has recorded a reduplicating in arrivals over the last 20 years (Carlsen, 2011).
Only very few tourism destinations in Asia are capable to show such a climb in arrivals.
Therefore it is clear that the Maldives had to rapidly adapt to those considerable changes under
certain conditions, the Maldives are liable to.
The economy is dependent on mainly two industries, the fishery and tourism, including the
„countries fiscal revenues, foreign exchange earnings and employment and growth? (Majeed,
2006). Each of these sectors faces a high and cosmopolitan competition.
According to the Tourism Yearbook 2012, produced and published by the Statistics & Research
Section of the Ministry of Tourism, Arts and Culture (MOTAC), the tourism arrivals have
increased significantly during the last decade.
2.6.7 Challenges of tourism in the Maldives
The Maldives is facing several challenges and obstacles that must be overcome in order to
maintain the country?s existence, by managing the necessary increasing tourism demand and at
the same time, attempting to fight global warming effects.
However, the situation is not simple. That is why several aspects need to be considered and
thoroughly thought through in order to be able to improve the circumstances.
The first concern, that needs to be addressed, is the labor situation and the educational
opportunities offered by the country. The possibilities for employment in the Maldives are
increasing; the local share of the jobs in the tourism and hospitality sector is proportionally
humble (Shakeela, 2007). Even though, the Maldivian government employment regulation states,
that resorts are obliged to engage at least fifty percent of residents, most of the managements are
not able to follow through with this, as not enough skilled local workforce is available (Shakeela,
2007). Therefore a high proportion of expatriate employees are hired to carry out these vacancies
(Shakeela, 2007). Due to these facts, it might become obvious, that expatriate employees govern
46
the best-paid occupational groups, such as managerial and other senior positions, whereas the
locals remain to fill up underpaid jobs, that require no, or only little qualifications.
Figure 4: Comparison of Expatriates and local Employement by Industry in March 2006
(Shakeela 2007)
As shown in figure 7, the Maldives demonstrates a large share of expatriate employment in
several industries (Shakeela, 2007). The need for the Maldives to educate local workforce is
becoming very important, since the demand for high-performance service is continually
increasing. Moreover, attractive payment must be offered to local skilled employees, which
should make up for the costs of inhabitants, who are staying away from their families (Shakeela,
2007). It is evident, that some action must be taken in this field, to improve the present situation,
by introducing various local education facilities as well as by providing better-paid jobs to the
local communities.
47
Second, the consequences of waste on the environment can lead to great losses. Tourism is
growing constantly and as a result, so is the waste and pollution generated by them. Waste
generated due to tourism activities, was investigated to be much more than a simple household,
in fact tourists produce about 16.5 kg of trash per week (Zulfa & Carlsen, 2011, p.219). The
small islands struggle to cope with a relentless stream of rubbish produced by three-quarters of a
million visitors (more than double of the domestic population), who are visiting the islands. The
solution found by the Maldives was to transform one of its islands, named Thilafushi into the so-
called Rubbish Island (Hall, 2012). This island was built about 20 years ago on regenerated coral
reefs, Hall described the mass as „clouds of pungent, toxic smoke rising from open fires, piles of
filth made up of plastic bottles, crisp packets and consumer detritus... it?s a far cry from the white
sands, crystal-clear waters and gently swaying palm trees that we associate with the Maldives,
the quintessential paradise island holiday destination set in the Indian Ocean.? Today, they
ultimately dispel the idea of a dumping island where they burned 330 tons of waste every day
because consequences can be seen already, such as environmental damage as plenty of lead,
asbestos, and other poisonous materials have been offloaded into the sea. „Little surprise then,
that tourists on the holiday of a lifetime prefer to sip a cocktail and look the other way? (Hall,
2012).
Today, according to Hall (2012) most of the cargo boats are transporting the rubble to India. A
solid waste management system must be carried out but also recycling and refuse avoidance are
very important issues for both, economic and ecological reasons. Another problem, which
occurred with regards to this increasing tourism industry, accordingly to Karthikheyan (2012) is
that „natural resource and environmental degradation associated with tourism activities are
sometimes serious problems in countries like Maldives that are top tourist destinations, the
management of natural resources to reverse this trend is thus one of the most difficult challenges
for governments at different levels.? As a result, the major consequences due to tourism are, the
stress on scarce natural resources, destruction to the marine ecosystem and waste and pollution
difficulties. Moreover Karthikheyan (2012) argues, that poorly controlled tourism development
and environmental aggravation represent a severe danger to tourism. In summery the most
endangered natural resources are according to Karthikheyan (2012), fresh water, land and marine
resources.
48
2.7 Impacts of Tourism
The economic impacts of tourism are mostly presented in a positive way. While this is widely
accepted, it is also true that even in cases where economies are positively influenced by tourism
they are often accompanied by negative effects. These may include economic, social and
environmental consequences.
On the economic front, negative effects are often borne by the local population living in the
tourism district. These effects include the following:
• An unstable source of income and employment: “Tourism has several negative externalities
attached to it: it is subject to seasonal fluctuations and high elasticities of demand and can
therefore be an unstable source of income and employment” (Cornelissen, 2005: 163).
• Increased property prices: “The changes in land-use patterns from an agricultural society to
the tourism industry introduce modified land-use patterns as tourism increases land prices as a
result of competition and thus encourages sales (Krause 2005: 32). This could lead to locals
finding it difficult to buy property as prices remain too high in relation to rural salaries
• Loss of non-tourism industries: The agricultural productivity of an area may be lost due to the
utilisation of land for tourism. As such, tourism could potentially displace other sectors of the
local economy (McAlister, 2011).
• Increased prices of goods: As result of tourism demand the prices of goods may be inflated to
the detriment of local residents and may contribute to inflation (Krause 2005: 32). In addition,
economies in which tourism plays a significant role are often quite vulnerable as revenues from
tourism activities may fluctuate as a result of factors such as seasonality, economic recession,
terrorism, extreme weather or the occurrence of natural disasters. Such fluctuations may pose
challenges to local businesses and may reduce overall efficiency in the utilisation of resources
and labour (Nedelea et al., 2008: 243).
A occasionally recognised fact is that when municipalities or private capital invest in
destinations for the purposes of developing tourism it presents an opportunity cost. The same
49
resources could have been injected into the development or expansion of other industries.
Therefore, what needs to be researched before investments are made are “the relative economic
benefits of investing in tourism as opposed to investing in another industry” (Krause, 2005: 30).
Earlier reference has been made to the negative social and environmental effects of tourism. If
not addressed, these can have serious consequences for the tourism destination. Keyser (2009:
351) maintains that tourism cannot exist without the environment. Yet, as an activity, tourism
has the capacity to destroy this foundation.
While it is possible to harness tourism to empower communities and to develop tourism products
that are environmentally sustainable these are difficult to achieve in practice (Cornelissen, 2005:
183). Social and physical impacts are more difficult to determine than economic impacts of
tourism The former often consists of intangibles or features that cannot be compared to another.
reference while the latter can be analysed numerically (Krause, 2005: 22). From a social
perspective it should be borne in mind that incomes generated through tourism activities are
seldom shared equally by the local population (CSD, 1999: 5). While systems like the Fair Trade
concept have been introduced to ensure a more equitable spread of benefits it has been found in a
study conducted by Krause (2005: 31) that even where attempts are consciously made to spread
income equitably the result is often still not satisfactory.
Keyser (2009: 353) lists several environmental impacts of tourism and tourism activities, which
include:
• The depletion of environmental resources
• Pollution of air, water or soil
• Physical damage to environmental resources
• Loss of biodiversity
• Loss of aesthetic qualities.
More recently, there has been a growing recognition of the economic value of the services that
ecosystems render. Any damage to such systems which affect such services invariably also
impact on the sustainability of the economy as a whole (Brummer, 2010).
50
2.8 Island Tourism Environment
The fragile state the Maldives is in is demonstrated by the severe impacts of climate change,
today. Natural resource loss is a predicament for the environmental condition but also for the
tourism, which is dependent on the preservation and condition of the biodiversity. To maintain
those unique places, there is a need for raising awareness, sensitivity and responsibility in the
behavior and attitude of individual tourists. While most visitors claim, that they are aware of the
impacts on the environment, resulting from tourism activities, most travelers intend to act as
green tourists. However, with their visits, they are „pushing against the carrying capacity and
hence the sustainability of regional environment? (Cater & Lowman, 1994, p.33). Carrying
capacity may be a good concept to monitor the impacts on the environment, due to tourism.
Nevertheless with the increasing demand it might become difficult keep up. Yet, these are the
roots of the conflict, as tourism is causing the loss of diversity but is dependent on the construct
it is systematically destroying. However, the evaluations of compliance to monitor the carrying
capacity of the islands are subject to judgment and determinations. These policies include, that
the total area of tourism development is no greater than 20% of the island land area (Cater &
Lowman, 1994, p.33). Moreover Zulfa et al. (2011) states, that 68% of the beach space must be
assigned to guest rooms; 2o% can be used for guest facilities, such as reception and restaurants,
whereas the final 12% could be utilized for open space between guest rooms. If the demands
were to increase, the limited resources available can only be used to a certain extent, which
would make the increasing request difficult to trade with.
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2.9 Island Tourism Communities
Islands suffer from a range of impacts due to tourism, as discussed in the previous chapters.
Indeed, in terms of island tourism communities, inhabitants did not only profit from the growing
tourism development, they also had to abandon a lot, in order to give way to tourism. Mainly,
they were forfeiting their control, when tourism tended to appear (Carlsen, 2011). The
government exerted a considerable political pressure on the local people, in most extreme cases;
this even leaded to exploitation and suppression of the local inhabitants (Carlsen, 2011). This is
already and must be revised to guarantee sustainable development.
As most of the tourism destinations, also the Maldives are struggling with guest relations and
tensions, whereby in this situation the geographical position must be strongly taken into account,
the difficulties this collision of different interests, where people are living closely together, are
extreme challenging. Differently to urban tourism destinations, where people can escape from
tourism by moving to the more suburban boroughs, the Maldives islands only have a narrow
capacity of living area.
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2.10 Island Tourism Economies
Carlsen (2011) is questioning, why islands, such as the Maldives, would encourage tourism,
knowing all the negative impacts tourism exposes to the community and the island. The question
is easy to answer; the Maldives is in a predicament, where they only have restricted possibilities
for growth. According to Tourism and Events Queensland (2013) „Tourism is one of the most
effective ways of redistributing wealth, by moving money into local economies from other parts
of the country and overseas. It brings income into a community that would otherwise not be
earned.?
However, some issues need to be observed when reflecting upon island tourism economies.
Referring to Carlsen (2011), the Maldives is highly reliable on external economies and
governments for income and resources. The islands are having restricted abilities to produce
goods and services and most of what they are selling, needs to be imported, meaning that most of
their incomes are flowing to other countries, from where they obtain their goods (Carlsen, 2011).
Hydroponics gardens are a major step forward to become more independent, however small
island often do not have the amount of space to build them.
Another problem is posed by external impacts, as islands like the Maldives are often subject to
market forces and trends, where only one event can affect the tourism arrivals, such as political
events, natural disasters and the following effects of these impacts (Carlsen, 2011). According to
the MOTAC (2012), tourism was significantly impacted by the tsunami in 2004, which
concluded in a strong reduction in arrivals in 2005.
Summarized, islands need to be understood from multiple perspectives such as from a social,
ecologic and economical angle. The objective is to balance the economic prosperity for the
residents? social cohesiveness for the islanders and visitors and the conservation of the
environment, which is the main reason and often the pull factor which encourages people to visit
(Carlsen, 2011). All of these factors need a good management where government comes into
play.
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2.11 Introduction of Guest houses in local Islands
The shift from luxury hotels to mid-market budget hotels in the last few years for delivering
quality service, establishing island tourism and opening for budgeted travel brought a new
concept to the sector while maintaining a loyal customer base and has opened ways for the
hospitality industry in Maldives. Due to this new opening of new concept from traditional one
island one hotel concept brought industry experts and government authorities and open
discussion doors for budget hotels to understand their “formula for success explores their scope
and feasibility, guest expectations, policy level frames and more in Maldives market.
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2.11.1 History of Guesthouse Business
In Maldives, prior to the development of the tourism guesthouses were state owned
establishments, operated by the government to host state guests. With the emergence of tourism
as an industry, the government constructed a Hotel in Male? and leased it to a private party for
operation. Subsequently, private entrepreneur also developed a hotel and operated until the late
1980?s.
The guesthouses and hotels are built on land allocated for housing under a special permit from
Male? Municipality or a part of the house is converted into a guesthouse. Initially, there were
rooms that were registered in the Ministry of Tourism and rented out to tourists, and the houses
where such rooms are available were also considered guesthouses. However, such practices have
been now ceased. The number of guesthouse and hotels rapidly increased in the late 1990s. This
is largely because as domestic air transfers are inoperative after dark, hotels and guest houses are
used by tourists who arrive by night flights, hence, an increasing number of beds in islands
further away from Male?, results in an increase in demand for beds in these establishments.
Further, as large foreign tour operators funded most of the resorts, the beds were sold in advance,
hence they were unavailable to some travellers although, the absolute number of beds in the
industry increased. And, the additional marketing and promotion campaigns of many new resorts
and travel agencies also escalated the demand for Maldives, contributing to price rises. These
were the major reason for a rapid increase in the number of hotels and guesthouses.
In summary, initially tourists were permitted to stay in inhabited islands, but as new laws
restricted tourists to board in inhabited islands, tourist accommodation were limited to resorts,
guesthouses and hotels in Male?. In Male, there were two hotels initially, but a few more were
added in the late 1990s, and the number of guesthouses increased rapidly. Capacity expansion in
Male? is positively related to the capacity expansion in distant islands and safari boats. This is
55
because Male? is a transit point for tourist proceeding to distant atolls who arrive at night and
guests who board on safari boats. In the late 1990s, the capacity in distant islands and safari
boats increased, while there was a supply shortage of resort beds close to Male?, hence at that
time hotels and guesthouses increased rapidly in response to the demand. However, even though
beds in guesthouses and hotels increased in numbers and physical qualities improved, the travel
package in general has not been enriched.
2.11.2 Challenges & opportunities of the tourism sector for the Islands
It is obvious that tourism activities cannot escape without taking harm. Tourism, under further
consideration, incorporates several benefits but also various disadvantages. On the one hand,
tourism in the Maldives delivers significant advantages to the economy as well as to the
individuals and on the other hand it is responsible for environmental pollution, an increase of
greenhouse gas emissions and debates of interest in dividing resources between inhabitants and
tourists, which will be further analyzed in this chapter (Karthikheyan, 2012, p.345).
2.11.3 Opportunities of Guesthouse tourism in the Maldives
Tourism is the strongest contributor to the countries revenue, and a great deal of the Maldives?s
economic rise was caused by the development of resorts and tourism (Karthikheyan, 2012,
p.345).
Increasing gueshouse tourism goes hand in hand with job opportunities, as one of the main
advantages of tourism is employment potentiality to the Maldivian population. With the
increasing visitors a fair supply of skilled labor will be assured for the long term.
A new generation is ready to take over Shakeela (2007) states that out of about 300,000 people,
living in the Maldives over 39% are under the age of 18. Moreover, looking at this high number
of young citizen, the tourism and hospitality sector can be renowned as one of the main
auspicious fields, to offer profitable job opportunities for the increasing young generation
(Shakeela, 2007). However, it is questionable if the necessary trained and educated employees
are on-hand and if the needed facilities to educate them are or will be available.
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2.12 Economic importance of Guesthouse and Small medium enterprises
Tourism is an important industry in the island of Maafushi. Growth in this industry and the
equitable spread of benefits will have an effect on the standard of living and the In conclusion,
this thesis has explored the practical steps of establishing a guesthouse in an underprivileged
community, which seems to be a promising way to advance community development,
empowerment of the residents, participation in the development process and cross-cultural
interaction. Tourism shall neither be underestimated in the cause of promoting sustainable
coexistence, as peace grows from mutual respect. level of investment in the region. “Economic
benefits and costs of tourism reach virtually everyone in the region in one way or another”
(Stynes, 1998: 1).
Figure 5: Calculating Economic impact of tourism
From an economic perspective tourism is an “activity that is defined by consumers at the point of
consumption” (Nedelea et al., 2008: 250). This means that any money spent for any reason by
tourists in a specific location will make a contribution to the economy of that specific location
(Nedelea et al., 2008: 250).
Tourist spending takes place across all sectors of the economy and is not only limited to those
parts of the economy with “identifiable tourism characteristics sectors such as transport, hotels
57
and recreation”. Spending may include purchases of groceries, fuel and other items not normally
seen as part of the “tourism economy” (Nedelea et al., 2008: 250). Clearly then the initial
expenditure by visitors can have significant additional effects throughout “the rest of the
economy, resulting in increased income and expenditure by a wide range of household groups
not necessarily directly connected with tourism” (Pao, 2005: 70). As a result, analysis of the
economic contribution of tourism becomes a complex task. The complexity has been subject to
considerable debate. “Resolving this debate requires reliable and rigorous information on the
precise nature of tourism spending and its impact on different sectors of the economy” (Nedelea
et al., 2008: 246).
Figure 6: Economic Effects of Tourism; Direct, Indirect
result of tourism, secondly from tourists paying taxes on goods and services bought while on
holiday, and lastly from specific taxes levelled at the tourism sector (CSD, 1999: 5). All three of
these sources of tax are evident in South Africa, with the last source presented as a tax on all
bed-nights utilised by tourists (Van den Berg, 2011).
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Often, some of the money generated by tourism is lost for the local economy. Typically, this
takes place through, for example, taxes, savings or paying for goods and services outside the
region where the tourist revenue was generated (Guidance Tourism, 1998). Some authors go as
far as to include salaries of executives that are not resident in the area of the local economy
(Crompton et al., 2006: 81).
Lastly, to understand the economic impact of tourism consideration must also be given to the ast
investments made by governments and private capital to develop tourism infrastructure and
destinations. These actions in themselves have a massive impact on economies in that they
require the procurement of goods, services and labour (Stynes, 1998: 3).
2.13 The economic importance of Small medium Enterprises
According to the IFC (2004) small businesses are central to poverty alleviation and economic
stability, with world population figures rising from six billion to eight billion, and with most of
the growth coming from poor countries in the developing world. Bridge, O?Neill and Cromie
(1998) indicate that SMEs play an important role in developed countries too, because of the
decline in employment opportunities in the large business sector.
As economies grow strong, the importance of the informal sector and micro enterprises
declines, but the importance of SMEs increases, with SME contribution to income and
employment increasing as countries grow richer (Ayyagari et al., 2005). The different
approaches to the SME sector and SME policy making are, however, underpinned by beliefs
about the sector. Some of these approaches and „beliefs? are discussed in the next section.
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2.14 Determinants of tourism demand
Middleton and Clarke (2001) argue that a few key factors underpin demand for tourism and that
these are the same for all countries. They indicate that demand patterns locally are unique to that
area, the overall demand is driven by a few drivers that are monitored by tourism managers the
world over.
Economic factors (income), in both the country of origin of the tourist and the destination, and
comparative prices, between place of origin and destination, drive travel volume. Another
determinant is the demographic profile and education of prospective tourists, where the higher
the social class and income, as well as education, the greater the volume and value of travel, but
also possibly the more demanding the travellers. The geographic profile of the destination is yet
another determinant, where factors such as scenic beauty, climate, eco, or adventure travel
opportunities could be the main attractions to a destination.
Socio-cultural attitudes to tourism play a role in shaping the way in which a potential traveller
will allocate time and money towards leisure activities and, as such, is an important facilitator of
travel. Government and regulatory aspects affect travellers indirectly as it affects the framework
within which travel products and services are offered. Although the regulations are generally
aimed to benefit one group, or another, e.g. employees, the disabled, the environment, health and
safety, the result is a financial burden on the product, or service provider and, therefore, in the
end, also the traveller. Media and communications, information and communication all play an
important role in making prospective travellers aware of tourism goods and services. It also
facilitates usage, as for example with the internet
Factors that influence demand and supply include demographic profile, lifestyle and economic
capability of the ever changing, increasingly sophisticated and demanding travellers. Where they
go and what they do is in turn affected by the destination profile and the ability of the industry to
60
offer affordable, desirable products and services. When and how they go and for how long all
depend on the economics of the destination and the place of origin, as well as the perceived
speed, convenience and cost of travel, accommodation and planned activities. Lastly the
individual?s economic ability and education, access to information and easy engagement (for
information, and purchase) with the industry, destination and products all influence volume and
demand. This section serves to illustrate the context in which the guest houses under
investigation operate and what factors may impact on their success and sustainability.
Figure 6: Industry context, supply, demand and competition
Source: Based on industry literature reviewed.
In summary, it may be concluded that tourism demand and supply are affected by a variety of
factors. Demand is, however, affected by another critical aspect of the tourism industry, namely
the impact of global events and disaster.
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2.15 Supply, Distribution and Demand for growth of guesthouse business
The complexity of the tourism product, the supply to the industry and the demand structures have
been discussed in the previous sections. The complexity of supply and demand and the
interrelation of suppliers of diverse goods and services to tourists have an impact on the
performance of tourism suppliers, such as guest houses, therefore, key aspects will be reviewed
briefly. Figure down below summarizes supply, distribution and demand of tourism goods such
as accommodation.
Figure 8: Supply, distribution and demand: key market segments
Source: Based on literature reviewed.
Demand for accommodation flows from four main target market segments and, mostly, supply
occurs through tourism intermediaries (Bennett, et al., 2005). Even when direct selling occurs,
guest houses, for example, rely on referrals from past guests and publicity association staff for
bookings. When reservations are made via the internet, the internet website acts as intermediary?
in that it has the „power? of attracting, or failing to attract prospective guests.
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2.16 Theoretical Perspectives
Porter (1990:1) poses the question “Why are firms based in a particular nation able to create and
sustain competitive advantage against the world?s best competitors in a particular field … why is
one nation so often the home for so many of an industry?s world leaders?”. Porter 1990) argues
that that a nation?s success is based on a small number of successful industries that it supports in
such a manner that the firms within that industry are able to operate successfully in the long-
term. Porter (1980; 1990) developed two models with which to examine the elements, locate in
the firm?s operating environments that facilitate success. He emphasizes that the mere presence
of the elements that facilitate success, will not result in success, but are dependent on the values
of the nation (refer section 2.4.4, Figure 2.12), that determine the quality of the leadership,
management and human resources and the actions they take (Porter, 1990).
In the Five Forces Model (refer section 2.4.3, Figures, 2.10 and 2.11), Porter (1980) addresses
industry competition and how it impacts firm success. The model outlines the elements, and
the dynamics between elements that facilitate, or restrain success. The Five Forces Model does,
however, not pay much attention to the macro, or micro operating environments. With the
Diamond Model (refer section 2.4.4, Figure 2.13), Porter (1990) addresses the structure,
conditions and dynamics of the macro and industry environments and their impact on firm
success. Porter (1990) argues that a nation with successful industries, and thus firms, uses its
natural and acquired resources to offer an environment that facilitates success, in an ongoing
process in which the environment is continually upgraded, to become more sophisticated and
advanced, through ongoing investment in it. Porter (1990) indicates that groups of interrelated
factors rather than individual factors facilitate success.
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The impact of globalization on firm success prompted some augmentations to the models to
indicate their validity and usage under such turbulent and hostile conditions (Porter, 1996; 2000;
Porter & Stern, 2001; Furman et al., 2001). Porter?s (1980; 1990; 1996; 2000) theoretical models
and augmentations (refer section 2.4.5) were selected as the theoretical framework for the study,
although the models are not directly linked to one another in their original form. For the purposes
of the study the models are linked in a number of ways. First, the models are linked to the three
layers of success identified in the literature review and then the Five Forces Model is
superimposed on the Diamond Model (refer section 2.4.4, Figure 2.14), to indicate that the firm
is seated in an industry, which in turn is located in the environment with its „conditions? that
facilitate success.
2.16.1 The „three layers of success? and Porter?s models
There is little indication from the literature, on SME success and failure, of the manner in which
the interrelationship between the SMEs and their operating environments contribute to success
and sustainability. Porter?s (1980; 1990) models provide a structure for the holistic approach to
exploration and assessment of factors contributing to success. Figure 2.8 depicts the areas
addressed by the SME literature reviewed for the study and how the Five Forces and Diamond
Models fit with the „three layers of success?.
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Figure 10: Three layers of success
Source: Based on literature reviewed for the study
Porter (1996) argues that interrelated elements located in each of the operating environments
create an environment (env.) conducive to success, but that visionary leaders allow firms, located
in such lucrative environments, to identify a sustainable competitive advantage and strategy that,
with operational effectiveness, ensure sustainable success in global turbulent conditions.
Figure 11: Areas that success factors emanate from, or are located in
Source: Based on literature reviewed.
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2.16.2 The triple bottom line approach
However, as mentioned above, sustainability is far more than just looking after the natural
environment, as it also deals with the social and economic influence of human activities. The
difficulty for the Maldives is to stimulate the increasing economic development by offering
economic and social advantages to the inhabitants, while maintaining the natural assets and
marine biodiversity. „The triple bottom line?, abbreviated 3BL, is an integrated concept of
sustainability, where all three components are distinguished.
Figure 7: Triple Bottom line Method
Originally, the idea of the 3BL was used as a business performance framework measure in
concern with company environmental reporting, where enterprises were communicating with
stakeholders about social equity, economic wealth and environmental affluence (Elkington, 1997
cited from Dowling & Page 2001, p.216).
John Elkington (1997), the founder of the „triple bottom line? argues, that enterprises should
arrange three various bottom lines, firstly the measure of the financial performance, secondly the
measure of social performance and thirdly the bottom line of the company?s planet account,
which accounts for how sustainable the company is. People, profit and planet are therefore the
three elements of the 3BL. The main goal was to compute the financial, environmental and social
performance of enterprises over a specific period of time (The Economist, 2009).
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Today, triple bottom line reporting is an agreed approach in tourism, to display that the
destination has procedures for a sustainable development. Dowling & Page (2001) state, that the
3BL management principle, in context with sustainable tourism, includes to position earnings
next to the consideration for the natural environment while respecting human beings, which leads
to the so called „win-win-win? situation. This approach aims to manage all resources to an extent
that social and economic demands are met while preserving the environment, the biodiversity
and the culture.
Therefore destinations need to take all three components into account such as a destination?s
economic, environmental and social performance.
2.16.3 The role of tourism in communities
Regional economies and poor communities may benefit through tourism projects aimed at
achieving this. Hiwasaki (2006) identifies four objectives of community-based projects. Such
projects aim to empower the communities and the businesses within it, and through this offer
social and economic development. In addition resources are developed and protected,
particularly with the aim of offering the visitor a quality experience in the community. Some
such projects are purposely planned and supported by government to uplift communities which
indicate that positive benefits are not always achieved, as in the case of the Cancun project.
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Figure 8: Relationship of guesthouse and its stakeholders
If local economic benefits are to be maximised and sustained, local enterprises and particularly
SMEs, should be strengthened, developed, their capacity built and their efforts integrated (Gunn,
2002; Mak, 2004). In this manner leakage is reduced (George 2007). Furthermore, Richards and
Hall (2000) point out that part of the success, of community-based projects, lies in clearly
defining the „community? and understanding its strengths and weaknesses, so that appropriate
strategies may be formed relating to informing, sustaining, marketing and networking the
community, the latter with the specific purpose of empowering the smaller enterprises and
making them more competitive. Richards and Hall (2000) also contend that policy frameworks
for community based projects fail to take the social, environmental and economic fabric of
communities into account. Hiwasaki?s (2006) research demonstrates the role of enterprise
networks in maximizing benefits to the community Successful community integration is closely
tied to successful networks in which communities are represented.
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2.16.4 Conclusions from the theoretical overview
In summary, Porter?s (1990) Diamond Model identifies four areas, or determinants that work
together in a mutually dependant manner to create the quality and type of national macro
environment and climate in which firms operate and compete. These determinants are factor and
demand conditions, related and supporting industries and firm strategy, structure and rivalry.
Five Forces Model deals with the structure and competitive forces of the industries seated within
the macro environment, with which the Diamond Model deals. The Five Forces Model identifies
five competitive forces operate and how they impact on industry dynamics. Various institutions,
present in the nation, namely socio-cultural, religious, family and educational institutions, are
instrumental in forming the values, norms and culture of the nation and they, in turn, help shape
the determinants, through the roles they play in driving attitudes, choice and behaviour.
present and supported by strong domestic markets and industries. The threat of imitation in the
technologically based and information driven global market place is also highlighted and the role
of sustainable competitive advantage in long-term success emphasized. The section further
indicates that the factors identified as critical to success in Porter?s (1980; 1990) models and
augmentations form a system of factors that are together, rather than individually, responsible for
sustainable success in the long-term.
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CHAPTER 3 RESEARCH METHODOLOGY
3.1 Introduction
Qualitative as well as quantitative analysis were employed in the preparation of this document.
Although, quantifiable indicators are available for many aspects, in some areas, such indicators
or data were unavailable hence; in such aspects a qualitative approach has been used.
In the preparation of this report, both primary and secondary data were used. The sources of
secondary data are mainly statistical publications of the Ministries of Tourism; Planning and
Development, and Education; the Maldives Monetary Authority and other papers published by
different government and international agencies. As many entrepreneurs and most key
stakeholders of the industry are easily accessible, personal interviews were conducted from
August to December 2000. Financial information in the proposals submitted for the development
of new resorts, and interviews with some developers and accountants of the sector, are the
sources of the variables used in the consisting of resort owners, managers and employees;
owners and operators of travel agencies and safari boat. Initially, papers covering key aspects of
the industry were presented to the workshop. After the presentations, discussions were held on
key issues related to tourism. Most discussions were held in small groups but group findings
were submitted to the plenary for further discussions.
After the discussions recommendations were drawn. The basis of the future policies and strategic
objectives outline in this report are those recommendations and suggestions.
The detailed description of the context of this study, combined with the evidence revealed in
Maafushi, supports the transferability of the research onto similar venues established or potential
backpacking and travel destinations. As the research focused on the local aspects of cooperation,
full transferability onto other local community see the potential of introducing tourism for
development, is assumed.
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This study has raised awareness of the potential that community-based guest house business
initiatives can have on sustainable socio-economic development, resident empowerment, and
coexistence aspects. This awareness should therefore not be neglected, as it indicates on a
promising tourism development strategy that can relatively easily be adapted by other islands.
3.2 Research Approach
The research questions posed above express a need for learning more about the dominant
concepts of enterprise modeling as a research domain. Hence, a quantitative approach research
approach based on survey questionnaire , document studies is taken from real world modeling
projects is argued for in order to meet the research objectives. However, a few alternative
research approaches will also be discussed.
? Four alternative approaches
From literature and discussions on various traditions and approaches to "good" research (Denzin
and Lincoln, 1994; Johannessen, 1992; Miles and Huberman, 1994; Strauss and Corbin, 1990;
Walsham, 1995), four potential research strategies have been considered for the research project:
1) Logical theoretical research
2) Quantitative, experimental research
3) Qualitative, observational research
4) Participatory action research
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Figure 9 : Four alternative research Approaches
Above, a brief discussion of how each strategy could have been applied is provided. The various
approaches can to some degree be combined in the same research project.
Outline of a research approach
The research strategy referred to as qualitative and observational in section covers a diversity of
approaches that resemble each other to a more or less degree. Without getting trapped in the
often heated debates on what characterizes right and wrong approaches to good research, a
few principles that worked as guidelines in the research project are discussed.
3.3 Research Design
The study required a direct approach and was therefore conducted with the context of research
using both constructionist and interpretive approached. The methodology of choice ,as it allowed
the examination off the research subjects, the guest houses , with the context of operating
environments, it future offered a flexible approach and utilization of a data collection strategy
that allowed the use of multiple data sources, as well as qualitative and quantitative dada
collection methods. The location for the study was selected by taking the objective of the study,
the methodology and specific guesthouse tourism industry factors into account.. The guesthouse
included in the study was selected using purposive sampling.
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3.4 Limitations of the Study
This research is been conducted only in the island of Maafushi which is one of the island which
operate guesthouse business in Maldives. But as of today most of the guesthouses are scattered
around the archipelago of Maldives. Many guesthouses are operating in various atolls and the
demand for this business in increasing.
Due to the fact that the survey is only made is one island the results when compare to other
island may differ as the numbers vary. The results of this research cannot be applied on a broader
level.
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3.5 Sampling and Area of the study ( Maafushi Island)
Maafushi Island/ North Male Atoll consisting of 2692 people as registered population and , but
the number has increased due to the establishment of guesthouse. The island is catering, and 352
foreigners. There has been a 17% increase in the residing population of the Island since the
previous Census which was done in 2006. The population of Maafushi represents 13.84% of the
total locality (Kaafu Atoll). This boom in population is mainly due to the guest house / hotel
industry growth witnessed during the last 5 years.
There are more than 30 guest houses in Maafushi as at June 2014, and it is the only local
inhabited island with most number of guest houses and guest beds in the country. The guest
houses provide the island with direct employment and many other indirect economic benefits to
almost every family in the island. Most guest houses are funded by direct investments by local
residents of the island. However, recently there have been investments by businessmen in Male'
and elsewhere.
Guest houses provide various excursions, including, snorkeling, fishing, water sports, and
picnic island excursions. There are also three dive centers in Maafushi.
There are more than 30 guest houses in Maafushi as at June 2014, and it is the only local
inhabited island with most number of guest houses and guest beds in the country. The guest
houses provide the island with direct employment and many other indirect economic benefits to
almost every family in the island. Most guest houses are funded by direct investments by local
residents of the island. However, recently there have been investments by businessmen in Male'
and elsewhere.
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Guest houses provide various excursions, including, snorkeling, fishing, water sports, and picnic
island excursions. There are also three dive centers in Maafushi.
The main objective of allowing guest houses in local islands by the government in 2009 is to
make economic growth more inclusive. As guest houses allow local residents to earn a living
directly while residing in the island, it also makes tourism receipts more inclusive, and income
distribution more even. Prior this policy, tourist establishments were allowed only on separate
uninhabited islands, and they are mostly called "Resorts". Most these resorts are owned and
operated by few businessmen in the country, and the rest are owned and operated by foreign
companies. Hence, the true benefits of tourism were not penetrated to the local citizens of the
country. This was evident by the most recent economic survey conducted by the Government,
which revealed that over a period of 5 years, the income distribution of the country has become
more uneven, although the country's GDP has expanded.
Come 2013, we have altogether 20 guest houses in Maafushi now, and 144 rooms. Which means
even if we didn?t consider the family rooms, that?d be 288 beds, and with 65% occupancy a
68,328 bed nights per year. Assuming average duration of stay is 4 days, that?s 17,000 guests per
year. With conservative estimates and past revenue records, it is estimated that about $9.7
million will enter the local Maafushi economy, and the guest houses will be paying the State as
bed tax and GST a total of $1.3 million (equivalent to MVR 20 million). The income per head
from guest houses alone is $4,425 per head in Maafushi. The total income per head of Maafushi
after adding incomes from other sectors will be probably the highest in the country. It is a perfect
example of making economic growth more inclusive, and a case study for Inclusive
Development. In fact, I did present a paper last year in Islamabad, during a South Asia Economic
Summit.
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With the 20 guest houses, more than 100 locals are being employed in various jobs, ranging from
speedboat crew, receptionists, waiters, room boys, accountants, and guest relations officers.
Majority of youth are actively engaged in economic activities, without having to spend their
times in coffee shops or elsewhere, as they did before. Women with children are able to earn at
least MVR 10,000 a month doing laundry services. Last month we spent from our hotel MVR
17,000 for laundry, which is done by a local family. With the recently installed more that 144 air
condition units, Maafushi is spending heavily on electricity. (There's still more to be done in
terms of using efficient energy sources).
Maafushi island
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3.6 Data collection Method
Data collection refers to the gathering of set of observations about variables and its is the starting
point of research methods. Basically there are two types of data which can be collected . that is
primary and secondary data..
Figure 10: Types of data collection methods
3.6.1 Primary Data collection
Primary data is collected through making a survey questionnaire to the to both the visitor who
have been visiting to Maafushi island and the guest house establishment. Visitor?s questioner has
been filled by the tourist who stayed in Maafushi and they were given their questionnaire at the
end of their vacation.
The other questionnaire was filled by the owners and managers of the guesthouses. All these
questionnaires were mailed back to me during the time frame.
DATA COLLECTION METHODS
PRIMARY DATA COLLECTION SECONDARY DATA COLLECTION
77
3.6.2 Secondary Data Collection
Secondary data?s collected from this research was mainly from the publications made by the
government authorities especially Ministry of tourism Maldives, Maldives association for travel
and tourism and other scholarly journals written by the scholars regarding the growth of small
medium enterprise and guesthouse in Maldives and its impact on economy of Maldives.
Mostly these secondary data was used to make some statistical results and to identify the areas of
concern for the growth of the guesthouse business in local islands.
3.7 Data verification
The verification of data is essential to ensure that data are accurate, complete and give a true
indication of the state or value of the factors under consideration. The problems associated with
the collection of fisheries data mean that the risks of collecting erroneous or inappropriate data.
For the verification of the data which I got from both the parties, that?s from the visitors and
guesthouse establishment, the questionnaire responses were double checked. Those
questionnaires which doubt was arisen were sent back again highlighting the area of doubt. It?s
very kind that the respondents again corrected the questionnaire mistake and re sent it to me
back. While entering the datas to the make graphical analysis, the data been twice checked and
then recorded.This is to ensure that there is no mistake while recording to the data which
ultimately might affect the result of this research.
78
CHAPTER 4 DATA ANALYSIS AND INTERPRETATION
4.1 Finding of the study and Analysis of survey results
In this area, primary data of both the visitors and guest house establishments are analyzed and its
relevant inference is expressed.
Survey 1, the visitor survey, was employed to gain more insight into tourism / visitor behavior
and the demand side of tourism. Survey 1 forms the basis for estimating expenditure by tourists.
Survey 2, the survey for accommodation establishments, was aimed at developing a better
understanding of the supply side of tourism in maafushi Island. The findings of Survey 1 and
Survey 2 will be discussed below under the same headings where relevant. However, the
findings will not follow the same chronology as the questions in Survey 1 and Survey 2 (which
was done for ease of understanding by those surveyed).
Finally, the results below represent different scenarios and do not attempt to provide absolute
answers. They are also dependent on the particular parameter under discussion. While some of
the differences in spending figures below may seem insignificant, their multiplication with
estimated visitor volumes may bring about meaningful differences.
79
Table 2: Frequency of the visit
Once
off
Twice per
annum
Three times
per annum
Four times per
annum
Five time per
year
15
8 4 2 1
Interpretation:
As per the graph, five categories are mentioned above and 15% of the visitors have choose once
per year, 8% of the visitors who have arrived twice the year, and the rest of the visitors has
visited Maafushi island 4, 2, and 1 % respectively throughout the year.
0
2
4
6
8
10
12
14
16
Once off Twice per
annum
Three times
per annum
Four times
per annum
Five time per
year
P
e
r
c
e
n
t
a
g
e
No. of times
Frequency of visit
80
Table 2: Average size of the members
Just me 2 3 4 5 or more( please insert no)
3
20 5 2 7
Interpretation:
Above shows 3% visitors arrived alone and 20% of visitors with 2 parties, mostly couples and
5% of the visitors with little family that is couples and their child. 4% of the visors were with 4
member?s family and there were big family of 7 % who were having more than 5 members in
their party.
0
5
10
15
20
25
Just me 2 3 4 5 or more(
please insert
no)
p
e
r
c
e
n
t
a
g
e
No of memebers
81
Table 3: Duration of the holiday stay of the visitor
1 day (day
Visitor)
2 days 3 days 4 days More than 4
Sate the no
2
5 3 5 15
Interpretation:
This category is extended from 1 day to more than 4 days regarding the number of days of the
holiday stay. 2% of the visitos stayed for 1 day which is for day visit and 5% of the visitors
stayed for 2 and 4 days. Around 3 % of the visitors stayed for maximum 3 days during their
vacation. The visitors who stayed for more than 4 days were around 15%
0
5
10
15
Sate the
no
1 day (day
Visitor)
2 days
3 days
4 days
More
than 4
2
5
3 5
15
Duration of the stay
Series1
82
Table 4: Purpose of the visit to Maafushi island
For business
For holiday To visit a friend On gov business Other
reason
5
85 6 12 3
Interpretation:
The pie chart above shows the purpose of the visit and it had been divided into 5 categories. Out
of that 77% visitors came for holiday to Maafushi island, 5% of them came to visit a friend, 11%
on government business, 4% for business purposes and 3% for other reasons.
4%
77%
5%
11%
3%
Purpose o the visit
For business
For holiday
To visit a friend
On gov business
Other reason
83
Table 5: Tourists purpose of the holiday in Maafushi island
Diving
40 Beach and Snorkeling 56 Visit friends 5
Water sports
35 Fishing trip 60 Relaxing 70
Island hopping
15 Sight seeing 25 Other- please specify
City tour
20 Photographing 30
Dolphin trips
56 Social events 2
Picnic trip
35 Arts and craft 6
Interpretation:
When asked about the purpose of the holiday from the visitors 40% of the visitors said to enjoy
Diving.35% for both watersports and picnic trips, 15% for island hoping, 20 % for Male city
tour,56% for dolphin tours trips and Beach & snorkeling 70% for relaxing mainly, 60% for
fishing trips, 25% for sightseeing, 30% for photographing in Maldives,2% for social events,6%
for arts and crafts and 5% for visiting friend respectively
31%
34%
14%
17%
1%
3%
Purpose of the holiday
Diving 40 Snorkeling
Water sports 35 Fishing trip
Island hopping 15 Sight seeing
City tour 20 Photographing
Dolphin trips 56 Social events
Picnic trip 14 Arts and craft
84
Table 6: Season of the year to visit Maafushi island
Nov- Jan Feb – April May- Jul Aug –Oct Anytime Unsure
70
30 25 45 15 20
Interpretation:
Around 70% of the tourist prefers to visit Maafushi during Nov- to jan which is mostly during
holiday times for them, especially Christmas vacation and new year. But during Feb to April this
number reduces to 30% and in May-june it furthered reduces to 25%. The in Aug – Oct it raised
to 45% . About 15% of the visitors said they are flexible to visit any time of the year and around
20% of the visitors are not sure about the dates.
70
30
25
45
15
20
0
10
20
30
40
50
60
70
80
Nov- Jan Feb – April May- Jul Aug –Oct Anytime Unsure
P
e
r
c
e
n
t
a
g
e
Season of the year
85
Table 7: Average spending per person during the holiday in Maafushi island
> 200 201 to 400
401 to 600 601 to 800 801 and above
35
25 45 30 20
Interpretation:
The average spending per person is shared with 5 categories out of that 29% visitors said they
spend 401 -600 per person per day, 23% said less than 200 per person 19% 601- 800 , 16% said
201- 400 and 13% of the visitor spent above 801 USD per person per day.
23%
16%
29%
19%
13%
Average speding per person per day
> 200 201 to 400 401 to 600 601 to 800 801 and above
86
Table 8: Break down on services which was spend from money
Accommodation 40 Eating out 50
Tourist booking
5 Souvenirs 15
Tour operators
15 Activities 45
Entrance fees
5 Beverages 10
Transport
20
Other
2
Interpretation:
The money spend on the service which was offered from the guesthouses are broke down into
various sub categories.
From these categories 50% was for eating and foods, 45% was for activities, 40% was for
accommodation, 20% was for traportation,15% was for both tour operators and souvenirs, 10%
was for drinks and beverages, 5% for entrance fees for islands and other places and 2% for other
activities respectively.
19%
3%
24%
7%
7%
2%
22%
5%
10%
1%
Breakdown of the services
Accommodation
Tourist booking
Eating out
Souvenirs
Tour operators
Entrance fees
Activities
Beverages
87
Table 9: Most appealing activities and facilities found in Maafushi island
Diving 45 Snorkeling 36
Water sports
35 Fishing trip 47
Island hopping
20 Sight seeing 15
City tour
12 Photographing 10
Interpretation:
When asked about which tourism activities which they like the most, 47% of the visitors
responded with saying fishing trips,45% Diving,36% Snorkeling trips 35% Water sports
Activities,20% said Island hoping trips to locals islands,15% for sightseeing,12% for city tours
and 10% said photographing respectively.
45
35
20
12
36
47
15
10
Activites most appealing for tourist
88
Table 10: Activity or Facility which would like to see in future
Sky diving 30
Bungee junping 45
Theme park 36
Interpretation:
Most of the visitor?s responded saying that they want to have bungee jumping. It was around
45% of the response, about 36% responses saying that they would like to see theme parks in
Maldives and local islands and 30% said they want to have adventurous activities like skydiving
in Maldives.
30
45
36
0
5
10
15
20
25
30
35
40
45
50
Sky diving Bungee junping Theme park
p
e
c
e
n
t
a
g
e
Actiivities
Activities which is not available now, but would like to see in
future
89
Table 11: Form of marketing which influenced the visitor
Internet 45 Website 56
Directories
12 Marketing agency 35
newspapers
15 Exhibitions 25
Magazine
30 Other 10
Interpretation:
When we look at the pie chart above, we can see that the marketing activities have been
distributed throughout with various forms of marketing. About 25% of the visitors response this
part with saying they were influenced to choose Maafushi over internet, 20% said through
guesthouse website and other travel websites, 15% said they were approached by marketing
agencies, 13% said through travel magazines, 11% were approached through travel exhibitions,
7% said by newspaper advertisements,5% was influenced by travel directories and 4% were
through other sources respectively.
20%
5%
7%
13%
25%
15%
11%
4%
Form of marketing material which influenced visitors
Internet
Directories
newspapers
Magazine
Website
Marketing
agency
Exhibitions
90
Table 12: Value for Money Perception about Maafushi island
Poor value for Money Good value for Money Excellent value for money
10
65 25
Interpretation:
Most of the guest choose Maafusi Island was a good destination and carry good value for money.
This response was around 65%.About 25% visitors said the island was excellent place for
valuing money and 10% said it was a poor destinations and carries poor or low value for money.
0
10
20
30
40
50
60
70
Poor value for
Money
Good value for
Money
Excellent value
for money
P
e
r
c
e
n
n
t
a
g
e
categories
Value perception
91
Analysis of primary data of Service Provider establishment
Table No 13 : Type of tourist facility operating in Maafushi island.
Guest house 76 Diving center 35 Water sports center 15
B&B
14 Transport provider 45 Coffee shop 45
Backpacker
13 Game fishing operator 20 Photo studio 25
Restaurant
25 Restaurant 20 Other 24
Interpretation:
When we look at this graph,we see that that both that transportation and coffee shop are having
the hight percentage which is 45% and the rest are having 35%, 25%,24%,20%,15% and 13%
respectively.
13
25
35
45
20 20
15
45
25
24
Tourist Establishment
92
Table no 14 : The services offered by the service operator
Water sports activity 45 City tours 5 Fishing trips 9
Diving sessions
14 Transfers 8 Picnic trips 6
Accomodation
17 Photography 1 Snorkeling 9
Foods
15 Goods 10 Other 6
Interpretation:
The service offered by the service providers are distributed evenly based on its relevant
percentage. The highest percentage occupied was accommodation which is 17% and then was
food 15. Goods carry 10% and water sports services carry 11% of it. The remaining are
snorkeling, picnic trips, fishing trips, diving sessions which carry below 10%.
Water sports
activity
11%
Diving sessions
3%
Accomodation
17%
Foods
15%
City tours
5%
Transfers
8%
Photography
1%
Goods
10%
Fishing trips
9%
Picnic trips
6%
Snorkeling
9%
Other
6%
Service oferred
93
Table No 15: Number of years in the business
> 3 Yrs. 3 to 5 Yrs.
5 to 7 Yrs. 7 to 9 Yrs. More than 9 Yrs.
75
45 25 12 10
Interpretation:
As shown from the graph the number of years in business personnel is comparatively less within
a span of 10 years of time. But in recent years as we can see new business have been established
and with 3 years of time there are around 75% of new guesthouses started. With a range of 3-5
years 45% of guesthouses are running and less than 7 years about 25% of the business are
running. This shows that the guesthouse business have huge demand in recent times.
> 3 Yrs. 3 to 5 Yrs. 5 to 7 Yrs. 7 to 9 Yrs. More than
9 Yrs.
75
45
25
12
10
P
e
r
c
e
n
t
a
g
e
Years range
Number of years in the services
94
Table no 16 : Occupancy rate during the financial year 2013 – 2014
Nov – Jan Feb- Apr May- Jul Aug- Oct
2013
82 45 32 67
2014
97 50 34 76
Interpretation:
According to this line graphy the highest occupancy was during Nov- jan time of the year.
Comparing to the previous year this percentage has increased from 82 % to 97 %. Then again the
next hike was in in Aug- Nov time of the year. During this time the occupancy has risen from
67% to 76 %. The rest of the year there is gradual increase in a decreasing rate.
0
20
40
60
80
100
120
Nov – Jan Feb- Apr May- Jul Aug- Oct
P
e
r
c
e
n
t
a
g
e
Month range
Occupency rate during the financial years 2013-2014
2013
2014
95
Table no 17 : Average charge on per person per during their vacation
> $200 $201 – 400 $401 - 600 $601 - 800 $ 800 or more
Percentage of
Business
78 67 56 45 25
Interpretation:
Average charge per person was highest below 200 dollar range and it was 78%. Next comes
range of 201 to 400 dollar range which is 67 %. 56% was charged average of 401 to 600 dollar
per person per day. The rest are 45% and 25% for 601 to 800 and 800 & more range
respectively.
0
10
20
30
40
50
60
70
80
> $200
$201 –
400
$401 - 600
$601 - 800
$ 800 or
more
P
e
r
c
h
e
n
t
a
g
e
o
f
b
u
s
i
n
e
s
s
Amount Range
Average charge per person
96
Table No18 : Number of rooms and its correspondents bed capacity
Average Rooms Average correspondent Beds
150
300
Interpretation:
The distribution of number of rooms in the guesthouses and its correspondent?s bed capacity was
made at a percentage og 67% and 33% respectively. This shows that there is a double of bed
capacity based on number of rooms.
Average Rooms
33%
Average
correspondent
Beds
67%
No of rooms and its correspondents bed capacity
97
Table No 19: Number of available rooms
Standard Deluxe Beach front Executive
45
30 70 25
Interpretation:
Categories of rooms available in the guesthouses are made on four categories. Among that the
highest was beachfront rooms which occupies 41%, then comes standard room which is 26%.
The remaining are deluxe rooms and Executive rooms which occupies 18% and 15%
respectively.
Standard
26%
Deluxe
18%
Beach front
41%
Executive
15%
Avalaible Categories of rooms
98
Table No 20: Comparison of receipts that of expenses of the guesthouses
Percentage of Receipts Percentage of Expenses
70
40
Interpretation:
When we see the graph above we can notice that the expenses are pretty low compare to the
receipts. The expenses are around 40% and the receipts are 70 %. This shows that there is huge
profit from this guesthouse business.
0
10
20
30
40
50
60
70
80
Percentage of Receipts Percentage of Expenses
P
e
r
c
e
n
t
a
g
e
a
m
o
u
n
t
financials
Comparision of reciepts that of expenses in guesthouses
99
Table no 21: Type and the budget for the marketing.
Marketing Percentage Marketing Percentage
Internet
53 Website 70
Directories
34 Marketing agency 41
newspapers
45 Exhibitions 15
Magazine
25 Other 10
Interpretation:
Most of the marketing is done through various services which are 52% the other main source is
marketing agencies which carry 30%. The remaining exhibitions carry 1% and other sources
carry 7% of the marketing. So the budget is made ascending order.
Website
52%
Marketing
agency
30%
Exhibitions
11%
Other
7%
Type of Marketing and average budget
100
Table no 22: Repeat customers business to the guesthouse
2 times 3 times 4 times 5 times 5 & more
45
56 35 21 12
Interpretation:
About 56% of the customers were 3 times repeaters and 45% of the customers were second times
repeaters. 4times repeaters are about 35% and the percentage is less are the number of times
increases. This shows that guest has preferred and appreciated the services provided by the
gueshouses which made them to choose same guesthouses for their vacation.
0
10
20
30
40
50
60
2 times 3 times 4 times 5 times 5 & more
P
e
r
c
e
n
t
a
g
e
No of times
Repeat customers business
101
4.2 Summary of the Survey results
The results of the surveys shed some light on both visitors to the area and tourism establishments
alike. To understand the economic contribution of tourism better, attempts are made to
understand the per day spending per person for different parameters. These parameters include
amongst others: length of stay, frequency of visits, group size. Most significantly the results
indicate that there is an escalation in the amount spent by visitors who visit more frequently or
who stay longer.
The study indicates that island of Maafushi represents the largest market for the district and
confirms island trends whereby foreign visitors stay longer and spend more per person per day
than domestic visitors. There are also clear differences in spending to be observed between those
who visit for the day and those who visit friends and relatives. The results also raise the idea of
“investment” which demonstrates that certain of the parameters show that some groups of
visitors have tangible or intangible investments in the district that affect their spending patterns
It is clear from both establishments and visitors that the internet plays a significant role in
making people aware of the district as a tourism destination. Word of mouth however is crucial
in persuading potential visitors to come to the district. Interestingly enough a significant
difference exists in the daily amount spent per person per day for those who decide to visit the
area lured by the internet as opposed to those decide to visit the area as result of word of mouth.
102
4.3 Conclusion
Understanding the dynamics of tourism and tourism?s impact on the economy of a sialnd
Maafushi enables better planning, informed investment and a better understanding of opportunity
costs. Essentially, an increase in the volume of tourism will increase its economic impact.
Increases in visitor volumes can be achieved subject to having the elements of destination
management in place.
Once this has been achieved, strategies devised to increase the frequency of visits, increase group
size, increase the length of stay or encourage people to spend more will start to bear fruit. The
local municipality seems to understand this dynamic but has not made sufficient resources
available to address these needs as it has been heavily investing in basic services over the past
The local municipality seems to understand this dynamic but has not made sufficient resources
available to address these needs as it has been heavily investing in basic services over the past
that represent the growth potential.
Such investment can play a significant role in reducing poverty and unemployment in the district
by providing employment and stimulating entrepreneurship. Destination marketing management,
infrastructure development and training seem to be the most pressing needs. In addition to the
investments that are required it is also essential that all role players start to cooperate
meaningfully in the interest of tourism in the district. Remarkably, every person interviewed in
this study commented on the lack of cooperation and the lack of a common vision among the
role players in the tourism industry. There can be no attempt at proper destination management
unless the tourism community starts to do and manage things differently (Santini, 2011).
Without proper destination management marketing efforts will become compromised exercises.
Watt (2011) believes the district is currently poorly marketed. A tourism destination needs to be
competitive in relation to other destinations. According to Occasional Paper 63 (2006: 14), this
study has shown that the district is perceived as being a value-for-money destination.
103
Unfortunately, this attribute alone is not enough to make the destination competitive.
Competitive destinations offer key experiences that are underpinned by the essential elements for
enabling tourism.
Together, these experiences and elements assist the destination to develop a brand and an image.
A destination?s image is a “unique combination of a destination?s tangible and intangible
characteristics and values” (Occasional Paper 63, 2006: 1). The district seems to have all the
necessary ingredients to develop a very competitive brand and image but there is little agreement
amongst role players as to exactly how the brand and image should be communicated.
The need for tourism awareness within the communities of the district has also been raised. The
stark differences between affluent visitors and impoverished communities can lead to resentment
if people do not understand tourism?s role or if the benefits of tourism are not fairly distributed.
Role players will have to address this aspect and the fair distribution of benefits from tourism
amongst a broad cross section of the community.
The study has also demonstrated that nature-based and outdoor activities are the main attractions
to the district. The challenge for the district will be to manage tourism growth in such a way that
it provides maximum benefits to the community without significant negative effects on the
natural environment or communities.
The Island of Maafushi has exceptional potential as a nature destination and tourism has steadily
been growing over the past few years. With its abundance of scenery, opportunities for adventure
and relatively crime-free environment it would seem almost wasteful not to make the most of
tourism.
104
CHAPTER 5 FUTHER RECOMMENDATIONS
Further Recommendations
During the study it was established that guesthouses in Maafushi was running successful
operations. Their performed in terms of services is getting improved day by day. They are
providing good service to their customers and that is contributing to satisfied customers.
However, the tourism statists of the country not representing well information about the guest
guest houe aspects except no of room s and bed capacity. In my opinion a board way of
observation, monitoring and evaluation should be done same as tourist resorts.
Maldives tourism market got international recognition for its service of catering luxury market.
So now it?s time to introduced other concepts of tourism like guest house business and market it
to the budgeted travel and medium income travellers and markets. As most of the tourist still
stays in resorts, there is lack of visibility of local life and opportunity to experience. I suggest
related authorities to introduced package and offers towards and related polices towards guest
house business in order to capture the medium income markets and budget travellers. In in tern
increase the revenue to the government and benefit community as whole in both direct and
indirect ways.
Guest house owners should be included in the government exhibition travelling?s and give an
opportunity to then to interact as many people as possible in order to form network in will give
knowledge about the guest house business sectors and expand their business. Those people
whom they meet during such exhibitions with the satisfied customers will market the
establishment oby word of mouth and that would contribute to increasing business.
105
CHAPTER 6 APPENDICES
APPENDIX A
Survey one for visitors
Guest house questionnaire: Growth of tourism in Maafushi (local Island)
Dear Visitor,
Please make applicable box with an X or provide an answer where required. Upon completion
you may return the questionnaire by 30th July 2015
Name: Your guest house
Email: Fax:
1. How often do you come to maafushi per year?
Once off Twice per annum Three times per
annum
Four times per
annum
Five time per
year
2. When you visit what is the size of your party average? (Family & friends)?
Just me 2 3 4 5 or more( please insert no)
106
3. When you visit how many days do you stay at a time?
1 day (day
Visitor)
2 days 3 days 4 days More than 4
Sate the no
4. I visit Maafushi?
For business For holiday To visit a friend On gov business Other
State reason
5. If you visit the island as a touris, what is the puropose? (you may tick more than one
box)
Diving Snorkeling Visit friends
Water sports
Fishing trip Other- please specify
Island hopping
Sight seeing
City tour
Photographing
Dolphin trips
Social events
Picnic trip
Arts and craft
107
6. My favorite season to visit maafushi island?
Nov- Jan Feb – April May- Jul Aug –Oct Anytime Unsure
7. When visiting maafushi I /we spend an average of __ dollars per person per day (all
costs included accommodation)
> 200 201 to 400
401 to 600 601 to 800 801 and above
8. Please provide a break down on services that you spend your money on (percentage
above figure- your percentages should not toalt more than 100%)
Accommodation Tourist booking Eating out Souvenirs
Tour operators
Entrance fees Activities Beverages
Transport
Other
9. I am from (your name home Town and country)
……………………………………………………………………………………………………………………
10. Which tourism activities/ facilities/ attractions did you find most appealing in maafushi?
……………………………………………………………………………………………………………………
108
11. What activities/ facilities/ attractions would you like to see that are not currently
available in maafushi?
……………………………………………………………………………………………………………………
12. When visited I maafushi I stayed at ( Name of the guest house ) & date of stay?
…………………………………………………………………………………………………………………
13. What form of marketing/ marketing material played a role in encouraging me to visit
Maafushi?
…………………………………………………………………………………………………………………
14. As a tourist destination Maafushi is …..
Poor value for Money Good value for Money Excellent value for money
27. which grade you will give your guest house?
< 2 star 2 stars 3 star 4 star 5 star
Thank you for your time and input. Please feel free to contact me for more information
on my email: [email protected] or text to my no: 0091993091403
109
APPENDIX A
Survey two for Establishments
Guest house questionnaire for Accommodation Establishments and service Providers
Please assist me in completing this questionnaire about your business. Your contribution to this
study is important. All Participants will a copy of the Research report on completion. The report
will not be made available to outsiders or Marketers.
Mark the answer you choose with an X or provide answer where applicable. If you are unwilling
to answer some of the questions or if a question is not relevant, please cross it out. All
individual information will be keep confidential and only consolidated data will be made
available.
Name of the Establishment Location
Email: Fax:
1. What kind of an establishment do you operate?
Guest house Diving center Water sports center
B&B
Transport provider Coffee shop
Backpacker
Game fishing operator Photo studio
Restaurant
Restaurant Other
2. If you are an operator or service provider what kind of services do you offer?
110
Water sports activity City tours Fishing trips
Diving sessions
Transfers Picnic trips
Photography
Photography Snorkeling
Foods
Goods Other
3. How long you have been in this business?
> 3 Yrs. 3 to 5 Yrs.
5 to 7 Yrs. 7 to 9 Yrs. More than 9 Yrs.
4. What was you occupancy rate for 2013 – 2014 ( numbers preferable but you may use
percentages- please indicate using latter (% sign)
Nov – Jan Feb- Apr May- Jul Aug- Oct
2013
=100%
2014
=100%
5. What do you charge on average per person per day? ( if you have different charges you
may break them down into percentages.)
> $200 $201 – 400 $401 - 600 $601 - 800 $ 800 or more
Percentage of
Business
111
6. If you are an accommodation establishment- how many rooms and how many beds do
you offer ( bed- nights)
Rooms Beds
7. If you are an accommodation establishment- No of categories of rooms?
Standard Deluxe Beach front Executive
8. If you are an accommodation establishment- receipts and expenses?
Percentage of Receipts Percentage of Expenses
9. What type of marketing do you do & what percentage of you marketing budget do you
spend on?
Marketing Percentage Marketing Percentage
Internet
Website
Directories
Marketing agency
newspapers
Exhibitions
Magazine
Other
112
10. Percentage of business that is from repeat customers?
0 – 20 % 21% - 40% 41% - 60% 61% - 80% 81% - 100%
Thank you for your Participation and time. Please return to [email protected] by
30
th
july 2015.For more information, kindly contact: 00919930914703
113
APPENDIX C
List of guest houses that participate in the Study from Maafushi island during the month of June
and August 2015
Name of the guest house Location
1. Arena Lodge Maafushi island
2. Arena lodge sky Maafushi island
3. Arora Inn Maafushi island
4. Dhonveli view Tourist Guest house Maafushi island
5. Island cottage Maafushi island
6. Island Relaxing Maafushi island
7. Leisure Boutique Maafushi island
8. Ocean vista Maafushi island
9. Picnic Inn Maafushi island
10. Shadow Palm Maafushi island
11. Stingray Beach Inn Maafushi island
12. Summer villa Guest house Maafushi island
13. Venture O Maafushi island
14. Yellow Rehendhi Inn Maafushi island
15. Narnia Maldives Maafushi island
16. White shell island and spa Maafushi island
17. Sunshine view Maafushi island
18. Water Breez Maafushi island
114
CHAPTER 5 REFERENCES AND BIBILOGRAPHY
References and Bibliography
Becken, S. & Hay, J. (2007). Tourism and Climate Change: Risks and Opportunities. Channel
View Publications. Clevedon. UK. 48-49.
Burke, J. (2012). Maldives? political instability allows gang violence to flourish. The Guardian.
[Online]. 22 October. Available from:http://www.guardian.co.uk/world/2012/oct/22/maldives-
political-instability-gang-violence. [Accessed: 22 May 2013].
Carlsen, J. (2011). Island Tourism. Island tourism sustainable perspectives. Wallingford,
Oxfordshire, UK: CABI 215-226.
Carlsen, J. (2011). Island Tourism. Island tourism sustainable perspectives. Wallingford,
Oxfordshire, UK: CABI 215-226. [Online]. Available from:
[Accessed: 13 February 2013].
Cater, E. & Lowman, G. (1994). Ecotourism: A Sustainable Option. Chichester: John Wiley &
Sons. 68-87.
Church, J.A., White, N.J. & Hunter, J.R. (2006). Sea-level rise at tropical Pacific and Indian
Ocean islands. Global and Planetary Change. 53 (3). Hobart. Tasmania. Australia. 155–168.
115
CIA World Factbook (n.d.). Maldives Economy Profile 2012. [Online]. Available from:http://www.indexmundi.com/maldives/economy_profile.html. [Accessed: 13 February 2013].
Clark, D. (2011). Maldives crowdsources 2020 carbon neutral plan. The Guardian. [Online]. 22
September. Available from:http://www.guardian.co.uk/environment/2011/sep/22/maldives-help-
carbon-neutrality-plan. [Accessed: 22 May 2013].
Domrös, M. (2004). Nachhaltige Fremdenverkehrsentwicklung durch Touristen-Isolate auf den
Malediven. Teoksessa H. Egner (toim.) Tourismus–Lösung oder Fluch. Die Frage nach der
nachhaltigen Entwicklung peripherer Regionen. Mainz. 95–106.
Dowling, R. & Page, S. (2001). Ecotourism. Prentice Hall. Pearson Education. Harlow. UK.
Energy Matters. (2013). Energy Matters - Bringing Solar Power To The Maldives [Online].
Available from:http://www.energymatters.com.au/renewable-energy/solar-power/maldives-
solar-power.php [Accessed: 13 February 2013].
Fourth Tourism Master Plan 2013-2017. (2012). Ministry of tourism Arts and Culture, Republic
of Maldives. DRAFT 1. Malè. Republic of Maldives.
UNEP, 1999. Contribution of UNEP to the Secretary-General’s report on Industry and
Sustainable Tourism for the 7th session of the CSD – Tourism and
Environment Protection Commission on Sustainable Development 7th session, 1999. CSD
Decisions and Resolutions, Tourism and Sustainable Development.
UNEP, 1999. “Tourism”, Our Planet, volume 10, number 1.
UNEP/FIDIC/ICLEI, 2001. Urban Environmental Management: Environmental Management
Training Resources Kit.
116
WTO/OMT, 1999. Guide à l’intention des autorités locales: développement
durable du tourisme.
WTO, WTTC, Earth Council, 1995. Agenda 21 for the Travel and Tourism Industry: Towards
Environmentally Sustainable Development
.
WTO, 2000. Sustainable development of tourism, a compilation of good practices.
ICLEI, 1996. The Local Agenda 21 Planning Guide, an Introduction to Sustainable Development
Planning.
ICLEI, 1999. Tourism and sustainable development - Sustainable tourism: a Local Authority
Perspective – Background Paper.
I&DEA, 1999. Local Agenda 21 in the UK – Local Agenda 21 Roundtable Guidance -
Sustainable Tourism.
Ken Chamberlain, UNEP-DTIE, 1997. “Carrying capacity”, Tourism Focus, number 8.
doc_332401851.pdf
This project thesis will highlight about the growth of guesthouse ( budgeted hotels) in Maldives and factors contributing for the growth and its effect on local community development
1
GROWTH OF GUEST HOUSE BUSINESS IN MALDIVES
BACHELOR THESIS FOR OBTAINING THE DEGREE
BACHERLOR OF MAMANGEMENT STUDIES
(2015-2016)
UNIVERSITY OF MUMBAI
PROJECT GUIDE: PROFESSOR RAHUL MUKHARJEE
SUBMITTED BY:
IBRAHIM JALEEL
MUMBAI, 04
th
DECEMBER 2015
CHIKITSAK SAMUHA’S
S.S & L.S PATKAR COLLEGE OF ARTS & SCIENCE
AND
V.P VARDE COLLLEGE OF COMMERCE & ECONOMICS
S.V ROAD. GOREGAOM (WEST), MUMBAI- 400062
2
CHIKITSAK SAMUHA’S
S.S & L.S PATKAR COLLEGE OF ARTS & SCIENCE
AND
V.P VARDE COLLLEGE OF COMMERCE & ECONOMICS
S.V ROAD. GOREGAOM (WEST), MUMBAI- 400062
CERTIFICATE
This is to certify that Mr.Ibrahim Jaleel of bachelor of Management Studies has successfully
completed the project on Growth of Guest house business in Maldives under the guidance of
Professor Rahul Mukherjee as part of fulfilling the degree course during the year 2015-2016.
Course Coordinator Vice Principal
Prof. Swathi Takkar Dr. Mala khakar
Project guide/ Internal Examiner External Examiner
Prof. Rahul Mukerjee
3
DECLARATION
I hereby affirm that this Bachelor?s Thesis represents my own written work and that I have used
no sources and aids other than those indicated. All passages quoted from publications or
paraphrased from these sources are properly cited and attributed.
The thesis was not submitted in the same or in a substantially similar version, not even partially,
to another examination board and was not published elsewhere.
Date Signature
4
Acknowledgments
First I would like to thank my government and ICCR for giving me the opportunity to study at
Mumbai University. Their love and support enabled me to travel to India and to get an
opportunity to study managements studies and learning about new cultures.
Next, I would like to thank my parents for their endless patience, love and support in every
situation of my life. My heartfelt thanks go to the coordinator and all the respected faculties
who support me in my project and advised me but who realized me that I should not stop
believing in myself.
This thesis would not have been completed without the help of all the respondents who filled out
my questionnaire, I am very thankful for their help. My thanks are outstanding for Professor
Rahul Mukherjee who has been a supportive supervisor and I am more than grateful for all his
advises.
5
Executive Summary
Tourism plays an important and often central role form any local economies, particularly in
developing countries like the republic of Maldives. Often there Is a price pay: in one concept of
tourism and uncontrolled tourism developments can have a very negative impact towards local
community. This this because tourism cannot play a direct role in the development of local,
communities due to the fact that archipelago arrangement of this island nation becomes an
obstacle. This creates and make further in the in equalities and the distribution of resources
among all the levels of the society in Maldives. As a result there will not be any sustainable
development of this industry in regards of the local communities.
Concurrently the responsibility of the tourism developments in Maldives lies more and more
with central authorities , despite of the effective local government authority (LGA), as
governance structures become more centralized in certain areas like tourism sector, despite of the
a decentralized system in effective. Many policies that have an effect on sustainable tourism
developments such as tourism zones in Maldives ,environmental impact assessments ,
regulations licensing, leasing, and economic incentives are often in the hands of central
authorities. In other words local council roles towards guest house business in not yet proceed.
Local authorities are also privileged partners in the development of sustainable guest house
tourism concept in local islands or the development of island tourism. When they legitimately
represent the interest of their citizens, local authorities will show that they can provide effective
leadership in sustainable guesthouse business.
Ensuring the tourism follows a path of sustainability and requires a clear and straight forward
leadership from local councils and authorities and efficient mechanism that involves all levels of
the stakeholders- most importantly the local citizens the of the communities. There should be
process and mechanism and cooperate approach to identify communities goals for guesthouse
business for their economic development in relations with the government manifestos.
The purpose of this thesis is, to identify the growth the guest house business and its potential
market segment for local and island tourism, second if destination management organization
should target budgeted tourists as well regarding island tourism under the concsept of budgeted
6
travel. Today?s research focuses on establishing an official definition of guesthouse tourism and
budget tourist tourists, as the impact on local life lifestyle due to its growth.
Furthermore, Maldives slowly recognize the benefits of guest house of business and research is
conducted regarding tourist arrivals, marketing strategies this paper will highlight the key
findings of the study regarding the travel profile of tourists, the importance of guest house and its
effect on local environment on both economy and employment. The respondents? likeliness to
participate in guesthouse tourism activities are due to to the low-price offered from the guest
houses in comparison with the tourist hotels and resorts. To achieve the aim of this study, the
author conducted an online survey where a sample of 30 respondents from customer side
provided data for an analysis and 30 guesthouses were also given questionnaires
The findings are compared to previous studies and to the general literature. The main results of
the study demonstrate the high interest of the respondents in guest house business and budgeted
travels during their holiday as well as the strong willingness of the respondents in participating in
guest house tourism activities.
7
GROWTH OF GUEST HOUSE BUSINESS IN MALDIVES
Photo courtesy: UNDP Maldives
8
9
Table of contents
Declaration ................................................................................................................................................... 3
Aknowledgement….…………................................................................................................................... ..4
Executive Summary…………................................................................................................................... ..5
Table of Contents.......................................................................................................................................... 8
List of Tables ................................................................................................................................................. 12
List of Figures ............................................................................................................................................... 13
List of Abbreviations ................................................................................................................................. 14
Chapter 1 Introduction....................................................................................................................... 15
1.1 Background of the Study............................................................................................ 15
1.2 Problem Statement......................................................................................................... 17
1.3 The Aim of the Study ........................................................................................................18
1.4 Objectives of the Research Study.............................................................................19
1.5 Outcomes of the Study ....................................................................................................20
1.6 Research Design……..… ...................................................................................................21
1.7 Use of Terminology…... ...................................................................................................21
1.8 Chapter Outline………… ...................................................................................................22
Chapter2 Literature review .......................................................................................................... 23
2.1 The Study Context…………………...................................................................................23
2.2 The Industry Environment……....................................................................................24
2.3 Small and medium Enterprises……...........................................................................26
2.4 Three layers of guesthouse Business ……..............................................................26
2.4.1 Category One: First layer of success: Sector entry and start-up........... 27
2.4.2 Category Two: Second layer of success: Survival to year three........... 27
2.2.3 Category Three: Third layer of success: Long-term sustainability ….. 29
2.5 Factors important to sustainable competitive advantage............................30
10
2.5.1 Market access........................................................................................................ 32
2.5.2 Economic and social factors………............................................................... 32
2.5.3 Growth and competitiveness............................................................................ 33
2.5.4 Industry Clusters................................................................................................ 34
2.5.5 Management of risk factors.............................................................................. 36
2.6 Maldives overview............................................................................................................37
2.6.1 Geography.............................................................................................................. 37
2.6.2 Population and demographics ……….............................................................. 38
2.6.3 Economy................................................................................................................. 38
2.6.4 Tourism in the Maldives.................................................................................... 43
2.6.5 Analysis of the importance of tourism in Maldives................................ 44
2.6.6 Tourism facts and figures.................................................................................. 45
2.6.7 Challenges of tourism in the Maldives.......................................................... 45
2.7 Impacts of Tourism...........................................................................................................48
2.8 Island Tourism Environment.......................................................................................50
2.9 Island Tourism Communities.......................... ..........................................................51
2.10 Island Tourism Economics............................................................................................52
2.11 Introduction of Guesthouse in Local Islands…....................................................53
2.11.1 History of Guesthouse Business...................................................................... 54
2.11.2 Challenges & opportunities of the tourism sector for the Islands....... 55
2.11.3 Opportunities of Guesthouse tourism in the Maldives………….………... 55
2.12 Economic Importance of Guesthouse and Small medium enterprises...56
.
2.13 Economic Importance Small medium enterprises…..........................................58
2.14 Determinants of tourism demand………………........................................................60
2.15 Supply, Distribution & demand for growth of guesthouse business…...61
2.16 Theoretical Perspectives……………………………………….........................................62
2.16.1 The „three layers of success? and Porter?s models....................................... 63
2.16.2 The triple bottom line approach ………………………………………………...... 65
2.16.3 The role of tourism in communities …………………………….….…….…….... 66
2.16.3 Conclusions from the theoretical overview ……………………………….….. 68
11
Chapter 3 Research Methodology................................................................................................. 70
3.1 Introduction……………….…………....................................................................................70
3.2 The Research Apporach…………....................................................................................70
3.3 Research Design……............................................................................................................71
3.4 Limitation of this Study ……............................................................................................72
3.5 Sampling and Area of the study ( Maafushi Island)…………………………….....73
3.6 Data Collection Method…………......................................................................................76
3.6.1 Primary Data Collections..………………………………….………….………..…..... 76
3.6.2 Secondary Data Collections ...……………………………………….………….…... 77
3.7 Data Verification……...........................................................................................................77
Chapter 4 Data Analysis and Interpretation................................................................................ 78
4.1 Finding of the study and Anaylsis of survey results …......................................78
4.2 Summary of the survey results……............................................................................101
4.3 Conclusion…..........................................................................................................................102
Chapter 5 Futher Recommendation.............................................................................................. .104
Chapter 6 Appendices...............................................................................................................................109
Chapter 7 References and Bibilography..........................................................................................114
12
List of Table and Graphs
Table 1: Economic data?s of the Maldives. ………………………………………………...…79
Table 2: Frequency of the visit…………………………………….……………………….…...80
Table 3: Average size of the members ………………..…………………………………..….…81
Table 4: Purpose of the visit to Maafushi island …………………………………………...…...82
Table 5: Tourists purpose of the holiday in Maafushi island.…………………………….….….83
Table 6: Season of the year to visit Maafushi island …………..….…………………….…..…..84
Table 7: Average spending per person during the holiday in Maafushi island……….……..…..85
Table 8: Break down on services which was spend from money…………....………..…….…...86
Table 9: Most appealing activities and facilities found in Maafushi island ………...…….……87
Table 10: Activity or Facility which would like to see in future…………...………………...….88
Table 11: Form of marketing which influenced the visitor……………………………….….….89
Table 12: Value for Money Perception about Maafushi …………………..……………...….….90
Table 13: Type of tourist facility operating in Maafushi island..…………………...…..….……91
Table 14: The services offered by the service operator …..……..…..………………..…….…..92
Table 15: Number of years in the business……………………………………...……..….……..93
Table 16: Occupency rate during the financial year 2013 - 2014…………....………..….……...94
Table 17: Average charge on per person during their vacation…………………..……..….……95
Table 18: No of rooms and its correspondents bed capacity…….…..……......………..….…….96
Table 19: No of available rooms………………………………….…………………..……....….97
Table 20: Comparison of receipts that of expenses of the gueshouses ………………..…..…….98
Table 21: Type and the budget for the marketing………………..……………………...…....….99
Table 22: Type and the budget for the marketing………………..………………….……....….100
13
List of figures
Figure 1: Industry boundaries and the fuve forcesof Industry competition……………………….…..25
Figure 2 : Basic strategic management process……………………………………………………………………..30
Figure 3 : Advantage offered to members by he clusters……………………………….……………………..35
Figure 4: Comparison of Expatriates and local Employement by Industry in March 2006 …...21
Figure 5: Calculating Economic Impact of tourism……………………………………………56
Figure 6: Economic Effects of Tourism; Direct, Indirect…………………….……………..…………..……..57
Figure 7: Industry context,Supply,demand and competition…………………………………..……….……..57
Figure 8: Supply, distribution and demand: key market segments ………………………..…………….…61
Figure 10: Three layers of success ………………………………………………………………………....……….….…64
Figure 11: Areas that success factors emanate from, or are located in …….………….....………..……64
Figure 12: Triple Bottom line Method ……………………………………….……………………..…………………..65
Figure 8: Relationship of guesthouse and its stakeholder………….…………………………….………….…..67
Figure 9: Four alternative research Approach .…………………………………………………………………….…71
Figure 10: Types of data collection methods………………..………………………………………………………. 76
14
List of Abbreviations
B&B Bed and breakfast
CPI Consumer price Index
GDP Gross Domestic Product
IFC International Finance Cooperation
IMF International monetary Fund
MMA Maldives monetary Authority
LGA Local Government Authority
PPP Purchasing Power parity
MV Maldives
R&D Research and development
UNWTO United Nations world Tourism
Organization
SME Small medium Enterprise
WTTC World Travel and tourism Council
MoT Ministry of Tourism
MMPRC Maldives Marketing and Public Relations
Corporations
SME Small medium Enterprises
15
CHAPTER1 INTRODUCTION
1.1 Background of the study
Tourism in the Maldives took off in the early 1970s when an Italian tour organizer came across
Maldives while looking for new destinations in untouched tropical places. The first group of 22
Italian tourists arrived on a chartered flight of Air Ceylon. By 1972, two islands had been
developed as resorts with a capacity of 280 beds. That year, a total of 1,000 tourists visited
Maldives. Hulhule? Airport was the gateway. Resort islands were developed in close proximity.
By the late 1970s, with Europe's interest increasing, international tourism had become an
important source of income for Maldives.
Throughout the history of Maldives tourism, development has been driven by the private sector.
Industry pioneers made the best of the minimal infrastructure. Originally packaged together with
culture-oriented Sri Lanka, Maldives soon established itself as a destination in its own right. The
market changed from specialized segments, especially divers, to the broader scope of beach
holidays. Maldives became synonymous with luxurious sun, sea and sand holidays.
The Maldives has always been, and continues to be, a high-end sun and sand destination. The
GFC in 2008 hit the entire industry hard with significant declines in all market segments. In
2010, tourist arrivals to Maldives improved considerably by increasing 20% over the previous
year. The contribution of tourism to the country?s GDP remained at an average of 31% in the
past five-year period (2005-2010).
The bulk of tourist arrivals traditionally have originated from Europe, but due to several factors,
including the GFC, that market is shrinking. Asian and Pacific markets, particularly China, have
been filling the gaps in demand. In 2012, Chinese travelers to the Maldives accounted for almost
25% of the total visitors20. The segmentation shift presents a unique opportunity for new
product development and economic growth in the Maldives.
16
The bulk of tourist arrivals traditionally have originated from Europe, but due to several factors,
including the GFC, that market is shrinking. Asian and Pacific markets, particularly China, have
been filling the gaps in demand. In 2012, Chinese travelers to the Maldives accounted for almost
25% of the total visitors 20%. The segmentation shift presents a unique opportunity for new
product development and economic growth in the Maldives.
Guesthouses on an inhabited island are only permitted on land designated for residential use.
City hotels are typically on designated public land. Due to the strong historic emphasis on resorts
in the Maldives, the secondary accommodation market has suffered and lacks a clear direction.
Where oblivious markets exist, especially around transport hubs, a quality controlled but
otherwise relatively free marketplace should be encouraged in the development of guesthouses
and small hotels. In other places, where no obvious international tourist markets exists, numbers
of guesthouses should be restricted to the level necessary for the business and the domestic
tourism market.
Local communities have had limited engagement in the tourism sector compared to other
Countries and island nations. This has mostly occurred by design with the bulk of tourism
activities taking place on uninhabited islands. Two new types of organizations have emerged that
offer a pathway for communities and SMEs to better integrate into the tourism industry:
17
1.2 Statement of the Problem
Since the establishment of tourism industry in Maldives in 1972 there was only one concept of
tourism based on one island, one resort hotel. But after 40 years of the service, new concepts
have emerged to this industry and one of this is guest house or island tourism. Unfortunately
there is lot of debate of this concept and its growth and there is no proper model and benefit
realized from the government and the private sector about the importance of this business and its
benefits to local people.
The study is concerned with the problem of the long-term growth and success, sustainability in
the guesthouse business in Maldives due to the introduction of island tourism ( local tourism) in
relation to budgeted travels, operating environments and finding the areas growth in which this
concept of tourism can be developed.
Ministry of Tourism of Maldives (MoT) and Maldives Marketing and public relations
Corporation (MMPRC_ has spent much effort researching visitor trends, both at a national level
and provincial level. This research effort includes visitor spending per person per day. Tourism
in local Islands analyses tourism trends in the province for different tourism regions. “In order to
plan and market effectively for tourism, readily available information on the volume of visitors
to an area and their economic impact on the local economy is essential” (Southern Tourist Board,
2001: 4).
According to a publication by the Southern Tourism Board (2001: 4), estimating the economic
impact of tourism at a local level is often impeded by an absence of meaningful data. Generally,
tourism data is collected at a national level. Local surveys may vary in “quality, reliability and
comparability” (Southern Tourist Board, 2001: 4).
18
1.3 The Aim of the study
The study is designed to serve two aims. First, the goal of this study is to evaluate the degree of
importance of tourism to the archipelago and to assess the situation of the Maldives, when facing
the consequences of global warming. In other words, the first goal is to evaluate how and if the
Maldives can cope with the increasing demand of tourism and the growth the guest house
business.. Moreover it evaluates the question as to why the archipelago continues to pursue
tourism when facing the associated consequences.
In exploring answers to this question, this research will secondly focus on finding successful and
sustainable solutions, to continue tourism development while maintaining the natural and social
environment for the Maldives.
The other aims this study is to:
Estimate the economic growth of local tourism to the island of Maafushi
Investigate factors that may contribute to the economic growth impact of tourism in the Male
Atoll ( Maafushi is one of the local island in Male Atoll).
Make recommendations to increase the economic growth impact of guesthouse tourism in the
Atoll
19
1.4 Objectives of the Research study
The main objective of this research is to study and understand the diversification of tourism
industry in Maldives, its benefit towards the local community through local tourism and
guesthouse business.
Apart from this, other relevant objectives include;
1. Identify the benefit from tourism industry to be distributed whole nation on a broader
concept.
2. To open doors for the participations of local community to tourism sector.
3. Introduction of Island tourism and local tourism in Maldives and to increase gross profit
on domestic tourism and its direct effects on households.
4. Ti identifies the impact on social and infrastructural changes in island life due to local
and guest house business.
5. To involve the local communities in tourism investments in order to produce competition
among them.
6. To identify the ways to develop human resources capability and training opportunities.
7. The effect on employment through this nature of business in local community and fight
against unemployment for youths.
8. To understand the ways in which heritage sites of the country can be protected and
maintain such places and introduce heritage and know the benefit of cultural in the
tourism sector.
9. Linking the industries like agriculture, fisheries and small medium enterprise to tourism
sector and understand the benefit as a whole.
20
1.5 Outcomes of the study
The aim of this study is to identify and estimate the growth contribution of local tourism though
guesthouse business to the island and the Atoll respectively. To date there has been no such
estimation of guest house business at a local level and the only few information available is at a
broader National level
Since it is of primary importance to all residents in the district of Underberg that tourism grows
(which in turn contributes to economic growth), it is also important to gain insight into the
factors that may influence the economic contribution of tourism to the atoll. The study will
elaborate more on these factors and explain how they influence the economic growth impact of
tourism.
The main outcomes of this study will include:
• Estimations of the direct economic growth impact of tourism in the Island and the atoll
• Estimations of the indirect impact of tourism in the island
• Developing a greater understanding of the factors that influence the growth of tourism in the
island. If understood, these factors can be manipulated to increase the economic impact.
• The development of a set of recommendations that may increase the growth of Guesthouse
busiess in the region.
Although outside the scope of this study, it is important to understand that local tourism may
have many other impacts that cannot be quantified by economics alone (Keyser, 2009: 27).
Taking the above into account, it is hoped that the information is used to make decisions that will
ultimately lead to an increase in tourism to benefit the island of Maafushi, the communities and
the people who are involved in the tourism business while ensuring a sustainable environment to
which visitors can return
21
1.6 Research design
The study required broad approach ad was therefore conducted with a view of constructive and
informative approached. A case study was the methodology of choice, as it allowed examination
of research subjects, the five guest houses within the context of their operating environments. An
easy and understandable approach was used for data collection through both quantitative and
qualitative data collection methods. The location of the study that is K. Maafushi, a developing
island with guest house business was selected by taking the objectives of the study in relation
with the statement of the problem. All the data was collected from the fie guest houses with their
various in both service operation and nature were selected for sampling.
1.7 Use of terminology
The terminologies used in this study includes relative terms and words recognized in the context
of tourism industry such as B &B, Accommodation, Occupancy etc. the purpose of it is to
provide the best terms used in the industry and flexible reading to the readers.
Guest house is word is used to refer small private and affordable accommodations mostly, but in
some parts of the word its referred as boutiques, lodges, B&Bs. This this to define the
differences and categories it compare to other types of tourism accommodations.
In Maldives, guest house are referred mostly the hotels reside in local islands whereas mostly in
city we find hotels. But there are few guest houses which provide day use for visitors.
22
1.8 Chapter outline
Chapter one offers and introduction of the study and a brief overview about the importance of
guesthouse business as tourism industry of Maldives in relation with its economic and social
developments. By highlighting the statement of the problem with the objectives of research study
a a research design were conducted. The research methodology and use of terminology are also
included in the chapter. Chapter two proceed with the literature view of guesthouse business,
tourism industry and the theoretical framework of the research study. Chapter three will outlines
the research design used in the study. Chapter four present the results of the study with graphical
analysis and its inference and chapter five provides the interpretation of the results. Chapter six
ends with the conclusion and recommendation the study.
23
CHAPTER 2 LITERAURE REVIEW
This chapter will explore the literature, which is necessary to understand the topic. The first
chapter of the review of the literature will cover the history of the Maldives, followed by a
research on tourism and its importance to the archipelago. Moreover, global warming in general
and how climate change has an impact on the Maldives tourism industry will be discussed.
However, there is a big conflict, as ecotourism cannot exist without the environment, and the
environment cannot ignore the vigorous effects the industry is having on it. The observation of
social, environmental and economic criteria is therefore essential to strike a balance. Last but not
least, global warming continues to be a main issue of political debate; therefore the situation and
the role of the Maldivian government will be analyzed.
2.1 The study context
The study at hand examines the „success? of small and medium enterprises at three different
points in the business lifecycle, namely at entry, in the first three years and in the long-term. The
selected businesses are examined within the „context? of their operating environments. The
reviewed literature, selected theory, results of the study and the interpretation of findings are
discussed from the perspective of these three interlocked environments. It is, therefore, important
at the outset to address the manner in which the „operating environments? and their complexity
are dealt with in the study. The three overarching environments that are considered in the study
are the „macro?, „industry? and „micro operating environments? Bateman & Snell, 1999; Pearce
& Robinson, 2005).
.
24
2.2 The Industry environment
There are various views of what constitutes an „industry?. Porter?s (1980) wider and somewhat
more flexible definition of industry was adopted for this study. Porter (1980:5) defines industry
as “… the group of firms producing products that are close substitutes for each other”. Porter
(1980) recognises the „problems? posed by defining the term industry, but does not see it as an
obstacle, as he separates the definition of a firm?s industry, or industries from the business the
firm wants to be in. Others support the view that the exact boundaries of industries are less
important than understanding the firm resources, strengths and weaknesses, or its product
markets (Slater & Olson, 2002; Teece, Pisano & Shuen, 2001).
Porter (1980) emphasises that industry boundaries are drawn in such a manner that the five
competitive forces, as described in his Five Forces Model (Porter, 1980
are clearly identifiedand included. He sees industry boundaries as judgmental and temporary, and argues that changes
in the industry structure may change these boundaries. In the case of a fragmented and diverse
industry, such as the tourism industry, with its unique and complex product market structure,
industry boundaries may be drawn differently for each specific level of analysis performed, e.g.
the industry sub-sector under consideration, such as for the current research, the accommodation
sub-sector (Bennett et al., 2005; Middleton & Clarke, 2001; Porter, 1980).
In determining industry boundaries from the perspective of exploring and explaining firm
success, the aim remains to determine and understand the dynamics in the industry and the
sources of competitive threat to the firm. Figure 2.1 depicts the industry boundaries (as a broken
line), together with the five major forces of industry competition. In terms of the guest house
sub-sector, the industry sub-sector boundaries are drawn with their competitors, substitutes and
new entrants in mind, as the analysis is carried out on that level.
25
Figure1: Industry boundaries and the five forces of industry competition
Source: Porter (1980: 187).
The current study was conducted within the tourism industry, a complex industry. The
compound nature of the tourism product, comprising various components and industries, and the
complex supply chain, makes it difficult to draw boundaries for the industry (Gunn, 2002).
Adding to the complexity is the fact that the industries involved in the supply of the tourism
product components (e.g. accommodation, food and beverage and transport), do not supply
exclusively to tourism markets (Mak, 2004; Sinclair & Stabler 1997). There has, therefore, been
much debate as to whether the tourism industry should even be regarded as an industry because
of its complexity and some argue that it should much rather be regarded as system (Gunn, 2002;
Bennett et al., 2005). However the traditional view of an industry does not exclude the view of
an industry as a system. For the purposes of this study, Porter?s (1980) view of the industry was
therefore deemed suitable.
The tourism industry is not only fragmented in nature, but is also an industry with strong global
supply and demand structures and, therefore, subject to all the threats that characterize global
trading environments.
26
2.3 Small and medium enterprise
SMEs around the world play a key role in employment creation, as well as poverty alleviation
(IFC, 2004; Levine, 2005). SMEs are, however, vulnerable to failure and it is therefore important
to understand the factors critical to their success and failure (Bannock, 2005; IFC, 1997; IFC,
2004; World Bank, 1998). Small business comprises a wide range of business structures that
vary across countries, cultures, industries and sub-sectors of industries, as well as by
organizational objectives. Various definitions will be discussed in the next sections.
2.4 Three layers of Guesthouse business success
Bodies, such as the World Bank and IFC, initiate, direct, finance and support much of the
changes and growth in SME sectors in countries of both the developed and developing world.
Involvement of the World Bank and IFC and the growing importance, but continuing
vulnerability of SMEs, has given rise to much research. The research reviewed for this study is
grouped into three distinct categories, termed the „three layers of success? that are aligned to the
phases of evolvement of the sector and are also reflective of the growing understanding of the
problems the sector faces in terms of business start-up, survival, success and sustainability.
27
2.4.1 Category One: First layer of success: Sector entry and start-up
The main focus of initial strategies and initiatives aimed at developing and growing the SME
sector around the world, was on removing the perceived main obstacles to growth of the sector
through lowering, or removing barriers to entry of the sector (first layer of success).
The „first layer of success and indicates that the focus in this layer is on elements, or factors
located both in the macro and micro operating environments of the firm. Literature discussed in
this section addresses the main obstacles to survival and growth that were identified through
projects in various countries, including MV. These factors include a supportive regulatory
framework, access to finance, access to markets and acquisition of business skills.
World Bank (World Bank Group, 2000) research, and the strategies following that, resulted over
the past ten years in increased support and initiatives, around the world, to improve the macro
trading environment for SMEs by providing a more supportive regulatory framework, better
access to funding and lower cost of SME finance.
However, research into the funding practices of SMEs, or the avenues accessible to them
revealed that most SMEs financed themselves, or through loans from families and friends.
2.4.2 Category Two: Second layer of success: Survival to year three
There are various studies that have been undertaken in individual countries in an attempt to
find ways in which small enterprises could operate more successfully in that particular country in
order to improve survival during the first three to five years (Second layer of success). The
„second layer of success Unlike the „first layer of success?, that addresses both the macro and
internal environments of the firm, the second layer mainly addresses the internal, or micro
environment of the firm. Success factors identified in this layer relate to operational issues,
marketing, management acumen, training and product quality. Literature in this regard
is reviewed in this section. The second layer further focuses on the period most likely for
SMEs to fail, namely the first three years. Bannock (2005:94) points out that there are
28
several danger periods in the life of a small business and argues that “…the first three years, for
that reason, are certainly the most crucial, since that is when failure rates are highest”. Studies
relating to the second layer of success deal with different functional aspects of business
operations, product, marketing, or management (i.e. the focus is on operational effectiveness).
Here the focus is on what occurs in small businesses in a particular industry, time and place and
what could make it more operationally effective in order to compete more successfully. These
studies tend to be narrow and focused and provide little insight into the interrelation between key
factors contributing to success, or failure. Neither do they provide insight into factors that come
into play within a particular region, or industry, or under conditions of stability (as in protected
local conditions), or turbulence (such as under rapid changing and hostile global market and
industry conditions), or turbulence from any other sources (such as with tsunamis, hurricanes,
political instability, terrorism, disease). There are various examples of studies investigating
specific aspects of the small business. Bannock (2005) provides an overview of the most
common factors among small businesses contributing to success, or failure, as identified across
industries, and from various countries, which sheds some light on problem areas by region.
However, interrelation of factors is not addressed. Tourism SMEs are not addressed by Bannock
(2005). In SA the DTI (2007) identified various common problems in the quest to improve SME
success rates, but here, too, the interrelation of factors is not addressed.
Bieger, Laesser and Liebrich (2004) argue that tourism SME owners and managers are often
unable to attend courses and manage the business. According to them, e-learning therefore The
sm all size of SMEs, the management style, the choices that their managers make and their
informal nature often exclude them from the necessary resources that contribute to business
success, such as leadership, mentorship, education, training, funding, network membership, and
critical information about their operating environments (Bannock, 2005). This makes them
vulnerable to continued failure and these broader issues form the basis of the third layer of
success.
29
2.4.3 Category Three: Third layer of success: Long-term sustainability
The „third layer of success? is portrayed in Figure 2.2 (refer section 2.1.4; label 15). Unlike the
other two layers, this layer addresses elements, or factors in the macro, industry and micro
operating environments. Instead of only dealing with one or more individual factors, the
emphasis here is on the interrelation between factors, or groups of factors, as indicated by Porter
(1990) and how they facilitate success in conjunction with one another. Research questions in the
„third layer of success? address issues related to ongoing SME failure, or limited success, based
on various premises. The first premise holds that SME success, or failure, sustainability and
growth are not simple and easy to understand, predict, or remedy (Ayyagari et al., 2005). A
second premise related to the first, is that merely having an operational business entity
(acceptable product, management skills, initial finance and favorable regulatory environment), is
not the only ingredient required for success (Ayyagari et al., 2005; Porter, 1996; 2000). A third
premise is directly related to the turbulent global and hostile operating conditions to which SMEs
are exposed in the 21st century. Studies in this regard indicate that, even if all other factors were
perfectly in place, these turbulent and hostile conditions present complications for business
survival and success (CEML, 2002 Expert Group on Future Skills Needs, 2005; Porter; 1996;
2000; Storey, 2003).
In the „third layer of success? the proverbial net is therefore cast wider to search for answers and
solutions in areas either neglected, or not considered previously. Such areas include
environmental and institutional quality, innovation, degree of competitiveness, a healthy SME
sector, better and more effective access to markets, supportive enterprise networks, better access
to advanced technology, easy exit from the sector, scale economies and management.
30
2.5 Factors important to sustainable competitive advantage
According to Porter (Furman et al., 2001; Porter & Stern, 2001), innovation drives continuous
sustainable competitive advantage, all of which are fostered by a high quality environment (high
institutional quality, continued investment and upgrading). Porter (1996) indicates the
importance of a strategic management approach to achieving sustainable competitive advantage.
Bateman and Snell (1999: 131) distinguish six core components within the basic strategic
management process “… (1) establishment of mission, vision, goals; (2) analysis of external
opportunities and threats; (3) analysis of internal strengths and weaknesses; (4) SWOT analysis
and strategy formulations; (5) strategy implementation; and (6) strategic control …”.
They point out that businesses use a variety of terms, relating to strategic management, but the
tasks remain similar, and further argue that it is an ongoing and essential process, in which
involvement of all managers in the organisation is critical to success. In contrast, Bannock
(2005) postulates that the strategic management approach is not appropriate for SMEs, and that
they do not have the resources or capacity to follow such an approach to management, but he
also acknowledges that survival without it is difficult. Figure 2.3 depicts the elements of a basic
strategic management process
Figure 2 Basic strategic management process
Source: Based on various literature sources on strategic management
31
Closely linked to strategic management, is the concept of „organizational leadership? or
„visionary leadership?. Porter (1990; 1996) regards this as a key element in business success, as
leadership, according to him, determines the strategic choices made and how resources are used
and competitive activities carried out, to achieve a sustainable competitive advantage. Hough et
al. (2003) support this view, and see it as essential in global operating conditions. Adler (in
Hough et al., 2003: 219) distinguishes between leaders and managers: “… leaders help to shape
the organization?s vision, the meaning within which others work and live. Managers by contrast,
act completely within a vision …”; and of visionary leadership she says “… involves the ability
to inspire and influence the thinking, attitudes, and behaviour of they do not accept constraints
and know that they can change the nature of outcomes.” He argues that when leaders identify
something, they have the courage to act and his findings indicate that it is often the leadership
that determines which firms located in favourable conditions will succeed and which will fail.
Porter (2001) further argues that advanced technology is one of the keys to sustainable
competitive advantage. Others support the view that technology can facilitate faster and more
efficient delivery of services and makes it possible for small businesses to become more
competitive. Kirchoff (in Bannock, 2005) indicates that technology-based SMEs grew, faster and
performed better than those with a lower level of technology. In SA, Elliot and Boshoff (2005)
found that, under specific conditions, the internet can make a significant difference for SMEs in
their marketing. Conditions reported by Elliot and Boshoff (2005) include a knowledgeable
owner supportive of the project, a product champion and a network of contacts and alliances,
because of limited resources Porter (1990; 1996) further indicates that, without continuous, and
improving, productivity, competitive advantage is sustained with difficulty, and, he argues,
technology, superior and advanced input factors are central to superior productivity. Hough et al.
(2003) support this view, particularly for global operating environments, and they indicate that
developing regions spend less than two percent of budgets on research and development
(compared to ten percent in developed regions) that facilitate increased productivity.
32
2.5.1 Market access
The IFC (2004) indicates that competitiveness and good product quality alone will not ensure
SME success and Porter (1996) adds operational effectiveness to this. Porter (1996) emphasises a
strong competitive positioning, which directly relates to the markets the firm will access. Poor
market access was identified as a factor that contributed to poor SME performance and failure
(IFC, 2004). Much has been put in place to encourage governments and large business globally
and locally in SA to offer opportunities to small businesses, as for example through procurement
opportunities on large foreign investment projects, joint ventures and strategic alliances, and sub-
contracting opportunities. According to the IFC (2004), the small businesses often do not have
the knowledge and skills to capitalize on such opportunities and should be helped to do so
independently, or in strategic partnerships with other businesses. The DTI (2007) indicates that
in SA, initiatives to increase international market access in the tourism industry include
government sponsored advertising and brand building outside of the country and cost effective
participation in local and international trade shows. Little indication was found of initiatives in
the tourism industry to stimulate domestic market growth, which according to Porter (1990;
2000; 2001) vital to in initial growth and success of an industry cluster.
2.5.2 Economic and social factors
The economy and how a nation organizes itself in this regard may also impact the sustainable
success of small business operating in that economy. Porter (1990) with his Diamond Model
emphasizes the role of the economic factors in business success. Du Toit (2007) supports this
view and suggests that even when most of the factors considered so far (quality product,
favorable regulatory environment, high institution quality, innovation, technology, growth,
market access and a strategic management approach) are in place, the economy?s nature,
structure, health and stability, may prevent sustainable success. Du Toit (2007) argues that one
possible cause for business failure lies in the instruments used to regulate economic growth,
spending, saving, credit and balance of payment deficits. Her work demonstrates how a demand-
33
side approach within an economy creates a „poverty trap?, and she argues that failure can still be
eminent in an environment favorable to business start-up, successful skills transfer and market
access. Du Toit (2007) suggests a new paradigm, where „supply-side issues? rather than
„demand-side issues? are addressed. She advocates an approach that includes policy intervention
and investment in human capital and socio economic investment, i.e. investment in the operating
environments and particularly in socio-cultural institutions and communities. By improving
community quality, skills are raised, crime levels reduced, labor quality improved, values
improved, and so the ability of firms to succeed. Du Toit?s (2007) research thus supports Porter?s
(1990) findings with regard to the role of the quality of factor conditions and factors in
facilitating successful industries and firms.
2.5.3 Growth and competitiveness
According to Bannock (2005), the small size of SMEs can constrain their competitiveness,
because size may impact economies of scale and the ability of small firms to afford specialists.
Bannock (2005) reasons that they have to settle for generalists able to perform various functions.
He further indicates that small firms face more obstacles than do medium firms, and medium
firms more than large firms. Levine (2005) confirms the importance of firm size and growth of
SMEs, particularly in relation to funding. The deck is stacked, so to speak, against small firms
and, if they choose not to grow, or grow inadequately, it is imperative that solutions be found for
the problems and risks they face that stem from their size and the resultant inherent constraints.
Bannock (2005:47) acknowledges that smallness offers certain advantages “… small scale
confers certain advantages, notably initiative, flexibility, low co-ordination costs and the ability
to offer specialised and personal service, as we have seen, but the constraints are formidable”.
This is also illustrated by Burlingham (2005). Porter (1990) reasons that strategies, such as
enterprise networks and cluster support, may provide the support that businesses require to
succeed, particularly in fragmented (2005). Porter (1990) reasons that strategies, such as
enterprise networks and cluster support, may provide the support that businesses require to
succeed, particularly in fragmented industries that comprise primarily medium and small
enterprises. This is demonstrated and supported by Hiwasaki (2006).
34
2.5.4 Industry clusters
According to Porter (1980; 1990) industry networks play a key role in the firm?s sustainable
successful operation. Three types of networks are of particular interest to this study, namely
industry clusters, strategic groups and enterprise networks. Porter (1990; 2005) indicates that
„industry clusters? play a key role in facilitating healthy vibrant industries and at the same time
evolve from healthy vibrant industries, in an ongoing process. Porter (2000:254) defines a
cluster as “a geographically proximate group of process. Porter (2000:254) defines a cluster as “a
geographically proximate group of interconnected companies and associated institutions in a
particular field, linked by interconnected companies and associated institutions in a particular
field, linked by commonalities and complementarities”. Cluster boundaries are not static and
may vary, as the cluster evolves (Porter, 2000). Clusters may initially form spontaneously.
However, once depending on the perspective from which they are regarded, and may change
over time discovered, a cluster may be actively expanded and utilised to achieve firm and
industry goals (Porter, 1990; Porter, 2000).
Porter (1990; 2000) further indicates that clusters may be limited to one geographical location or
include any number of countries, and they may further vary in size, depth and sophistication, in
the types of membership businesses, as well as in formality. Unlike industry strategic groups
(Porter, 1980), clusters are not directly involved with strategic, or tactical decisions. Some
clusters function more effectively in some nations than in others as a result of culture, values and
norms in the nation (Porter, 1990). Porter (2000:259) argues that with clusters “the value as a
whole is greater than the sum of its parts”, and as such offers businesses that are located within
the cluster, a distinct competitive advantage.
Gilbert and Kusar (2006) support the findings on the flow of information through clusters and
the benefits to members. In global operating environments clusters provide the opportunity for
support in areas that benefit cluster members collectively (Porter, 2000), such as lobbying
government and industry and facilitating complementarities.
35
Porter (2000) further indicates that clusters play a critical role in stimulating competitive
advantage through increasing productivity, stimulating innovation and encouraging new business
formation (Porter, 2000). These benefits are critical to the long-term success and sustainability of
the firm and vibrancy of the industry. Figure 2.4 depicts the dynamic between cluster members
that facilitates productivity, innovation and new business formation, that, in turn, leads to
expansion of the cluster. The more the cluster evolves and strengthens, the greater the potential
benefits for members.
Figure : Advantages offered to members by clusters
Based on Porter (2000: Chapter 13).
36
2.5.5 Management of risk factors
Management of risk factors pose a risk to the survival of small businesses due to their size,
business structure and management practices (Bannock, 2005, Thompson & Strickland, 2003).
Firms are also at greater risk, as Porter (1990, 1996) indicates, when the macro and industry
environments are not adequately supportive to the firms in the environment, or firms are not
members of networks, or clusters. Thompson and Strickland (2003: 294) highlight why single
business firms such as SMEs are at risk in volatile conditions: “If the market becomes saturated,
competitively unattractive, or is eroded by the appearance of new technologies, or products, or
fast shifting buyer preferences, then a company?s prospects can quickly dim. It is not unusual for
changing customer needs, technological innovation, or new substitute products, to wipe out a
single-business firm.” Various studies (e.g. Bullen, 2005; Falkena, 2001; Hoyt & Hvenegaard,
2002; Ruggia, 2004) report on the impact of risk factors on firms, and to which tourism SMEs
are particularly vulnerable.
37
2.6 Maldives overview
2.6.1 Geography
Maldives, officially the Republic of Maldives and also referred to as the Maldive Islands, is an
island nation in the Indian Ocean consisting of a double chain of twenty-six atolls, orientated
north-south, that lie between Minicoy Island and the Chagos
Archipelago.
Maldives , officially the Republic of Maldives and also referred to
as the Maldive Islands, is an island nation in the Indian Ocean
consisting of a double chain of twenty-six atolls, orientated north-
south, that lie between Minicoy Island (the southernmost part of
Lakshadweep, India) and the Chagos Archipelago. The chains stand
in the Laccadive Sea, about 700 kilometres (430 mi) south-west
of Sri Lanka and 400 kilometres (250 mi) south-west of India.
Maldives consists of 1,192 coral islands grouped in a double chain
of 26 atolls, along the north-south direction, spread over roughly
90,000 square kilometres (35,000 sq mi), making this one of the
world's most dispersed countries. It lies between latitudes 1°S and
8°N, and longitudes 72° and 74°E. The atolls are composed of live
coral reefs and sand bars, situated atop a submarine ridge 960 kilometres (600 mi) long that rises
abruptly from the depths of the Indian Ocean and runs north to south. Only near the southern end
of this natural coral barricade do two open passages permit safe ship navigation from one side of
the Indian Ocean to the other through the territorial waters of Maldives. For administrative
purposes the Maldivian government organized these atolls into twenty one administrative
divisions
41
Maldives is the lowest country in the world, with a maximum natural ground level of only 2.4
metres (7 ft 10 in), with the average being only 1.5 metres (4 ft 11 in) above sea level, although
in areas where construction exists, this has been increased to several metres. However, more than
80 per cent of the country's land is composed of coral islands that rise less than one metre above
sea level.
2.6.2 Population and demographics
The population of the Maldives increased from 180,000 in 1985 to 330,000 in 2013. The
population growth rate between 1977 and 2005 appears to have fluctuated between 3.4 – 1.80
percent, the latter being the most recently reported value in 2005 census (MPHRE, 2005). The
high rate of growth of population is due to a reduction in the crude death rate that has resulted
from improvements in primary health care (IMR reduced from 128 – 20 per 1000 during the
period, 1978-2005). Thus, the Maldives has a relatively young
2.6.3 Economy
The Maldives with a per capita Gross Domestic Product (GDP) of US$ 4900 in 2014 (PPP
11300), economic life in the Maldives is now dominated by income from the tourism, hotel and
transport sectors. Fisheries have taken a much more backseat from what it was in the 1960 -
1980.Rapid economic growth is traceable to the quick growth of tourism which has increased
living standards yet hastened an increased cost of living. The impressive annual growth in the
economy since the latter part of the 70?s due largely to the increased receipts from tourism and
fishing as well as government investment in infrastructure, has been met with lethargy in the
decades since the 1990s. But the new Century has brought about a much faster growth as is
evidenced by the GDP?s expansion in 2014 to double what it was in 2000 (from 1 to 2.3 billion
(World Bank 2014)).
42
Table 1: Economic data’s of the Maldives.
Currency Rufiyaa
Trade organistations WTO,SATFA
GDP USD 1.3944 billon (
GDP per capital USD 8800 (2011) est
GDP growth 7.4% (2011 est
Population below poverty 4% (2008
Main industries Tourism , fishing, construction
Gross external Debt 943 million
Public debt 316 million
Revenue 758 million
Expensess 362 million
43
2.6.4 Tourism in the Maldives
The motivation for this study is to evaluate an answer to the question, if the Republic of
Maldives has the capability to handle the growing tourism demand, whilst facing the difficulties
of global warming. Working out the importance of tourism to the Maldives, will be the first step
to find the answer to the question.
One of the fastest growing sectors of the economy is the hospitality leisure and tourism industry,
which also has become the principal operation and resource of economic wealth. People travel
because of different reasons, such as: travel for visiting friends and relatives, pleasure,
entertainment, business, recreation education etc. Destinations compete to satisfy those different
needs by emphasizing the experience they have to offer to finally attract those customers to their
distinctive travel destination (Ritchie & Crouch, 2003, p19).
Tourism can be beneficial to a destination, in terms of employment, gross outputs and the input
tourism generates to the world economy. However, it also exerts impacts that are not favorable at
all, such as the require it makes on the global resources, directly or indirectly (Cater & Lowman,
1994, p.89). In order to minimize these negative events, the rate of growth of tourism
infrastructure needs to be controlled and the associated development must be carried out on a
sustainable basis (Zulfa & Carlsen, 2011, p.216).
44
2.6.5 Analysis of the importance of tourism in Maldives
Sun, exceptional and unspoiled white sand beaches, blue lagoons and colorful coral reefs. These
idyllic images pop up in one?s mind immediately, when thinking about islands tourism.
Tourism in the Maldives was first established by an Italian tourist operator named George
Corbin, who was supported by three adventurous Maldivians, Hussain Afeef, Ahmed Naseem
and Mohamed Umar Maniku (Zulfa & Carlsen, 2011, p.216). Today, out of those three
entrepreneurs, two own the two largest tourism organizations in the Maldives called Crown
Company and Universal Enterprises (Zulfa & Carlsen, 2011, p.216). Moreover, in 1982 Mr.
Maniku and Mr. Afeef established and participated in the Executive of the Maldives Association
of Tourism Industry, abbreviated MATI. „Under these two pioneers, the tourism industry in the
Maldives has transformed itself to an exemplary status, demonstrating the innovative ability of
Maldivians and the spirit of Maldivian enterprise? (Reimer cited from Zulfa & Carlsen, 2011,
p.216).
Due to the decisive growth in infrastructure and the considerable amount of new building
constructions, comprising mainly five star resorts, the archipelagos shifted expeditiously into a
high-class deluxe tourism destination. In the early stages of tourism, government leased out only
islands for the purpose of tourism, nearby the only international airport, located on the North
Malé Atoll on Hulhulé Island, away from the local inhabited islands (Zulfa & Carlsen, 2011,
p.217).
Later, under the Second Tourism Master Plan, the government released further atolls for the use
of tourism. New principles were agreed on under the Third Master Plan, where tourist
development was allowed to expand across the whole archipelago, implying new undertakings to
build domestic airports to interlink all atolls (MOTAC, 2012, p.10). Seaplanes and helicopters
are used to reach the atolls today, which is facilitating the journey to the different island resorts,
which also had well supported the development of tourism in the archipelago, as islands far off
have suddenly become within easy reach (Zulfa & Carlsen, 2011, p.217).
45
2.6.6 Tourism facts and figures
The Maldives has recorded a reduplicating in arrivals over the last 20 years (Carlsen, 2011).
Only very few tourism destinations in Asia are capable to show such a climb in arrivals.
Therefore it is clear that the Maldives had to rapidly adapt to those considerable changes under
certain conditions, the Maldives are liable to.
The economy is dependent on mainly two industries, the fishery and tourism, including the
„countries fiscal revenues, foreign exchange earnings and employment and growth? (Majeed,
2006). Each of these sectors faces a high and cosmopolitan competition.
According to the Tourism Yearbook 2012, produced and published by the Statistics & Research
Section of the Ministry of Tourism, Arts and Culture (MOTAC), the tourism arrivals have
increased significantly during the last decade.
2.6.7 Challenges of tourism in the Maldives
The Maldives is facing several challenges and obstacles that must be overcome in order to
maintain the country?s existence, by managing the necessary increasing tourism demand and at
the same time, attempting to fight global warming effects.
However, the situation is not simple. That is why several aspects need to be considered and
thoroughly thought through in order to be able to improve the circumstances.
The first concern, that needs to be addressed, is the labor situation and the educational
opportunities offered by the country. The possibilities for employment in the Maldives are
increasing; the local share of the jobs in the tourism and hospitality sector is proportionally
humble (Shakeela, 2007). Even though, the Maldivian government employment regulation states,
that resorts are obliged to engage at least fifty percent of residents, most of the managements are
not able to follow through with this, as not enough skilled local workforce is available (Shakeela,
2007). Therefore a high proportion of expatriate employees are hired to carry out these vacancies
(Shakeela, 2007). Due to these facts, it might become obvious, that expatriate employees govern
46
the best-paid occupational groups, such as managerial and other senior positions, whereas the
locals remain to fill up underpaid jobs, that require no, or only little qualifications.
Figure 4: Comparison of Expatriates and local Employement by Industry in March 2006
(Shakeela 2007)
As shown in figure 7, the Maldives demonstrates a large share of expatriate employment in
several industries (Shakeela, 2007). The need for the Maldives to educate local workforce is
becoming very important, since the demand for high-performance service is continually
increasing. Moreover, attractive payment must be offered to local skilled employees, which
should make up for the costs of inhabitants, who are staying away from their families (Shakeela,
2007). It is evident, that some action must be taken in this field, to improve the present situation,
by introducing various local education facilities as well as by providing better-paid jobs to the
local communities.
47
Second, the consequences of waste on the environment can lead to great losses. Tourism is
growing constantly and as a result, so is the waste and pollution generated by them. Waste
generated due to tourism activities, was investigated to be much more than a simple household,
in fact tourists produce about 16.5 kg of trash per week (Zulfa & Carlsen, 2011, p.219). The
small islands struggle to cope with a relentless stream of rubbish produced by three-quarters of a
million visitors (more than double of the domestic population), who are visiting the islands. The
solution found by the Maldives was to transform one of its islands, named Thilafushi into the so-
called Rubbish Island (Hall, 2012). This island was built about 20 years ago on regenerated coral
reefs, Hall described the mass as „clouds of pungent, toxic smoke rising from open fires, piles of
filth made up of plastic bottles, crisp packets and consumer detritus... it?s a far cry from the white
sands, crystal-clear waters and gently swaying palm trees that we associate with the Maldives,
the quintessential paradise island holiday destination set in the Indian Ocean.? Today, they
ultimately dispel the idea of a dumping island where they burned 330 tons of waste every day
because consequences can be seen already, such as environmental damage as plenty of lead,
asbestos, and other poisonous materials have been offloaded into the sea. „Little surprise then,
that tourists on the holiday of a lifetime prefer to sip a cocktail and look the other way? (Hall,
2012).
Today, according to Hall (2012) most of the cargo boats are transporting the rubble to India. A
solid waste management system must be carried out but also recycling and refuse avoidance are
very important issues for both, economic and ecological reasons. Another problem, which
occurred with regards to this increasing tourism industry, accordingly to Karthikheyan (2012) is
that „natural resource and environmental degradation associated with tourism activities are
sometimes serious problems in countries like Maldives that are top tourist destinations, the
management of natural resources to reverse this trend is thus one of the most difficult challenges
for governments at different levels.? As a result, the major consequences due to tourism are, the
stress on scarce natural resources, destruction to the marine ecosystem and waste and pollution
difficulties. Moreover Karthikheyan (2012) argues, that poorly controlled tourism development
and environmental aggravation represent a severe danger to tourism. In summery the most
endangered natural resources are according to Karthikheyan (2012), fresh water, land and marine
resources.
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2.7 Impacts of Tourism
The economic impacts of tourism are mostly presented in a positive way. While this is widely
accepted, it is also true that even in cases where economies are positively influenced by tourism
they are often accompanied by negative effects. These may include economic, social and
environmental consequences.
On the economic front, negative effects are often borne by the local population living in the
tourism district. These effects include the following:
• An unstable source of income and employment: “Tourism has several negative externalities
attached to it: it is subject to seasonal fluctuations and high elasticities of demand and can
therefore be an unstable source of income and employment” (Cornelissen, 2005: 163).
• Increased property prices: “The changes in land-use patterns from an agricultural society to
the tourism industry introduce modified land-use patterns as tourism increases land prices as a
result of competition and thus encourages sales (Krause 2005: 32). This could lead to locals
finding it difficult to buy property as prices remain too high in relation to rural salaries
• Loss of non-tourism industries: The agricultural productivity of an area may be lost due to the
utilisation of land for tourism. As such, tourism could potentially displace other sectors of the
local economy (McAlister, 2011).
• Increased prices of goods: As result of tourism demand the prices of goods may be inflated to
the detriment of local residents and may contribute to inflation (Krause 2005: 32). In addition,
economies in which tourism plays a significant role are often quite vulnerable as revenues from
tourism activities may fluctuate as a result of factors such as seasonality, economic recession,
terrorism, extreme weather or the occurrence of natural disasters. Such fluctuations may pose
challenges to local businesses and may reduce overall efficiency in the utilisation of resources
and labour (Nedelea et al., 2008: 243).
A occasionally recognised fact is that when municipalities or private capital invest in
destinations for the purposes of developing tourism it presents an opportunity cost. The same
49
resources could have been injected into the development or expansion of other industries.
Therefore, what needs to be researched before investments are made are “the relative economic
benefits of investing in tourism as opposed to investing in another industry” (Krause, 2005: 30).
Earlier reference has been made to the negative social and environmental effects of tourism. If
not addressed, these can have serious consequences for the tourism destination. Keyser (2009:
351) maintains that tourism cannot exist without the environment. Yet, as an activity, tourism
has the capacity to destroy this foundation.
While it is possible to harness tourism to empower communities and to develop tourism products
that are environmentally sustainable these are difficult to achieve in practice (Cornelissen, 2005:
183). Social and physical impacts are more difficult to determine than economic impacts of
tourism The former often consists of intangibles or features that cannot be compared to another.
reference while the latter can be analysed numerically (Krause, 2005: 22). From a social
perspective it should be borne in mind that incomes generated through tourism activities are
seldom shared equally by the local population (CSD, 1999: 5). While systems like the Fair Trade
concept have been introduced to ensure a more equitable spread of benefits it has been found in a
study conducted by Krause (2005: 31) that even where attempts are consciously made to spread
income equitably the result is often still not satisfactory.
Keyser (2009: 353) lists several environmental impacts of tourism and tourism activities, which
include:
• The depletion of environmental resources
• Pollution of air, water or soil
• Physical damage to environmental resources
• Loss of biodiversity
• Loss of aesthetic qualities.
More recently, there has been a growing recognition of the economic value of the services that
ecosystems render. Any damage to such systems which affect such services invariably also
impact on the sustainability of the economy as a whole (Brummer, 2010).
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2.8 Island Tourism Environment
The fragile state the Maldives is in is demonstrated by the severe impacts of climate change,
today. Natural resource loss is a predicament for the environmental condition but also for the
tourism, which is dependent on the preservation and condition of the biodiversity. To maintain
those unique places, there is a need for raising awareness, sensitivity and responsibility in the
behavior and attitude of individual tourists. While most visitors claim, that they are aware of the
impacts on the environment, resulting from tourism activities, most travelers intend to act as
green tourists. However, with their visits, they are „pushing against the carrying capacity and
hence the sustainability of regional environment? (Cater & Lowman, 1994, p.33). Carrying
capacity may be a good concept to monitor the impacts on the environment, due to tourism.
Nevertheless with the increasing demand it might become difficult keep up. Yet, these are the
roots of the conflict, as tourism is causing the loss of diversity but is dependent on the construct
it is systematically destroying. However, the evaluations of compliance to monitor the carrying
capacity of the islands are subject to judgment and determinations. These policies include, that
the total area of tourism development is no greater than 20% of the island land area (Cater &
Lowman, 1994, p.33). Moreover Zulfa et al. (2011) states, that 68% of the beach space must be
assigned to guest rooms; 2o% can be used for guest facilities, such as reception and restaurants,
whereas the final 12% could be utilized for open space between guest rooms. If the demands
were to increase, the limited resources available can only be used to a certain extent, which
would make the increasing request difficult to trade with.
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2.9 Island Tourism Communities
Islands suffer from a range of impacts due to tourism, as discussed in the previous chapters.
Indeed, in terms of island tourism communities, inhabitants did not only profit from the growing
tourism development, they also had to abandon a lot, in order to give way to tourism. Mainly,
they were forfeiting their control, when tourism tended to appear (Carlsen, 2011). The
government exerted a considerable political pressure on the local people, in most extreme cases;
this even leaded to exploitation and suppression of the local inhabitants (Carlsen, 2011). This is
already and must be revised to guarantee sustainable development.
As most of the tourism destinations, also the Maldives are struggling with guest relations and
tensions, whereby in this situation the geographical position must be strongly taken into account,
the difficulties this collision of different interests, where people are living closely together, are
extreme challenging. Differently to urban tourism destinations, where people can escape from
tourism by moving to the more suburban boroughs, the Maldives islands only have a narrow
capacity of living area.
52
2.10 Island Tourism Economies
Carlsen (2011) is questioning, why islands, such as the Maldives, would encourage tourism,
knowing all the negative impacts tourism exposes to the community and the island. The question
is easy to answer; the Maldives is in a predicament, where they only have restricted possibilities
for growth. According to Tourism and Events Queensland (2013) „Tourism is one of the most
effective ways of redistributing wealth, by moving money into local economies from other parts
of the country and overseas. It brings income into a community that would otherwise not be
earned.?
However, some issues need to be observed when reflecting upon island tourism economies.
Referring to Carlsen (2011), the Maldives is highly reliable on external economies and
governments for income and resources. The islands are having restricted abilities to produce
goods and services and most of what they are selling, needs to be imported, meaning that most of
their incomes are flowing to other countries, from where they obtain their goods (Carlsen, 2011).
Hydroponics gardens are a major step forward to become more independent, however small
island often do not have the amount of space to build them.
Another problem is posed by external impacts, as islands like the Maldives are often subject to
market forces and trends, where only one event can affect the tourism arrivals, such as political
events, natural disasters and the following effects of these impacts (Carlsen, 2011). According to
the MOTAC (2012), tourism was significantly impacted by the tsunami in 2004, which
concluded in a strong reduction in arrivals in 2005.
Summarized, islands need to be understood from multiple perspectives such as from a social,
ecologic and economical angle. The objective is to balance the economic prosperity for the
residents? social cohesiveness for the islanders and visitors and the conservation of the
environment, which is the main reason and often the pull factor which encourages people to visit
(Carlsen, 2011). All of these factors need a good management where government comes into
play.
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2.11 Introduction of Guest houses in local Islands
The shift from luxury hotels to mid-market budget hotels in the last few years for delivering
quality service, establishing island tourism and opening for budgeted travel brought a new
concept to the sector while maintaining a loyal customer base and has opened ways for the
hospitality industry in Maldives. Due to this new opening of new concept from traditional one
island one hotel concept brought industry experts and government authorities and open
discussion doors for budget hotels to understand their “formula for success explores their scope
and feasibility, guest expectations, policy level frames and more in Maldives market.
54
2.11.1 History of Guesthouse Business
In Maldives, prior to the development of the tourism guesthouses were state owned
establishments, operated by the government to host state guests. With the emergence of tourism
as an industry, the government constructed a Hotel in Male? and leased it to a private party for
operation. Subsequently, private entrepreneur also developed a hotel and operated until the late
1980?s.
The guesthouses and hotels are built on land allocated for housing under a special permit from
Male? Municipality or a part of the house is converted into a guesthouse. Initially, there were
rooms that were registered in the Ministry of Tourism and rented out to tourists, and the houses
where such rooms are available were also considered guesthouses. However, such practices have
been now ceased. The number of guesthouse and hotels rapidly increased in the late 1990s. This
is largely because as domestic air transfers are inoperative after dark, hotels and guest houses are
used by tourists who arrive by night flights, hence, an increasing number of beds in islands
further away from Male?, results in an increase in demand for beds in these establishments.
Further, as large foreign tour operators funded most of the resorts, the beds were sold in advance,
hence they were unavailable to some travellers although, the absolute number of beds in the
industry increased. And, the additional marketing and promotion campaigns of many new resorts
and travel agencies also escalated the demand for Maldives, contributing to price rises. These
were the major reason for a rapid increase in the number of hotels and guesthouses.
In summary, initially tourists were permitted to stay in inhabited islands, but as new laws
restricted tourists to board in inhabited islands, tourist accommodation were limited to resorts,
guesthouses and hotels in Male?. In Male, there were two hotels initially, but a few more were
added in the late 1990s, and the number of guesthouses increased rapidly. Capacity expansion in
Male? is positively related to the capacity expansion in distant islands and safari boats. This is
55
because Male? is a transit point for tourist proceeding to distant atolls who arrive at night and
guests who board on safari boats. In the late 1990s, the capacity in distant islands and safari
boats increased, while there was a supply shortage of resort beds close to Male?, hence at that
time hotels and guesthouses increased rapidly in response to the demand. However, even though
beds in guesthouses and hotels increased in numbers and physical qualities improved, the travel
package in general has not been enriched.
2.11.2 Challenges & opportunities of the tourism sector for the Islands
It is obvious that tourism activities cannot escape without taking harm. Tourism, under further
consideration, incorporates several benefits but also various disadvantages. On the one hand,
tourism in the Maldives delivers significant advantages to the economy as well as to the
individuals and on the other hand it is responsible for environmental pollution, an increase of
greenhouse gas emissions and debates of interest in dividing resources between inhabitants and
tourists, which will be further analyzed in this chapter (Karthikheyan, 2012, p.345).
2.11.3 Opportunities of Guesthouse tourism in the Maldives
Tourism is the strongest contributor to the countries revenue, and a great deal of the Maldives?s
economic rise was caused by the development of resorts and tourism (Karthikheyan, 2012,
p.345).
Increasing gueshouse tourism goes hand in hand with job opportunities, as one of the main
advantages of tourism is employment potentiality to the Maldivian population. With the
increasing visitors a fair supply of skilled labor will be assured for the long term.
A new generation is ready to take over Shakeela (2007) states that out of about 300,000 people,
living in the Maldives over 39% are under the age of 18. Moreover, looking at this high number
of young citizen, the tourism and hospitality sector can be renowned as one of the main
auspicious fields, to offer profitable job opportunities for the increasing young generation
(Shakeela, 2007). However, it is questionable if the necessary trained and educated employees
are on-hand and if the needed facilities to educate them are or will be available.
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2.12 Economic importance of Guesthouse and Small medium enterprises
Tourism is an important industry in the island of Maafushi. Growth in this industry and the
equitable spread of benefits will have an effect on the standard of living and the In conclusion,
this thesis has explored the practical steps of establishing a guesthouse in an underprivileged
community, which seems to be a promising way to advance community development,
empowerment of the residents, participation in the development process and cross-cultural
interaction. Tourism shall neither be underestimated in the cause of promoting sustainable
coexistence, as peace grows from mutual respect. level of investment in the region. “Economic
benefits and costs of tourism reach virtually everyone in the region in one way or another”
(Stynes, 1998: 1).
Figure 5: Calculating Economic impact of tourism
From an economic perspective tourism is an “activity that is defined by consumers at the point of
consumption” (Nedelea et al., 2008: 250). This means that any money spent for any reason by
tourists in a specific location will make a contribution to the economy of that specific location
(Nedelea et al., 2008: 250).
Tourist spending takes place across all sectors of the economy and is not only limited to those
parts of the economy with “identifiable tourism characteristics sectors such as transport, hotels
57
and recreation”. Spending may include purchases of groceries, fuel and other items not normally
seen as part of the “tourism economy” (Nedelea et al., 2008: 250). Clearly then the initial
expenditure by visitors can have significant additional effects throughout “the rest of the
economy, resulting in increased income and expenditure by a wide range of household groups
not necessarily directly connected with tourism” (Pao, 2005: 70). As a result, analysis of the
economic contribution of tourism becomes a complex task. The complexity has been subject to
considerable debate. “Resolving this debate requires reliable and rigorous information on the
precise nature of tourism spending and its impact on different sectors of the economy” (Nedelea
et al., 2008: 246).
Figure 6: Economic Effects of Tourism; Direct, Indirect
result of tourism, secondly from tourists paying taxes on goods and services bought while on
holiday, and lastly from specific taxes levelled at the tourism sector (CSD, 1999: 5). All three of
these sources of tax are evident in South Africa, with the last source presented as a tax on all
bed-nights utilised by tourists (Van den Berg, 2011).
58
Often, some of the money generated by tourism is lost for the local economy. Typically, this
takes place through, for example, taxes, savings or paying for goods and services outside the
region where the tourist revenue was generated (Guidance Tourism, 1998). Some authors go as
far as to include salaries of executives that are not resident in the area of the local economy
(Crompton et al., 2006: 81).
Lastly, to understand the economic impact of tourism consideration must also be given to the ast
investments made by governments and private capital to develop tourism infrastructure and
destinations. These actions in themselves have a massive impact on economies in that they
require the procurement of goods, services and labour (Stynes, 1998: 3).
2.13 The economic importance of Small medium Enterprises
According to the IFC (2004) small businesses are central to poverty alleviation and economic
stability, with world population figures rising from six billion to eight billion, and with most of
the growth coming from poor countries in the developing world. Bridge, O?Neill and Cromie
(1998) indicate that SMEs play an important role in developed countries too, because of the
decline in employment opportunities in the large business sector.
As economies grow strong, the importance of the informal sector and micro enterprises
declines, but the importance of SMEs increases, with SME contribution to income and
employment increasing as countries grow richer (Ayyagari et al., 2005). The different
approaches to the SME sector and SME policy making are, however, underpinned by beliefs
about the sector. Some of these approaches and „beliefs? are discussed in the next section.
59
2.14 Determinants of tourism demand
Middleton and Clarke (2001) argue that a few key factors underpin demand for tourism and that
these are the same for all countries. They indicate that demand patterns locally are unique to that
area, the overall demand is driven by a few drivers that are monitored by tourism managers the
world over.
Economic factors (income), in both the country of origin of the tourist and the destination, and
comparative prices, between place of origin and destination, drive travel volume. Another
determinant is the demographic profile and education of prospective tourists, where the higher
the social class and income, as well as education, the greater the volume and value of travel, but
also possibly the more demanding the travellers. The geographic profile of the destination is yet
another determinant, where factors such as scenic beauty, climate, eco, or adventure travel
opportunities could be the main attractions to a destination.
Socio-cultural attitudes to tourism play a role in shaping the way in which a potential traveller
will allocate time and money towards leisure activities and, as such, is an important facilitator of
travel. Government and regulatory aspects affect travellers indirectly as it affects the framework
within which travel products and services are offered. Although the regulations are generally
aimed to benefit one group, or another, e.g. employees, the disabled, the environment, health and
safety, the result is a financial burden on the product, or service provider and, therefore, in the
end, also the traveller. Media and communications, information and communication all play an
important role in making prospective travellers aware of tourism goods and services. It also
facilitates usage, as for example with the internet
Factors that influence demand and supply include demographic profile, lifestyle and economic
capability of the ever changing, increasingly sophisticated and demanding travellers. Where they
go and what they do is in turn affected by the destination profile and the ability of the industry to
60
offer affordable, desirable products and services. When and how they go and for how long all
depend on the economics of the destination and the place of origin, as well as the perceived
speed, convenience and cost of travel, accommodation and planned activities. Lastly the
individual?s economic ability and education, access to information and easy engagement (for
information, and purchase) with the industry, destination and products all influence volume and
demand. This section serves to illustrate the context in which the guest houses under
investigation operate and what factors may impact on their success and sustainability.
Figure 6: Industry context, supply, demand and competition
Source: Based on industry literature reviewed.
In summary, it may be concluded that tourism demand and supply are affected by a variety of
factors. Demand is, however, affected by another critical aspect of the tourism industry, namely
the impact of global events and disaster.
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2.15 Supply, Distribution and Demand for growth of guesthouse business
The complexity of the tourism product, the supply to the industry and the demand structures have
been discussed in the previous sections. The complexity of supply and demand and the
interrelation of suppliers of diverse goods and services to tourists have an impact on the
performance of tourism suppliers, such as guest houses, therefore, key aspects will be reviewed
briefly. Figure down below summarizes supply, distribution and demand of tourism goods such
as accommodation.
Figure 8: Supply, distribution and demand: key market segments
Source: Based on literature reviewed.
Demand for accommodation flows from four main target market segments and, mostly, supply
occurs through tourism intermediaries (Bennett, et al., 2005). Even when direct selling occurs,
guest houses, for example, rely on referrals from past guests and publicity association staff for
bookings. When reservations are made via the internet, the internet website acts as intermediary?
in that it has the „power? of attracting, or failing to attract prospective guests.
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2.16 Theoretical Perspectives
Porter (1990:1) poses the question “Why are firms based in a particular nation able to create and
sustain competitive advantage against the world?s best competitors in a particular field … why is
one nation so often the home for so many of an industry?s world leaders?”. Porter 1990) argues
that that a nation?s success is based on a small number of successful industries that it supports in
such a manner that the firms within that industry are able to operate successfully in the long-
term. Porter (1980; 1990) developed two models with which to examine the elements, locate in
the firm?s operating environments that facilitate success. He emphasizes that the mere presence
of the elements that facilitate success, will not result in success, but are dependent on the values
of the nation (refer section 2.4.4, Figure 2.12), that determine the quality of the leadership,
management and human resources and the actions they take (Porter, 1990).
In the Five Forces Model (refer section 2.4.3, Figures, 2.10 and 2.11), Porter (1980) addresses
industry competition and how it impacts firm success. The model outlines the elements, and
the dynamics between elements that facilitate, or restrain success. The Five Forces Model does,
however, not pay much attention to the macro, or micro operating environments. With the
Diamond Model (refer section 2.4.4, Figure 2.13), Porter (1990) addresses the structure,
conditions and dynamics of the macro and industry environments and their impact on firm
success. Porter (1990) argues that a nation with successful industries, and thus firms, uses its
natural and acquired resources to offer an environment that facilitates success, in an ongoing
process in which the environment is continually upgraded, to become more sophisticated and
advanced, through ongoing investment in it. Porter (1990) indicates that groups of interrelated
factors rather than individual factors facilitate success.
63
The impact of globalization on firm success prompted some augmentations to the models to
indicate their validity and usage under such turbulent and hostile conditions (Porter, 1996; 2000;
Porter & Stern, 2001; Furman et al., 2001). Porter?s (1980; 1990; 1996; 2000) theoretical models
and augmentations (refer section 2.4.5) were selected as the theoretical framework for the study,
although the models are not directly linked to one another in their original form. For the purposes
of the study the models are linked in a number of ways. First, the models are linked to the three
layers of success identified in the literature review and then the Five Forces Model is
superimposed on the Diamond Model (refer section 2.4.4, Figure 2.14), to indicate that the firm
is seated in an industry, which in turn is located in the environment with its „conditions? that
facilitate success.
2.16.1 The „three layers of success? and Porter?s models
There is little indication from the literature, on SME success and failure, of the manner in which
the interrelationship between the SMEs and their operating environments contribute to success
and sustainability. Porter?s (1980; 1990) models provide a structure for the holistic approach to
exploration and assessment of factors contributing to success. Figure 2.8 depicts the areas
addressed by the SME literature reviewed for the study and how the Five Forces and Diamond
Models fit with the „three layers of success?.
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Figure 10: Three layers of success
Source: Based on literature reviewed for the study
Porter (1996) argues that interrelated elements located in each of the operating environments
create an environment (env.) conducive to success, but that visionary leaders allow firms, located
in such lucrative environments, to identify a sustainable competitive advantage and strategy that,
with operational effectiveness, ensure sustainable success in global turbulent conditions.
Figure 11: Areas that success factors emanate from, or are located in
Source: Based on literature reviewed.
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2.16.2 The triple bottom line approach
However, as mentioned above, sustainability is far more than just looking after the natural
environment, as it also deals with the social and economic influence of human activities. The
difficulty for the Maldives is to stimulate the increasing economic development by offering
economic and social advantages to the inhabitants, while maintaining the natural assets and
marine biodiversity. „The triple bottom line?, abbreviated 3BL, is an integrated concept of
sustainability, where all three components are distinguished.
Figure 7: Triple Bottom line Method
Originally, the idea of the 3BL was used as a business performance framework measure in
concern with company environmental reporting, where enterprises were communicating with
stakeholders about social equity, economic wealth and environmental affluence (Elkington, 1997
cited from Dowling & Page 2001, p.216).
John Elkington (1997), the founder of the „triple bottom line? argues, that enterprises should
arrange three various bottom lines, firstly the measure of the financial performance, secondly the
measure of social performance and thirdly the bottom line of the company?s planet account,
which accounts for how sustainable the company is. People, profit and planet are therefore the
three elements of the 3BL. The main goal was to compute the financial, environmental and social
performance of enterprises over a specific period of time (The Economist, 2009).
66
Today, triple bottom line reporting is an agreed approach in tourism, to display that the
destination has procedures for a sustainable development. Dowling & Page (2001) state, that the
3BL management principle, in context with sustainable tourism, includes to position earnings
next to the consideration for the natural environment while respecting human beings, which leads
to the so called „win-win-win? situation. This approach aims to manage all resources to an extent
that social and economic demands are met while preserving the environment, the biodiversity
and the culture.
Therefore destinations need to take all three components into account such as a destination?s
economic, environmental and social performance.
2.16.3 The role of tourism in communities
Regional economies and poor communities may benefit through tourism projects aimed at
achieving this. Hiwasaki (2006) identifies four objectives of community-based projects. Such
projects aim to empower the communities and the businesses within it, and through this offer
social and economic development. In addition resources are developed and protected,
particularly with the aim of offering the visitor a quality experience in the community. Some
such projects are purposely planned and supported by government to uplift communities which
indicate that positive benefits are not always achieved, as in the case of the Cancun project.
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Figure 8: Relationship of guesthouse and its stakeholders
If local economic benefits are to be maximised and sustained, local enterprises and particularly
SMEs, should be strengthened, developed, their capacity built and their efforts integrated (Gunn,
2002; Mak, 2004). In this manner leakage is reduced (George 2007). Furthermore, Richards and
Hall (2000) point out that part of the success, of community-based projects, lies in clearly
defining the „community? and understanding its strengths and weaknesses, so that appropriate
strategies may be formed relating to informing, sustaining, marketing and networking the
community, the latter with the specific purpose of empowering the smaller enterprises and
making them more competitive. Richards and Hall (2000) also contend that policy frameworks
for community based projects fail to take the social, environmental and economic fabric of
communities into account. Hiwasaki?s (2006) research demonstrates the role of enterprise
networks in maximizing benefits to the community Successful community integration is closely
tied to successful networks in which communities are represented.
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2.16.4 Conclusions from the theoretical overview
In summary, Porter?s (1990) Diamond Model identifies four areas, or determinants that work
together in a mutually dependant manner to create the quality and type of national macro
environment and climate in which firms operate and compete. These determinants are factor and
demand conditions, related and supporting industries and firm strategy, structure and rivalry.
Five Forces Model deals with the structure and competitive forces of the industries seated within
the macro environment, with which the Diamond Model deals. The Five Forces Model identifies
five competitive forces operate and how they impact on industry dynamics. Various institutions,
present in the nation, namely socio-cultural, religious, family and educational institutions, are
instrumental in forming the values, norms and culture of the nation and they, in turn, help shape
the determinants, through the roles they play in driving attitudes, choice and behaviour.
present and supported by strong domestic markets and industries. The threat of imitation in the
technologically based and information driven global market place is also highlighted and the role
of sustainable competitive advantage in long-term success emphasized. The section further
indicates that the factors identified as critical to success in Porter?s (1980; 1990) models and
augmentations form a system of factors that are together, rather than individually, responsible for
sustainable success in the long-term.
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CHAPTER 3 RESEARCH METHODOLOGY
3.1 Introduction
Qualitative as well as quantitative analysis were employed in the preparation of this document.
Although, quantifiable indicators are available for many aspects, in some areas, such indicators
or data were unavailable hence; in such aspects a qualitative approach has been used.
In the preparation of this report, both primary and secondary data were used. The sources of
secondary data are mainly statistical publications of the Ministries of Tourism; Planning and
Development, and Education; the Maldives Monetary Authority and other papers published by
different government and international agencies. As many entrepreneurs and most key
stakeholders of the industry are easily accessible, personal interviews were conducted from
August to December 2000. Financial information in the proposals submitted for the development
of new resorts, and interviews with some developers and accountants of the sector, are the
sources of the variables used in the consisting of resort owners, managers and employees;
owners and operators of travel agencies and safari boat. Initially, papers covering key aspects of
the industry were presented to the workshop. After the presentations, discussions were held on
key issues related to tourism. Most discussions were held in small groups but group findings
were submitted to the plenary for further discussions.
After the discussions recommendations were drawn. The basis of the future policies and strategic
objectives outline in this report are those recommendations and suggestions.
The detailed description of the context of this study, combined with the evidence revealed in
Maafushi, supports the transferability of the research onto similar venues established or potential
backpacking and travel destinations. As the research focused on the local aspects of cooperation,
full transferability onto other local community see the potential of introducing tourism for
development, is assumed.
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This study has raised awareness of the potential that community-based guest house business
initiatives can have on sustainable socio-economic development, resident empowerment, and
coexistence aspects. This awareness should therefore not be neglected, as it indicates on a
promising tourism development strategy that can relatively easily be adapted by other islands.
3.2 Research Approach
The research questions posed above express a need for learning more about the dominant
concepts of enterprise modeling as a research domain. Hence, a quantitative approach research
approach based on survey questionnaire , document studies is taken from real world modeling
projects is argued for in order to meet the research objectives. However, a few alternative
research approaches will also be discussed.
? Four alternative approaches
From literature and discussions on various traditions and approaches to "good" research (Denzin
and Lincoln, 1994; Johannessen, 1992; Miles and Huberman, 1994; Strauss and Corbin, 1990;
Walsham, 1995), four potential research strategies have been considered for the research project:
1) Logical theoretical research
2) Quantitative, experimental research
3) Qualitative, observational research
4) Participatory action research
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Figure 9 : Four alternative research Approaches
Above, a brief discussion of how each strategy could have been applied is provided. The various
approaches can to some degree be combined in the same research project.
Outline of a research approach
The research strategy referred to as qualitative and observational in section covers a diversity of
approaches that resemble each other to a more or less degree. Without getting trapped in the
often heated debates on what characterizes right and wrong approaches to good research, a
few principles that worked as guidelines in the research project are discussed.
3.3 Research Design
The study required a direct approach and was therefore conducted with the context of research
using both constructionist and interpretive approached. The methodology of choice ,as it allowed
the examination off the research subjects, the guest houses , with the context of operating
environments, it future offered a flexible approach and utilization of a data collection strategy
that allowed the use of multiple data sources, as well as qualitative and quantitative dada
collection methods. The location for the study was selected by taking the objective of the study,
the methodology and specific guesthouse tourism industry factors into account.. The guesthouse
included in the study was selected using purposive sampling.
72
3.4 Limitations of the Study
This research is been conducted only in the island of Maafushi which is one of the island which
operate guesthouse business in Maldives. But as of today most of the guesthouses are scattered
around the archipelago of Maldives. Many guesthouses are operating in various atolls and the
demand for this business in increasing.
Due to the fact that the survey is only made is one island the results when compare to other
island may differ as the numbers vary. The results of this research cannot be applied on a broader
level.
73
3.5 Sampling and Area of the study ( Maafushi Island)
Maafushi Island/ North Male Atoll consisting of 2692 people as registered population and , but
the number has increased due to the establishment of guesthouse. The island is catering, and 352
foreigners. There has been a 17% increase in the residing population of the Island since the
previous Census which was done in 2006. The population of Maafushi represents 13.84% of the
total locality (Kaafu Atoll). This boom in population is mainly due to the guest house / hotel
industry growth witnessed during the last 5 years.
There are more than 30 guest houses in Maafushi as at June 2014, and it is the only local
inhabited island with most number of guest houses and guest beds in the country. The guest
houses provide the island with direct employment and many other indirect economic benefits to
almost every family in the island. Most guest houses are funded by direct investments by local
residents of the island. However, recently there have been investments by businessmen in Male'
and elsewhere.
Guest houses provide various excursions, including, snorkeling, fishing, water sports, and
picnic island excursions. There are also three dive centers in Maafushi.
There are more than 30 guest houses in Maafushi as at June 2014, and it is the only local
inhabited island with most number of guest houses and guest beds in the country. The guest
houses provide the island with direct employment and many other indirect economic benefits to
almost every family in the island. Most guest houses are funded by direct investments by local
residents of the island. However, recently there have been investments by businessmen in Male'
and elsewhere.
74
Guest houses provide various excursions, including, snorkeling, fishing, water sports, and picnic
island excursions. There are also three dive centers in Maafushi.
The main objective of allowing guest houses in local islands by the government in 2009 is to
make economic growth more inclusive. As guest houses allow local residents to earn a living
directly while residing in the island, it also makes tourism receipts more inclusive, and income
distribution more even. Prior this policy, tourist establishments were allowed only on separate
uninhabited islands, and they are mostly called "Resorts". Most these resorts are owned and
operated by few businessmen in the country, and the rest are owned and operated by foreign
companies. Hence, the true benefits of tourism were not penetrated to the local citizens of the
country. This was evident by the most recent economic survey conducted by the Government,
which revealed that over a period of 5 years, the income distribution of the country has become
more uneven, although the country's GDP has expanded.
Come 2013, we have altogether 20 guest houses in Maafushi now, and 144 rooms. Which means
even if we didn?t consider the family rooms, that?d be 288 beds, and with 65% occupancy a
68,328 bed nights per year. Assuming average duration of stay is 4 days, that?s 17,000 guests per
year. With conservative estimates and past revenue records, it is estimated that about $9.7
million will enter the local Maafushi economy, and the guest houses will be paying the State as
bed tax and GST a total of $1.3 million (equivalent to MVR 20 million). The income per head
from guest houses alone is $4,425 per head in Maafushi. The total income per head of Maafushi
after adding incomes from other sectors will be probably the highest in the country. It is a perfect
example of making economic growth more inclusive, and a case study for Inclusive
Development. In fact, I did present a paper last year in Islamabad, during a South Asia Economic
Summit.
75
With the 20 guest houses, more than 100 locals are being employed in various jobs, ranging from
speedboat crew, receptionists, waiters, room boys, accountants, and guest relations officers.
Majority of youth are actively engaged in economic activities, without having to spend their
times in coffee shops or elsewhere, as they did before. Women with children are able to earn at
least MVR 10,000 a month doing laundry services. Last month we spent from our hotel MVR
17,000 for laundry, which is done by a local family. With the recently installed more that 144 air
condition units, Maafushi is spending heavily on electricity. (There's still more to be done in
terms of using efficient energy sources).
Maafushi island
76
3.6 Data collection Method
Data collection refers to the gathering of set of observations about variables and its is the starting
point of research methods. Basically there are two types of data which can be collected . that is
primary and secondary data..
Figure 10: Types of data collection methods
3.6.1 Primary Data collection
Primary data is collected through making a survey questionnaire to the to both the visitor who
have been visiting to Maafushi island and the guest house establishment. Visitor?s questioner has
been filled by the tourist who stayed in Maafushi and they were given their questionnaire at the
end of their vacation.
The other questionnaire was filled by the owners and managers of the guesthouses. All these
questionnaires were mailed back to me during the time frame.
DATA COLLECTION METHODS
PRIMARY DATA COLLECTION SECONDARY DATA COLLECTION
77
3.6.2 Secondary Data Collection
Secondary data?s collected from this research was mainly from the publications made by the
government authorities especially Ministry of tourism Maldives, Maldives association for travel
and tourism and other scholarly journals written by the scholars regarding the growth of small
medium enterprise and guesthouse in Maldives and its impact on economy of Maldives.
Mostly these secondary data was used to make some statistical results and to identify the areas of
concern for the growth of the guesthouse business in local islands.
3.7 Data verification
The verification of data is essential to ensure that data are accurate, complete and give a true
indication of the state or value of the factors under consideration. The problems associated with
the collection of fisheries data mean that the risks of collecting erroneous or inappropriate data.
For the verification of the data which I got from both the parties, that?s from the visitors and
guesthouse establishment, the questionnaire responses were double checked. Those
questionnaires which doubt was arisen were sent back again highlighting the area of doubt. It?s
very kind that the respondents again corrected the questionnaire mistake and re sent it to me
back. While entering the datas to the make graphical analysis, the data been twice checked and
then recorded.This is to ensure that there is no mistake while recording to the data which
ultimately might affect the result of this research.
78
CHAPTER 4 DATA ANALYSIS AND INTERPRETATION
4.1 Finding of the study and Analysis of survey results
In this area, primary data of both the visitors and guest house establishments are analyzed and its
relevant inference is expressed.
Survey 1, the visitor survey, was employed to gain more insight into tourism / visitor behavior
and the demand side of tourism. Survey 1 forms the basis for estimating expenditure by tourists.
Survey 2, the survey for accommodation establishments, was aimed at developing a better
understanding of the supply side of tourism in maafushi Island. The findings of Survey 1 and
Survey 2 will be discussed below under the same headings where relevant. However, the
findings will not follow the same chronology as the questions in Survey 1 and Survey 2 (which
was done for ease of understanding by those surveyed).
Finally, the results below represent different scenarios and do not attempt to provide absolute
answers. They are also dependent on the particular parameter under discussion. While some of
the differences in spending figures below may seem insignificant, their multiplication with
estimated visitor volumes may bring about meaningful differences.
79
Table 2: Frequency of the visit
Once
off
Twice per
annum
Three times
per annum
Four times per
annum
Five time per
year
15
8 4 2 1
Interpretation:
As per the graph, five categories are mentioned above and 15% of the visitors have choose once
per year, 8% of the visitors who have arrived twice the year, and the rest of the visitors has
visited Maafushi island 4, 2, and 1 % respectively throughout the year.
0
2
4
6
8
10
12
14
16
Once off Twice per
annum
Three times
per annum
Four times
per annum
Five time per
year
P
e
r
c
e
n
t
a
g
e
No. of times
Frequency of visit
80
Table 2: Average size of the members
Just me 2 3 4 5 or more( please insert no)
3
20 5 2 7
Interpretation:
Above shows 3% visitors arrived alone and 20% of visitors with 2 parties, mostly couples and
5% of the visitors with little family that is couples and their child. 4% of the visors were with 4
member?s family and there were big family of 7 % who were having more than 5 members in
their party.
0
5
10
15
20
25
Just me 2 3 4 5 or more(
please insert
no)
p
e
r
c
e
n
t
a
g
e
No of memebers
81
Table 3: Duration of the holiday stay of the visitor
1 day (day
Visitor)
2 days 3 days 4 days More than 4
Sate the no
2
5 3 5 15
Interpretation:
This category is extended from 1 day to more than 4 days regarding the number of days of the
holiday stay. 2% of the visitos stayed for 1 day which is for day visit and 5% of the visitors
stayed for 2 and 4 days. Around 3 % of the visitors stayed for maximum 3 days during their
vacation. The visitors who stayed for more than 4 days were around 15%
0
5
10
15
Sate the
no
1 day (day
Visitor)
2 days
3 days
4 days
More
than 4
2
5
3 5
15
Duration of the stay
Series1
82
Table 4: Purpose of the visit to Maafushi island
For business
For holiday To visit a friend On gov business Other
reason
5
85 6 12 3
Interpretation:
The pie chart above shows the purpose of the visit and it had been divided into 5 categories. Out
of that 77% visitors came for holiday to Maafushi island, 5% of them came to visit a friend, 11%
on government business, 4% for business purposes and 3% for other reasons.
4%
77%
5%
11%
3%
Purpose o the visit
For business
For holiday
To visit a friend
On gov business
Other reason
83
Table 5: Tourists purpose of the holiday in Maafushi island
Diving
40 Beach and Snorkeling 56 Visit friends 5
Water sports
35 Fishing trip 60 Relaxing 70
Island hopping
15 Sight seeing 25 Other- please specify
City tour
20 Photographing 30
Dolphin trips
56 Social events 2
Picnic trip
35 Arts and craft 6
Interpretation:
When asked about the purpose of the holiday from the visitors 40% of the visitors said to enjoy
Diving.35% for both watersports and picnic trips, 15% for island hoping, 20 % for Male city
tour,56% for dolphin tours trips and Beach & snorkeling 70% for relaxing mainly, 60% for
fishing trips, 25% for sightseeing, 30% for photographing in Maldives,2% for social events,6%
for arts and crafts and 5% for visiting friend respectively
31%
34%
14%
17%
1%
3%
Purpose of the holiday
Diving 40 Snorkeling
Water sports 35 Fishing trip
Island hopping 15 Sight seeing
City tour 20 Photographing
Dolphin trips 56 Social events
Picnic trip 14 Arts and craft
84
Table 6: Season of the year to visit Maafushi island
Nov- Jan Feb – April May- Jul Aug –Oct Anytime Unsure
70
30 25 45 15 20
Interpretation:
Around 70% of the tourist prefers to visit Maafushi during Nov- to jan which is mostly during
holiday times for them, especially Christmas vacation and new year. But during Feb to April this
number reduces to 30% and in May-june it furthered reduces to 25%. The in Aug – Oct it raised
to 45% . About 15% of the visitors said they are flexible to visit any time of the year and around
20% of the visitors are not sure about the dates.
70
30
25
45
15
20
0
10
20
30
40
50
60
70
80
Nov- Jan Feb – April May- Jul Aug –Oct Anytime Unsure
P
e
r
c
e
n
t
a
g
e
Season of the year
85
Table 7: Average spending per person during the holiday in Maafushi island
> 200 201 to 400
401 to 600 601 to 800 801 and above
35
25 45 30 20
Interpretation:
The average spending per person is shared with 5 categories out of that 29% visitors said they
spend 401 -600 per person per day, 23% said less than 200 per person 19% 601- 800 , 16% said
201- 400 and 13% of the visitor spent above 801 USD per person per day.
23%
16%
29%
19%
13%
Average speding per person per day
> 200 201 to 400 401 to 600 601 to 800 801 and above
86
Table 8: Break down on services which was spend from money
Accommodation 40 Eating out 50
Tourist booking
5 Souvenirs 15
Tour operators
15 Activities 45
Entrance fees
5 Beverages 10
Transport
20
Other
2
Interpretation:
The money spend on the service which was offered from the guesthouses are broke down into
various sub categories.
From these categories 50% was for eating and foods, 45% was for activities, 40% was for
accommodation, 20% was for traportation,15% was for both tour operators and souvenirs, 10%
was for drinks and beverages, 5% for entrance fees for islands and other places and 2% for other
activities respectively.
19%
3%
24%
7%
7%
2%
22%
5%
10%
1%
Breakdown of the services
Accommodation
Tourist booking
Eating out
Souvenirs
Tour operators
Entrance fees
Activities
Beverages
87
Table 9: Most appealing activities and facilities found in Maafushi island
Diving 45 Snorkeling 36
Water sports
35 Fishing trip 47
Island hopping
20 Sight seeing 15
City tour
12 Photographing 10
Interpretation:
When asked about which tourism activities which they like the most, 47% of the visitors
responded with saying fishing trips,45% Diving,36% Snorkeling trips 35% Water sports
Activities,20% said Island hoping trips to locals islands,15% for sightseeing,12% for city tours
and 10% said photographing respectively.
45
35
20
12
36
47
15
10
Activites most appealing for tourist
88
Table 10: Activity or Facility which would like to see in future
Sky diving 30
Bungee junping 45
Theme park 36
Interpretation:
Most of the visitor?s responded saying that they want to have bungee jumping. It was around
45% of the response, about 36% responses saying that they would like to see theme parks in
Maldives and local islands and 30% said they want to have adventurous activities like skydiving
in Maldives.
30
45
36
0
5
10
15
20
25
30
35
40
45
50
Sky diving Bungee junping Theme park
p
e
c
e
n
t
a
g
e
Actiivities
Activities which is not available now, but would like to see in
future
89
Table 11: Form of marketing which influenced the visitor
Internet 45 Website 56
Directories
12 Marketing agency 35
newspapers
15 Exhibitions 25
Magazine
30 Other 10
Interpretation:
When we look at the pie chart above, we can see that the marketing activities have been
distributed throughout with various forms of marketing. About 25% of the visitors response this
part with saying they were influenced to choose Maafushi over internet, 20% said through
guesthouse website and other travel websites, 15% said they were approached by marketing
agencies, 13% said through travel magazines, 11% were approached through travel exhibitions,
7% said by newspaper advertisements,5% was influenced by travel directories and 4% were
through other sources respectively.
20%
5%
7%
13%
25%
15%
11%
4%
Form of marketing material which influenced visitors
Internet
Directories
newspapers
Magazine
Website
Marketing
agency
Exhibitions
90
Table 12: Value for Money Perception about Maafushi island
Poor value for Money Good value for Money Excellent value for money
10
65 25
Interpretation:
Most of the guest choose Maafusi Island was a good destination and carry good value for money.
This response was around 65%.About 25% visitors said the island was excellent place for
valuing money and 10% said it was a poor destinations and carries poor or low value for money.
0
10
20
30
40
50
60
70
Poor value for
Money
Good value for
Money
Excellent value
for money
P
e
r
c
e
n
n
t
a
g
e
categories
Value perception
91
Analysis of primary data of Service Provider establishment
Table No 13 : Type of tourist facility operating in Maafushi island.
Guest house 76 Diving center 35 Water sports center 15
B&B
14 Transport provider 45 Coffee shop 45
Backpacker
13 Game fishing operator 20 Photo studio 25
Restaurant
25 Restaurant 20 Other 24
Interpretation:
When we look at this graph,we see that that both that transportation and coffee shop are having
the hight percentage which is 45% and the rest are having 35%, 25%,24%,20%,15% and 13%
respectively.
13
25
35
45
20 20
15
45
25
24
Tourist Establishment
92
Table no 14 : The services offered by the service operator
Water sports activity 45 City tours 5 Fishing trips 9
Diving sessions
14 Transfers 8 Picnic trips 6
Accomodation
17 Photography 1 Snorkeling 9
Foods
15 Goods 10 Other 6
Interpretation:
The service offered by the service providers are distributed evenly based on its relevant
percentage. The highest percentage occupied was accommodation which is 17% and then was
food 15. Goods carry 10% and water sports services carry 11% of it. The remaining are
snorkeling, picnic trips, fishing trips, diving sessions which carry below 10%.
Water sports
activity
11%
Diving sessions
3%
Accomodation
17%
Foods
15%
City tours
5%
Transfers
8%
Photography
1%
Goods
10%
Fishing trips
9%
Picnic trips
6%
Snorkeling
9%
Other
6%
Service oferred
93
Table No 15: Number of years in the business
> 3 Yrs. 3 to 5 Yrs.
5 to 7 Yrs. 7 to 9 Yrs. More than 9 Yrs.
75
45 25 12 10
Interpretation:
As shown from the graph the number of years in business personnel is comparatively less within
a span of 10 years of time. But in recent years as we can see new business have been established
and with 3 years of time there are around 75% of new guesthouses started. With a range of 3-5
years 45% of guesthouses are running and less than 7 years about 25% of the business are
running. This shows that the guesthouse business have huge demand in recent times.
> 3 Yrs. 3 to 5 Yrs. 5 to 7 Yrs. 7 to 9 Yrs. More than
9 Yrs.
75
45
25
12
10
P
e
r
c
e
n
t
a
g
e
Years range
Number of years in the services
94
Table no 16 : Occupancy rate during the financial year 2013 – 2014
Nov – Jan Feb- Apr May- Jul Aug- Oct
2013
82 45 32 67
2014
97 50 34 76
Interpretation:
According to this line graphy the highest occupancy was during Nov- jan time of the year.
Comparing to the previous year this percentage has increased from 82 % to 97 %. Then again the
next hike was in in Aug- Nov time of the year. During this time the occupancy has risen from
67% to 76 %. The rest of the year there is gradual increase in a decreasing rate.
0
20
40
60
80
100
120
Nov – Jan Feb- Apr May- Jul Aug- Oct
P
e
r
c
e
n
t
a
g
e
Month range
Occupency rate during the financial years 2013-2014
2013
2014
95
Table no 17 : Average charge on per person per during their vacation
> $200 $201 – 400 $401 - 600 $601 - 800 $ 800 or more
Percentage of
Business
78 67 56 45 25
Interpretation:
Average charge per person was highest below 200 dollar range and it was 78%. Next comes
range of 201 to 400 dollar range which is 67 %. 56% was charged average of 401 to 600 dollar
per person per day. The rest are 45% and 25% for 601 to 800 and 800 & more range
respectively.
0
10
20
30
40
50
60
70
80
> $200
$201 –
400
$401 - 600
$601 - 800
$ 800 or
more
P
e
r
c
h
e
n
t
a
g
e
o
f
b
u
s
i
n
e
s
s
Amount Range
Average charge per person
96
Table No18 : Number of rooms and its correspondents bed capacity
Average Rooms Average correspondent Beds
150
300
Interpretation:
The distribution of number of rooms in the guesthouses and its correspondent?s bed capacity was
made at a percentage og 67% and 33% respectively. This shows that there is a double of bed
capacity based on number of rooms.
Average Rooms
33%
Average
correspondent
Beds
67%
No of rooms and its correspondents bed capacity
97
Table No 19: Number of available rooms
Standard Deluxe Beach front Executive
45
30 70 25
Interpretation:
Categories of rooms available in the guesthouses are made on four categories. Among that the
highest was beachfront rooms which occupies 41%, then comes standard room which is 26%.
The remaining are deluxe rooms and Executive rooms which occupies 18% and 15%
respectively.
Standard
26%
Deluxe
18%
Beach front
41%
Executive
15%
Avalaible Categories of rooms
98
Table No 20: Comparison of receipts that of expenses of the guesthouses
Percentage of Receipts Percentage of Expenses
70
40
Interpretation:
When we see the graph above we can notice that the expenses are pretty low compare to the
receipts. The expenses are around 40% and the receipts are 70 %. This shows that there is huge
profit from this guesthouse business.
0
10
20
30
40
50
60
70
80
Percentage of Receipts Percentage of Expenses
P
e
r
c
e
n
t
a
g
e
a
m
o
u
n
t
financials
Comparision of reciepts that of expenses in guesthouses
99
Table no 21: Type and the budget for the marketing.
Marketing Percentage Marketing Percentage
Internet
53 Website 70
Directories
34 Marketing agency 41
newspapers
45 Exhibitions 15
Magazine
25 Other 10
Interpretation:
Most of the marketing is done through various services which are 52% the other main source is
marketing agencies which carry 30%. The remaining exhibitions carry 1% and other sources
carry 7% of the marketing. So the budget is made ascending order.
Website
52%
Marketing
agency
30%
Exhibitions
11%
Other
7%
Type of Marketing and average budget
100
Table no 22: Repeat customers business to the guesthouse
2 times 3 times 4 times 5 times 5 & more
45
56 35 21 12
Interpretation:
About 56% of the customers were 3 times repeaters and 45% of the customers were second times
repeaters. 4times repeaters are about 35% and the percentage is less are the number of times
increases. This shows that guest has preferred and appreciated the services provided by the
gueshouses which made them to choose same guesthouses for their vacation.
0
10
20
30
40
50
60
2 times 3 times 4 times 5 times 5 & more
P
e
r
c
e
n
t
a
g
e
No of times
Repeat customers business
101
4.2 Summary of the Survey results
The results of the surveys shed some light on both visitors to the area and tourism establishments
alike. To understand the economic contribution of tourism better, attempts are made to
understand the per day spending per person for different parameters. These parameters include
amongst others: length of stay, frequency of visits, group size. Most significantly the results
indicate that there is an escalation in the amount spent by visitors who visit more frequently or
who stay longer.
The study indicates that island of Maafushi represents the largest market for the district and
confirms island trends whereby foreign visitors stay longer and spend more per person per day
than domestic visitors. There are also clear differences in spending to be observed between those
who visit for the day and those who visit friends and relatives. The results also raise the idea of
“investment” which demonstrates that certain of the parameters show that some groups of
visitors have tangible or intangible investments in the district that affect their spending patterns
It is clear from both establishments and visitors that the internet plays a significant role in
making people aware of the district as a tourism destination. Word of mouth however is crucial
in persuading potential visitors to come to the district. Interestingly enough a significant
difference exists in the daily amount spent per person per day for those who decide to visit the
area lured by the internet as opposed to those decide to visit the area as result of word of mouth.
102
4.3 Conclusion
Understanding the dynamics of tourism and tourism?s impact on the economy of a sialnd
Maafushi enables better planning, informed investment and a better understanding of opportunity
costs. Essentially, an increase in the volume of tourism will increase its economic impact.
Increases in visitor volumes can be achieved subject to having the elements of destination
management in place.
Once this has been achieved, strategies devised to increase the frequency of visits, increase group
size, increase the length of stay or encourage people to spend more will start to bear fruit. The
local municipality seems to understand this dynamic but has not made sufficient resources
available to address these needs as it has been heavily investing in basic services over the past
The local municipality seems to understand this dynamic but has not made sufficient resources
available to address these needs as it has been heavily investing in basic services over the past
that represent the growth potential.
Such investment can play a significant role in reducing poverty and unemployment in the district
by providing employment and stimulating entrepreneurship. Destination marketing management,
infrastructure development and training seem to be the most pressing needs. In addition to the
investments that are required it is also essential that all role players start to cooperate
meaningfully in the interest of tourism in the district. Remarkably, every person interviewed in
this study commented on the lack of cooperation and the lack of a common vision among the
role players in the tourism industry. There can be no attempt at proper destination management
unless the tourism community starts to do and manage things differently (Santini, 2011).
Without proper destination management marketing efforts will become compromised exercises.
Watt (2011) believes the district is currently poorly marketed. A tourism destination needs to be
competitive in relation to other destinations. According to Occasional Paper 63 (2006: 14), this
study has shown that the district is perceived as being a value-for-money destination.
103
Unfortunately, this attribute alone is not enough to make the destination competitive.
Competitive destinations offer key experiences that are underpinned by the essential elements for
enabling tourism.
Together, these experiences and elements assist the destination to develop a brand and an image.
A destination?s image is a “unique combination of a destination?s tangible and intangible
characteristics and values” (Occasional Paper 63, 2006: 1). The district seems to have all the
necessary ingredients to develop a very competitive brand and image but there is little agreement
amongst role players as to exactly how the brand and image should be communicated.
The need for tourism awareness within the communities of the district has also been raised. The
stark differences between affluent visitors and impoverished communities can lead to resentment
if people do not understand tourism?s role or if the benefits of tourism are not fairly distributed.
Role players will have to address this aspect and the fair distribution of benefits from tourism
amongst a broad cross section of the community.
The study has also demonstrated that nature-based and outdoor activities are the main attractions
to the district. The challenge for the district will be to manage tourism growth in such a way that
it provides maximum benefits to the community without significant negative effects on the
natural environment or communities.
The Island of Maafushi has exceptional potential as a nature destination and tourism has steadily
been growing over the past few years. With its abundance of scenery, opportunities for adventure
and relatively crime-free environment it would seem almost wasteful not to make the most of
tourism.
104
CHAPTER 5 FUTHER RECOMMENDATIONS
Further Recommendations
During the study it was established that guesthouses in Maafushi was running successful
operations. Their performed in terms of services is getting improved day by day. They are
providing good service to their customers and that is contributing to satisfied customers.
However, the tourism statists of the country not representing well information about the guest
guest houe aspects except no of room s and bed capacity. In my opinion a board way of
observation, monitoring and evaluation should be done same as tourist resorts.
Maldives tourism market got international recognition for its service of catering luxury market.
So now it?s time to introduced other concepts of tourism like guest house business and market it
to the budgeted travel and medium income travellers and markets. As most of the tourist still
stays in resorts, there is lack of visibility of local life and opportunity to experience. I suggest
related authorities to introduced package and offers towards and related polices towards guest
house business in order to capture the medium income markets and budget travellers. In in tern
increase the revenue to the government and benefit community as whole in both direct and
indirect ways.
Guest house owners should be included in the government exhibition travelling?s and give an
opportunity to then to interact as many people as possible in order to form network in will give
knowledge about the guest house business sectors and expand their business. Those people
whom they meet during such exhibitions with the satisfied customers will market the
establishment oby word of mouth and that would contribute to increasing business.
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CHAPTER 6 APPENDICES
APPENDIX A
Survey one for visitors
Guest house questionnaire: Growth of tourism in Maafushi (local Island)
Dear Visitor,
Please make applicable box with an X or provide an answer where required. Upon completion
you may return the questionnaire by 30th July 2015
Name: Your guest house
Email: Fax:
1. How often do you come to maafushi per year?
Once off Twice per annum Three times per
annum
Four times per
annum
Five time per
year
2. When you visit what is the size of your party average? (Family & friends)?
Just me 2 3 4 5 or more( please insert no)
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3. When you visit how many days do you stay at a time?
1 day (day
Visitor)
2 days 3 days 4 days More than 4
Sate the no
4. I visit Maafushi?
For business For holiday To visit a friend On gov business Other
State reason
5. If you visit the island as a touris, what is the puropose? (you may tick more than one
box)
Diving Snorkeling Visit friends
Water sports
Fishing trip Other- please specify
Island hopping
Sight seeing
City tour
Photographing
Dolphin trips
Social events
Picnic trip
Arts and craft
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6. My favorite season to visit maafushi island?
Nov- Jan Feb – April May- Jul Aug –Oct Anytime Unsure
7. When visiting maafushi I /we spend an average of __ dollars per person per day (all
costs included accommodation)
> 200 201 to 400
401 to 600 601 to 800 801 and above
8. Please provide a break down on services that you spend your money on (percentage
above figure- your percentages should not toalt more than 100%)
Accommodation Tourist booking Eating out Souvenirs
Tour operators
Entrance fees Activities Beverages
Transport
Other
9. I am from (your name home Town and country)
……………………………………………………………………………………………………………………
10. Which tourism activities/ facilities/ attractions did you find most appealing in maafushi?
……………………………………………………………………………………………………………………
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11. What activities/ facilities/ attractions would you like to see that are not currently
available in maafushi?
……………………………………………………………………………………………………………………
12. When visited I maafushi I stayed at ( Name of the guest house ) & date of stay?
…………………………………………………………………………………………………………………
13. What form of marketing/ marketing material played a role in encouraging me to visit
Maafushi?
…………………………………………………………………………………………………………………
14. As a tourist destination Maafushi is …..
Poor value for Money Good value for Money Excellent value for money
27. which grade you will give your guest house?
< 2 star 2 stars 3 star 4 star 5 star
Thank you for your time and input. Please feel free to contact me for more information
on my email: [email protected] or text to my no: 0091993091403
109
APPENDIX A
Survey two for Establishments
Guest house questionnaire for Accommodation Establishments and service Providers
Please assist me in completing this questionnaire about your business. Your contribution to this
study is important. All Participants will a copy of the Research report on completion. The report
will not be made available to outsiders or Marketers.
Mark the answer you choose with an X or provide answer where applicable. If you are unwilling
to answer some of the questions or if a question is not relevant, please cross it out. All
individual information will be keep confidential and only consolidated data will be made
available.
Name of the Establishment Location
Email: Fax:
1. What kind of an establishment do you operate?
Guest house Diving center Water sports center
B&B
Transport provider Coffee shop
Backpacker
Game fishing operator Photo studio
Restaurant
Restaurant Other
2. If you are an operator or service provider what kind of services do you offer?
110
Water sports activity City tours Fishing trips
Diving sessions
Transfers Picnic trips
Photography
Photography Snorkeling
Foods
Goods Other
3. How long you have been in this business?
> 3 Yrs. 3 to 5 Yrs.
5 to 7 Yrs. 7 to 9 Yrs. More than 9 Yrs.
4. What was you occupancy rate for 2013 – 2014 ( numbers preferable but you may use
percentages- please indicate using latter (% sign)
Nov – Jan Feb- Apr May- Jul Aug- Oct
2013
=100%
2014
=100%
5. What do you charge on average per person per day? ( if you have different charges you
may break them down into percentages.)
> $200 $201 – 400 $401 - 600 $601 - 800 $ 800 or more
Percentage of
Business
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6. If you are an accommodation establishment- how many rooms and how many beds do
you offer ( bed- nights)
Rooms Beds
7. If you are an accommodation establishment- No of categories of rooms?
Standard Deluxe Beach front Executive
8. If you are an accommodation establishment- receipts and expenses?
Percentage of Receipts Percentage of Expenses
9. What type of marketing do you do & what percentage of you marketing budget do you
spend on?
Marketing Percentage Marketing Percentage
Internet
Website
Directories
Marketing agency
newspapers
Exhibitions
Magazine
Other
112
10. Percentage of business that is from repeat customers?
0 – 20 % 21% - 40% 41% - 60% 61% - 80% 81% - 100%
Thank you for your Participation and time. Please return to [email protected] by
30
th
july 2015.For more information, kindly contact: 00919930914703
113
APPENDIX C
List of guest houses that participate in the Study from Maafushi island during the month of June
and August 2015
Name of the guest house Location
1. Arena Lodge Maafushi island
2. Arena lodge sky Maafushi island
3. Arora Inn Maafushi island
4. Dhonveli view Tourist Guest house Maafushi island
5. Island cottage Maafushi island
6. Island Relaxing Maafushi island
7. Leisure Boutique Maafushi island
8. Ocean vista Maafushi island
9. Picnic Inn Maafushi island
10. Shadow Palm Maafushi island
11. Stingray Beach Inn Maafushi island
12. Summer villa Guest house Maafushi island
13. Venture O Maafushi island
14. Yellow Rehendhi Inn Maafushi island
15. Narnia Maldives Maafushi island
16. White shell island and spa Maafushi island
17. Sunshine view Maafushi island
18. Water Breez Maafushi island
114
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