The changing face of tourism and work: How Maldives is successfully adapting to the pandemic

It’s December 2023. Rita, a young businesswoman, has just finished meeting with clients in Chennai, India and anticipates meeting friends in Singapore for the holidays two weeks later. An employer-sponsored hybrid work model allows her to work from anywhere. She chooses to work at a guesthouse in Male, Maldives thanks to great Internet connectivity while spending time absorbing the local culture and South Asian cuisine, even trying her hand at snorkeling. Pre-COVID-19, she would have had to fly back from Chennai, India to snowy Chicago where she resides; go to the office for 10 days; work fighting an arduous jetlag; and then fly back East almost 10 thousand miles to Singapore. Now not only is she significantly reducing her carbon footprint, but she also feels revitalized after her stay in the Maldives, and is happier and more productive. Not to mention, she has contributed to Maldives’ tourism industry.

Is Rita’s practical yet creative twist on work-life balance indicative of the future of tourism—and work? 

According to various measures in the World Bank’s latest South Asia Economic Focus (SAEF), the region’s tourism heavy nations—Maldives, and to a lesser extent Nepal, Sri Lanka, and Bhutan—are well poised to take advantage of new services and digital technologies along with a new-found need for wellness post-pandemic, to boost their economies . See a prior blog on services as the driver of development in South Asia.

Tourism: Savior for a Post COVID Economy?

Before COVID-19, tourism was among the fastest-growing sectors in Maldives and Bhutan, with a growth rate that outpaced GDP growth rates. The pandemic and related stringent measures hit all South Asian countries dependent on tourism hard, leading to a deep contraction in GDP in 2020.  According to the World Travel and Tourism Council, the entire global tourism industry, particularly business travel, was devastated by the pandemic.  Business spending decreased by 61 percent from 2019 to 2020 compared to 49 percent for leisure travel. Business travelers on average spend much more than leisure and domestic travelers, making the recovery of business spending essential for the entire travel sector. As the industry struggles to recover, there is also great uncertainty about how the future of work could transform the demand for travel, and many expect international business travel to be the last segment to recover as it is most sensitive to travel restrictions.

However, despite these uncertainties, our analysis in the South Asia Economic Focus shows that tourism has the potential to be a fast-growing sector post-COVID amidst new remote work possibilities and changing travel behaviors:

• The desire for travel is strong, spurred by the pent-up demand in leisure travel, which has been driven by new hybrid work environments and household savings during the pandemic. 
• As remote work becomes a long-term reality, more than half of the global tourists have expressed interest in extending business trips or working remotely in tourism destinations while enjoying leisure time.
• There is also evidence of an increase in the average duration of stay by 2.4 days since 2020, according to Tourism Status Updates by the Ministry of Tourism Maldives.
• The ravaging effects of COVID-19 on mental health may also increase the demand.
• COVID-19 is changing tourists’ attitudes and behaviors. According to recent online surveys by booking.com, more than half of global travelers, particularly younger travelers, started looking for travel plans that were more sensitive to the environment and local communities, including staying away from crowded tourist attractions and exploring lesser-known destinations.

South Asian countries already have a comparative advantage in developing niche tourism and ecotourism, as they are endowed with diverse natural and cultural resources. Therefore, small and tourism-dependent countries can view the pandemic as an opportunity to unleash the potential of tourism and pave the way for sustained growth going forward. 

Maldives: Setting the Bar High in Tourism

Maldives has been exemplary in its resilience and ability to recover. In 2021, visitor arrivals reached more than 80 percent of pre-COVID levels, far outpacing other similar tourist destinations. 

These are some lessons we can draw from Maldives’ spectacular recovery in the tourism sector:

• First, the government’s policies and interventions around the border restrictions and health regulations play an important role in the recovery of the tourism sector.  For example, Maldives took a concerted effort to reopen its border to tourists as early as July 2020 but implemented strict hygiene protocols for tourists, including one of the fastest COVID-19 vaccination campaigns in the world. This has improved the confidence of travelers and has created high-value consumers.

• Second, Maldives quickly made an effort to capture new source markets and expand to new countries of origin. For example, the emerging source of the international tourist market from Russia and India—in part arbitraging quarantine rules—has compensated for the tourism revenue loss from China, its top source market before the pandemic.

• Third, Maldives is seizing changing preferences to promote a better image. In 2020, Maldives launched a marketing campaign with the tagline “Isolation never looked this good” to emphasize its unique reputation of being a niche destination, while emphasizing environmentally sustainable tourism.

• Fourth, it is investing in digital technology as the demand for high-speed internet and contactless services rise due to the pandemic. In Maldives, more than 60 percent of the population has access to broadband Internet—with relatively high bandwidth speed—while other tourism-dependent South Asian countries are still lagging , limiting the possibilities to meet travelers’ need for working remotely. Moreover, digital platforms will be important in minimizing physical interaction when traveling, while still fulfilling travelers’ needs. For example, one of the luxury resort in Maldives, has developed an app to facilitate contactless services including ordering food, virtual check-in and check-out, and other amenities to adapt to changing customer behaviors.

Adapt or perish? Maldives is choosing the former. It behooves other South Asian nations to pay attention as they build back resiliently post COVID-19.