Demand returns for Indian Ocean island hotels

The Indian Ocean island destinations of the Maldives and Mauritius have seen an upswing in demand, according to data from STR Global.

Demand, as measured by occupied rooms, increased 17 percent for the Maldives and 8.6 percent for Mauritius between 2009 and 2010. While this partly reflects the poor market conditions of 2009, demand in both markets almost has returned to pre-recession levels. 2010 demand is down only 0.7 percent in the Maldives compared to 2008, and it is down only 4 percent in Mauritius, as shown below.

The increases in demand have yet to impact average daily rate (ADR). ADR in 2010 still has ground to make up on both 2009 and 2008 in local currency, Euro and Chinese yuan terms. Europe is the major source of tourism for both countries, representing 63.5 percent and 64.8 percent of tourist arrivals in the Maldives (January to November 2010) and Mauritius (2010), respectively. In spite of the ADR declines in Euro terms for both countries, arrivals from Europe have not dramatically increased, with growth of 9.7 percent for the Maldives and 4.5 percent for Mauritius. Interestingly, the fall in rate in Euro terms has not stimulated demand, which suffered due to the depressed economic conditions of this source market.

The falls in ADR in Chinese  yuan terms of 29 percent and 21.1 percent between 2010 and 2008 for the Maldives and Mauritius, respectively, has been matched by the growing importance of this origination market. Arrivals from China to the Maldives in 2010 are up a staggering 101 percent on the previous year and a more modest, but still respectable 9.9 percent in Mauritius. Air Mauritius will commence direct flights to Shanghai in July to increase the number of Chinese visitors.

The rate of growth in supply, as measured by available room nights, has begun to slow in both markets. Year-on-year supply growth has slowed in both countries year on year.

“The gradual slowdown of supply growth in both the Maldives and Mauritius should give demand time to recover, absorbing the new supply better”, said Elizabeth Randall, managing director of STR Global. “In the long run, this will give hoteliers the chance to improve rates”.

STR Global tracks the performance of 25 hotels in the Maldives and 23 hotels in Mauritius.

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