MMA Bulletin Shows Record Q1 Arrivals, though Tourism Contracts as Geopolitical Shocks Persist

In the most recent Quarterly Economic Bulletin from the Maldives Monetary Authority, the Maldivian tourism sector demonstrated a tale of two extremes during the first quarter of 2026.

Initially, the tourism sector remained the primary engine of the Maldivian economy, outperforming a contracting fisheries sector and standing alongside steady expansions in construction, real estate, and wholesale trade. The country’s highest ever quarterly arrivals were registered in the opening months of the year, welcoming hundreds of thousands of visitors. This figure represents a fractional increase compared to the corresponding period in the previous year. January set an initial all-time high for arrivals, which February immediately surpassed with a new historic peak.

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However, following the outbreak of the war in the Middle East at the end of February, March arrivals plummeted by over a third compared to the previous month, marking the sharpest monthly decline since the COVID-19 pandemic. While the quarter opened with robust double-digit annual growth across January and February, performance reversed sharply with substantial year-on-year declines in March and April. Consequently, total arrivals for the first third of the year fell moderately on an annual basis.

Alongside the fluctuations in arrival numbers, total industry bednights expanded slightly during the quarter, though visitors shifted their accommodation preferences significantly. The data reveals a clear divergence in visitor choices, as traditional resort bednights contracted, whilst guesthouse bednights experienced a tremendous surge.

Additionally, the average duration of stay lengthened to just over a week, up from a slightly shorter duration in the preceding year. Meanwhile, the industry-wide average occupancy rate experienced a moderate drop. A noticeable occupancy decline across both resorts and hotels drove this aggregate fall, even as guesthouses improved their occupancy notably.

Examining the source markets, Europe retained its position as the dominant source region, commanding a clear majority of the market share. Meanwhile, the Asia and the Pacific region also expanded its footprint compared to the previous year.

China maintained its status as the leading individual source market, capturing a substantial share following a strong annual growth surge during the Lunar New Year festivities, whilst solid double-digit annual growth drove Russia to secure the second-largest share. Conversely, the United Kingdom experienced a moderate annual decline, breaking a two-year streak of continuous growth, whilst Italy and Germany accounted for smaller portions of overall arrivals and both registered slight annual declines. Furthermore, India sustained its significant downward trajectory, with arrivals plunging considerably on a yearly basis.

The geopolitical climate marginally reduced overall international flight movements, as major Gulf carriers scaled back operations due to airspace closures while select regional and budget airlines expanded their routes. Despite these aviation hurdles, operational capacity continued to grow, driven by an increase in active resorts and an expanded total bed capacity dominated by traditional resorts, with guesthouses accounting for roughly a quarter of available accommodation.

On a macroeconomic level, tourism remained the central driver of the Maldivian economy, contributing significantly to the robust real GDP growth that the country recorded late last year. As a crucial fiscal revenue source, the Tourism Goods and Services Tax increased substantially during the same period.

Green tax revenue grew following a doubling of the tax rate implemented at the start of the previous year, while the banking sector maintained significant exposure to tourism, which accounted for approximately one-third of total private sector credit. Moreover, bank lending to the sector increased on an annual basis, primarily driven by financing for new resort developments and major renovations.

Looking ahead, the current growth outlook for the year appears significantly skewed to the downside. The Maldives Monetary Authority expects to revise its annual GDP growth forecast downward from its initial, more optimistic estimates. The ongoing arrival slump and escalating airfares, which spiked global oil prices heavily drive, directly prompt this anticipated revision.