Maldives’ Tourism Resiliency; What 38 Years of Resort Occupancy Data Reveal

Over the past 38 years, Maldives tourism has weathered a wide range of global and domestic shocks — a testament to its resilience.

The Maldives' tourism sector is uniquely exposed to world events — geopolitical tensions, health crises, economic downturns, and natural disasters all influence visitor flows. Recent disruptions, including the conflict in the Middle East, once again highlight how sensitive tourism and aviation are to international uncertainties.

This long history of disruptions allows us to consider a fundamental question: How resilient is the Maldives resort segment to major shocks?

Using Value at Risk to Measure Tourism Resilience

To answer this, this analysis applies the concept of Value at Risk (VaR) — a widely used financial risk-management measure. Along with indicators such as standard deviation, VaR estimates a threshold level that will only be breached with a small probability at a chosen confidence level.

Applied to tourism; a 95 percent VaR indicates the occupancy level that will be breached only 5 percent of the time under adverse conditions. In simpler terms, VaR identifies the worst-case occupancy level expected during difficult periods, based on longterm patterns and simulations.

This analysis uses 38 years of monthly occupancy data for the resort segment. It does not include guesthouses, safaris, or hotels which have different occupancy dynamics — this encompasses the resort segment as a whole and may not be relevant to individual resorts.

Major Global and Domestic Events Affecting Tourism (1988–2025)

Global Events

• Gulf War (1990)

• Major Terror Attacks, including 9/11 (2001)

• Indian Ocean Tsunami (2004)

• Global Financial Crisis (2008–2009)

• Global Pandemics; SARS (2003), H1N1 / Swine Flu (2009), COVID19 (2020–2022)

Local Events

• 1988 Coup attempt on Malé led by PLOTE mercenaries

• 2000–2005 period of political unrest — weathering civil dissent, riots following prison deaths in 2003, and protests leading to constitutional reform

• 2012 political transition and subsequent instability through 2013

Understanding the VaR Results

The 95 percent VaR values for each month are calculated using three methods:

• Empirical (Historical) VaR

• Parametric VaR

• Monte Carlo Simulation (100 year simulated horizon)

The analysis emphasises the Simulated 95 percent VaR, which provides the most forward-looking estimate of downside occupancy.

These VaR levels represent the minimum occupancy expected in 95 percent of simulated scenarios — meaning there is only a 5 percent chance occupancy would fall below these figures even under unfavorable conditions.

What the Results Reveal

Only four global shocks pushed occupancy below VaR thresholds

Across nearly four decades, actual occupancy fell below VaR-estimated downside levels only during:

• Gulf War (1990)

• 9/11 and its aftermath (2001–2002)

• Indian Ocean Tsunami (2004)

• COVID19 pandemic (2020–2022)

Among these, COVID19 resulted in the lowest occupancy levels ever recorded.

Domestic political shocks had no measurable impact on resort occupancy

Despite significant periods of local political instability — including 1988, 2003–2005, and 2012–2013 — resort occupancy did not experience unusual declines. International demand remained the dominant driver, and visitors continued to arrive largely unaffected by internal events.

The lowest VaR months reflect natural seasonality

The months with the lowest downside thresholds are:

• May – 37 percent

• June – 35 percent

• July – 49 percent

Conclusion

The Maldives resort sector demonstrates remarkable resilience, maintaining stable occupancy through most political, economic, and market disturbances. Only major global events — not domestic ones — have pushed occupancy to significant lows. Even in those cases, the sector has consistently rebounded.

The VaR framework offers a clear and data-driven way to understand the downside boundaries of occupancy. Looking across nearly four decades, the Maldives resort industry continues to show why it stands among the most resilient and reliable tourism markets in the world; supported by robust international demand and enduring global appeal.