1.

0 Introduction

Tourism has been embraced by both developed and developing countries as a means
to stimulate the economy, generate employment opportunities and assist with
infrastructure development. However, questions about whether tourism’s benefits are
being optimized are becoming more common. Today, the term strategy is no more
confined to military applications, Modern management has used it in relation to
business operations and another definition of strategy is: “Something an organization
needs or uses in order to ‘win’ or establish it’s ‘legitimacy’ in a world of
competitive rivalry and numerous challenges to managerial autonomy”. Rumelt in
1979 defined strategy as what a firm uses to create and maintain an asymmetric
advantage in it’s product markets. Mintzberg, H. (Research on Strategy Making,
1972) holds that strategy reflects a pattern in a stream of conscious managerial
decisions, aimed at ensuring organizational adaptation. Tactic: A term closely
related to strategy is tactic – a specific action or means for accomplishing a strategy. In
this course, tactics are meant to be the policies and action plans necessary to carry out
strategies.

2.0 Theory of Strategic Planning

3.0 Importance of Strategic Planning

The historical freedom of a capitalistic society, an entrepreneurial spirit, effective

communications channel, multiple social classes and materialism led to the search for
new products and services and hence more competition. This required the ability to
forecast future wants of targeted markets and hence the need for research and planning
for future, i.e., strategic planning. Businesses quickly found that the standardised
process of updating last year’s plan and turning it on for supervisory approval was no
longer enough. Something more was needed.

Generally, most successful organizations achieve their industry positions by some

means of planning. In the short term, many hospitality/tourism sector decisions are
made in the heat of the moment based on customer’s needs. This is a necessary
activity as often hospitality/tourism products and services do not have the luxury of time
to prepare a detailed plan. But, on the other hand, decisions regarding the future of a
destination/site/ travel firm require and demand adequate planning. One of the
advantages of a formal planning system is that it forces management to routinely
analyse critical aspects of a firm’s/destination’s competitive environment, consequently
reducing the number of strategic decisions made without a strategic plan or strategic
thinking. Change and adaptation in modern business is good, but change without
structured thinking can be dangerous. Voltaire’s statement that “no problem can stand
the assault of sustained thinking” is very right in this context. Unfortunately, the
importance of strategic planning in many tourism organisations is realised only after a
crisis. This also holds true for destination as well as national level planning.

Figure I gives what can be a framework of strategic planning for destinations. Whereas
external factors create conditions that affect market and competitive positioning, the
internal environment has implications for whether the destination is equipped to seize
opportunities and mitigate threats. The extent to which strengths and weaknesses
constraint or positively affect the ability to counter threats and/or capitalise on
opportunities is central to the formulation of strategic plans. The values and
expectations of the leadership as well as ethics of the society and other aspects of
social and corporate responsibility should also be taken into consideration in strategic
planning. Figure II provides an overview of a strategic planning framework.

Strategic planning as a ritualised, rational and formal process has also faced criticism.
The failures of strategic planning have sometimes been immense. The most
fundamental criticism is that strategic thinking is a dynamic and ongoing process, so
there can be nothing called strategic planning. Strategy cannot be planned because
planning is about analysis whereas strategy is about synthesis. Nevertheless, strategic
planning is something that is being adopted more and more at all levels.

4.0 Tourism Planning Approaches

Tourism has undoubtedly had a profound impact on destinations all over the world. The
economic optimism following World War II saw many nations and communities lured
into the tourism business, encouraged by the highly publicised economic benefits the
industry can generate. Hall (1998) quite rightly states that, tourism cannot be allowed to
progress in an ad hoc manner without an overall guiding framework and predetermined
strategies toward development objectives.

A number of different planning approaches have evolved to meet the changing

development demands and characteristics of the tourism industry and the global
increase in visitor numbers (Hall, 1998). The first of these, the often criticized economic
approach to tourism planning (Getz, 1986), reflected the confidence in the tourism
sector, and a level of ignorance regarding the impacts of tourism on the destination. The
land use approach was also grounded in a period when the negative impacts had not
been realized or were minimal enough to be hidden or ignored. Tourism planning
generally involved detailed surveys and appraisals of the physical resources of the
country or region with little or no concern about possible spin-off effects of proposals
and projects on adjacent areas or environments (Choy, 1991;). The environmental
approach to tourism planning emerged as the effects of tourism that became more
tangible and in part due to the global conservation movement of the 1960s. During this
period attention moved away from a narrow economic and physical planning focus and
began to address environmental concerns.
The community approach to tourism planning stemmed from the realization that tourism
was having irreversible and damaging effects to the communities and cultures that were
exposed to tourism and that alternative planning and management was needed to
develop more socially acceptable guidelines for tourism expansion. The community
approach, essentially a form of ‘bottom up’ planning, emphasized development in the
community rather than development of the community (Hall, 1998).

The sustainable approach to tourism planning developed from broader international

concerns over ecological issues. Sustainable development has been advocated for the
tourism sector as a possible solution to the environmental and social degradation of the
industry’s resources and due to the fact that tourism is a resource industry which is
dependent on nature’s endowment and society’s heritage (Cooper, 1995; Murphy,
1994). Simpson (2001) identifies two key precursors to a sustainable approach to
tourism planning: multiple stakeholder participation in the planning process and a need
for a more strategic and long-term orientation in tourism planning. The achievement of
sustainable development objectives hinges on the adoption of a participatory model,
involving the meaningful engagement of the community, along with industry
stakeholders and relevant government agencies, which in turn will lead to agreement on
planning directions and goals (Faulkner, 2003).

Strategy as it applies to sustainable tourism planning and development seeks to

achieve three basic strategic objectives: conservation of tourism resource values;
enhanced experiences of the visitors who interact with tourism resources; and the
maximization of the economic, social and environmental returns to stakeholders in the
host community (Hall, 2000). Under the sustainable, strategic approach, tourism
planning is proactive, adopts a long-term planning horizon, is responsive to community
needs, and perceives planning and implementation as part of a single process that is
ongoing (Hall, 2000; Ritchie, 1999). It can also be said that the tourism industry and the
wider community are increasingly adopting and recognizing the importance of the
concept (Ritchie and Crouch, 2000), or at least the associated jargon.

5.0 Practice of Strategic Planning in Maldives

Tourism‟s importance as a key economic driver and the challenges ahead of it in terms
of product and market development, human resource development, environmental
management, legal and institutional strengthening, community-linked tourism
development and infrastructure and support services were identified in the situation
analysis.

5.1 Vision of Maldives tourism Strategy

These reviews and consultations led to a vision of expanding and strengthening the
Maldives tourism as an instrument of economic and social development in a manner
that benefits all Maldivians, in all parts of the country. This vision also encompasses
steady development of the industry as a model of sustainable development of tourism
with environmentally and socially responsible tourism practices of internationally
acclaimed standards.

It is anticipated that the Maldives Third Tourism Master Plan, once implemented, will
help to create an environment in which tourism can continue to contribute more to the
economic and social development of the Maldives and to provide the quintessential
island holiday experience for all visitors who choose the Maldives as their holiday
destination.

5.2 Overview of Tourism in Maldives

Tourism in the Maldives began in 1972 with a mere 280 beds on 2 resort islands. Since
then, the industry has grown rapidly transforming the Maldives into a quintessential
island holiday destination with global reputation, winning international acclaim and
awards. Sustainable tourism development has been the key to the Maldives‟ success
as a tourist destination. Of the 1190 islands that make up the archipelago’s 26 atolls, 89
islands had been developed into tourist resorts by the end of 2006. In November 1980,
the Department of Tourism and Foreign Investments (DTFI) commissioned the
DANGROUP under assistance from the Kuwait Fund for Arab Economic Development
to carry out a feasibility study for project preparation in the tourism sector. The outcome
of this study was the First Tourism Development Plan of the Maldives, now referred to
as the First Tourism Master Plan, FTMP. The First Tourism Master Plan-1983,
emphasized the significance of Environmentally Sustainable Tourism, Establishment of
Tourism Zones and Tourist Centres, Institutional Strengthening, Human Resource
Development etc.

The consultation process of the Second Tourism Master Plan (STMP) began in 1994
with the assistance of the European Union. The STMP focused on six broad strategic
directions:

1. Balancing Regional Development

2. Facilitating Private Sector Investments
3. Strengthening the Institutions
4. Developing Human Resources and Cultural Aspects
5. Harmonising Tourism and the Environment
6. Strengthening Marketing and Promotion

5.3 Situational Analysis

Situational Analysis focuses on:

Economic and financial status

The Maldivian economy is mainly driven by the tourism, fisheries and construction
industries. Tourism has contributed over 30% to the GDP in the past decade. As a
result of the devastating Asian Tsunami in December 2004, tourism’s contribution to
GDP declined to an estimated 23%. Therefore, the Maldives did not reach the pre-tsunami
forecast GDP growth of 7.5% and instead registered a negative 5.2% change in the
GDP for 2005. In 2006, the Maldives registered a positive growth of approximately
18.7% over the previous year, stabilising the economy and repositioning it in the pre-
tsunami growth pattern.

Tourist arrival trends, markets, and product analysis

Maldives has positioned itself as a unique and high quality destination and has differentiated the
destination from its competitors. The average growth rate for the past ten years more than 9%, reflecting
steady expansion of the industry. However, 2005 saw a decline in bed nights as well as in the average
occupancy of the destination due to the after effects of the tsunami. Two additional indicators that reflect
the health of the industry are occupancy rate of resorts and the average stay that relates to occupancy. The
occupancy rate varies depending on the season.

Key source markets in terms of countries include Italy, UK, Germany, and France. Japan competes with
the European markets in terms of the number of arrivals, ranking fourth among source markets. The past
decade has shown growth in arrivals from emerging markets, particularly China, Russia and India.
Leisure and relaxation form the prime source of attraction for tourists. The Maldives is also a romantic
destination that appeal to honeymooners. The under-water beauty of the Maldives has always attracted
divers.

Human resource development

While tourism is geared to create new employment opportunities, the concern over the growing share of
expatriate workforce in the tourism industry remains to be addressed. The increase of expatriates in the
tourism sector is relatively low when compared to other key sectors it is crucial that the industry and the
Government take greater initiatives to address the matter. The limited supply of local labour is also likely
to hamper the efforts towards greater localisation of the work force in tourism.

The state of the environment

The Maldives tourism industry has remained mindful of the fragility of the environment.
In Maldives, recent rapid growth of the industry has presented further challenges. These
challenges relate to (1) preserving natural beauty of the islands, (2) ensuring the
adherence to EIA requirements during and after resort construction, (3) conservation of
reefs (4) disposal of garbage generated by tourist resorts, and (5) discharge of sewage
and effluent water.

Community involvement
Legal and institutional strengthening
Infrastructure and services

6.0 Reason for Success or Failure

Today, the Maldives GDP per capita income is the highest in the South Asian region. However, in 2006
the tourism industry bounced back to pre-tsunami level, lifting the entire economy out of an anticipated
recession. This recovery of the tourism industry is attributed to the joint efforts made by the public and
the private sectors to revive the industry. Among countries affected from the tsunami, the Maldives
sustained the highest economic loss due to the economy‟s heavy reliance on tourism.

While the income from the tourism industry is significant, the economic leakage from the industry is also
substantial. Economic leakage from tourism occurs due the following: (1) high level of imports, (2)
repatriation of wages by expatriate workers, (3) repatriation of profits (4) provision of tourism services
such as travel bookings by foreign tour operators and travel agents, and (5) dependence on foreign
airlines. Virtually all inputs for construction and operation of resorts are imported, and close to 50% of
resort employees are expatriates who repatriate a high proportion of their income.

The health and spa market segments are also attracted to the Maldives due to the
quality of spas in the Maldives. Most resorts in the Maldives now have a spa on the
island. The Maldives has a strong identity of a perfect tropical island destination and the
resorts offer different experiences to a variety of market segments.

Two factors lead to the increase in expatriate employment in the tourism sector. One is
that Maldivians are not interested in certain employment categories and the other is that
Maldivians are not qualified for certain employment categories. On the other hand, there
are very few Maldivians trained as Chefs, Dive Instructors, Accountants, and for many
other technical jobs. As a result, expatriates dominate these highly paid employment
categories. The Government has imposed a 50% ceiling on expatriate staff employed in
a resort or hotel.

The Maldives has maintained a 20% built-up area limit in resort islands. Strict
enforcement of the limit has helped the Maldives to retain the natural environment of the
resort islands. Furthermore, by regulation, height of buildings is kept below the tree line
to ensure that the natural look of the islands is kept intact. Buildings are allowed on the
lagoon under product diversification, but for every room built on the lagoon equal an
open space must be left free on the island. The use of solar and wind energy would help
decrease the greenhouse gas emissions from the Maldives, and substantiate the
Maldives‟ commitment to the Kyoto Protocol.

7.0 Planning Analysis

To obtain higher level economic benefits from the tourism sector, steps need to be
taken to increase Government revenue from tourism. Growth in the bed capacity will
undoubtedly increase the income from the tourism industry. However, emphasis should
also be placed on inducing greater visitor expenditures. Visitor expenditures are
dependent on the number of visitors, their expenditures per day, and the length of stay.
Therefore, focus should be placed on high yield visitors with higher spending habits and
on creating means to cater for and encourage their spending habits. The current tourism
tax structure should be also be reviewed and revised to correlate with the
income/revenue of tourism establishments. As such, a progressive tax in the form of a
Goods and Sales Tax would be most appropriate to increase revenue from tourism
without unduly placing a heavy tax burden on resorts and hotels. In order to reduce
leakage from the workforce, more effort is needed to train Maldivians in medium and
high skill jobs in the industry. Likewise, recognizing that growth in tourism will inevitably
lead to an inflow of expatriate labour, measures could be taken to encourage expatriate
labour to spend more in the Maldives.

The appeal of the Maldives amongst traditional markets seems permanent and
sustainable - a genuine attraction towards unique, clean, peaceful, beautiful tropical
islands. Therefore, the future market direction would be towards a stronger presence in
these countries leaning on these natural assets, even when considering market and
product diversification. Industry relations with travel trade businesses in traditional
markets would be maintained and strengthened. Additional efforts would be undertaken
to promote the Maldives to the public in traditional markets. Strategies would be
formulated and implemented to ensure affordable prices are maintained, so that the
Maldives would not lose out on the traditional charter clientele in the European source
markets.

The broader human resource policy is a dual purpose policy that aims to train and
provide increasing employment opportunities for Maldivians and to reduce the number
of expatriates employed in the industry. Reducing expatriate employment as a policy
imperative has its limitations in that simply adequate numbers of Maldivians are not
available to meet the demand. Some developments and re-developments propose
significant „environmental modification‟ as part of the development or expansion of the
island.

8.0 Result

9.0 Recommendation

More equitable distribution of the economic benefits from tourism among Maldivians is
essential to ensure sustainable social and economic development of tourism. Avenues
to achieving this objective include (1) increasing the linkages of tourism with other
sectors, (2) increasing local investment in resorts, hotels and support services and (3)
development of tourist resorts and hotel throughout the country in a manner that directly
benefit island communities.

Marketing strategies would include print advertisements in magazines and automobiles,

radio programs, television advertisements, and participation in tourism and travel trade
fairs. Inviting travel journalists and travel television program producers to the Maldives
will be continued. Regular and frequent communications with relevant media will
continue. The Government will continue to encourage individual resorts to conduct
marketing activities in co-operation with Tour Operators as well as with Airlines
operating to the Maldives. Events that would add value to the destination and also
strengthen the image of the destination would be held in the Maldives with high media
coverage including international television coverage. In the future, more emphasis will
be placed on web-based promotions. Consideration will be given to advertising in travel
websites and websites frequently browsed by the target markets for the destination.

Ministry of Tourism and Civil Aviation monitoring capacity will have to be strengthened.
Given the limited Maldivian workforce and the educational background of school
leavers, the Government would pursue training of Maldivians for skilled and high paying
jobs in tourism.

More emphasis shall, in the future, be paid to developing resorts in harmony with nature
to prevent environmental disasters. Better selection of islands for resort development
could avoid applications and approaches. a better monitoring mechanism needs to be developed
particularly channel clearance and sea-wall construction.

10.0 Conclusion