Why Modi’s Lakshadweep Visit Sparks Diplomatic Tensions, Affecting Maldives Tourism and Economy.

12 Jan, 2024 | Statistics

Famous for its beautiful beaches and blue oceans, the Maldives is facing a tourism crisis as a result of a diplomatic dispute that has sparked a #BoycottMaldives movement. Three Maldivian officials made mockery of Indian Prime Minister Narendra Modi on social media after he posted about his trip to the southern island of Lakshadweep, which sparked the issue. A major response has resulted from this online dispute, with Indian celebrities and individuals calling for a boycott of the Maldives in favor of domestic beach resorts.

The Maldives economy is largely based on tourism, as are the economies of other South Asian countries including Bangladesh, Sri Lanka, Nepal, Bhutan, and India. Over 30% of the Maldives GDP and a staggering 60% of its foreign exchange profits come from tourism. In fact, more than 70% of the workforce in the nation is employed in this industry. As per recent data, the Maldives tourist industry generated USD 883.4 million in revenue during the second quarter of 2023, up USD 47.8 million over the same period in 2022.

Major markets

From 2016 to 2023, there was a consistent growth in the number of tourists arriving in the Maldives, with 1.28 million visitors in 2016 to 1.8 million in 2023, a 12% rise from 2022. In 2023, the top five markets for the Maldives tourism industry were India, Russia, China, the United Kingdom and Germany. With 209,198 arrivals, India leads the Maldives tourism sector. Followed by Russia (209,146), China (187,118), the UK (155,730), and Germany (135,090).

Interestingly, with 90,474 visitors out of 1,484,274 total, India ranked as the fifth-largest source of tourist arrivals in 2018. But with nearly twice as many arrivals (166,030), India jumped to the second position in 2019. Following the pandemic in 2020, around 63,000 Indian tourists visited the Maldives, making India the country's biggest source market.

With nearly 2.91 lakh and 2.41 lakh Indian tourist arrivals, respectively, accounting for a 23% and 14% market share, India remained the Maldives' largest market even in the difficult years of 2021 and 2022.

Impact on tourism

The #BoycottMaldives protest and the current diplomatic dispute have had an immediate negative effect on the Maldives tourism sector. There has been a notable decrease in the prices of holiday packages due to a 40% decrease in reservations for the Maldives. In fact, there has been a sharp increase in searches for local beach destinations, particularly Lakshadweep. Profiting from the surge in domestic travel, MakeMyTrip reported a stunning 3400% increase in on-platform searches for Lakshadweep.

Similarly, searches for other beach destinations have increased, with Daman seeing a 350% increase and the Andamans recording an astounding 120% increase in total search volumes following Prime Minister Modi's visit in December 2023. In response, MakeMyTrip launched the "Beaches of India" campaign providing discounts in an attempt to persuade Indian tourists to visit nearby beach destinations.

Similar patterns were seen on other travel websites, as searches for Lakshadweep increased by 3000% on, 900% on Cleartrip, and 2900% on Ixigo. Given that India made a significant $380 million contribution to the Maldives tourism sector the year before, this has resulted in a potential loss of millions of dollars in income for the Maldives.

Moreover, the #BoycottMaldives hashtag led to a huge social media activity, with 2.83 lakh posts supporting the boycott. The #BoycottMaldives movement has become more popular than the counter-campaign, which only received 7,870 tweets with the #IndiaOut hashtag. Tweets with the hashtag #ExploreIndianIslands generated 15 times more engagement than tweets with the hashtag #VisitMaldives.

Considering India and the Maldives' historic defense and security cooperation, this dispute has greater consequences. The $100 million financial aid from the Indian government to the Maldives in November 2022 shows India's commitment to the island nation's economic recovery.

This diplomatic dispute is expected to have major economic effects on the Maldives tourism industry, as India is exploring alternative beach destinations highlighting the complex patterns of tourism-dependent economies.

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