Guesthouses projected to incur USD 29 million in losses over virus

With the closure of guesthouses due to the COVID-19 pandemic, it will take at least six months for the businesses to recover, during which period alone; guesthouses will collectively incur USD 28.9 million in losses, shows a survey conducted by Guesthouse Association of Maldives (GAM).

GAM, in a statement announcing the results of the survey, noted that it had been conducted prior to the complete suspension of all tourist check-ins to guesthouses.

The COVID-19 pandemic has hit the guesthouse industry hard; with travel restrictions barring arrivals from top source markets such as China and Europe, the ban on excursions, and finally, the ban on international tourists from checking into any guesthouse or city hotel in Maldives.

While guesthouse industry is at a complete standstill following the ban, guesthouses continue to incur monthly expenses such as rent, salaries, utility bills, and taxes, noted GAM.

It found that while it was challenging to give an accurate estimate as to when guesthouses would be able to begin operations again, it would take at least six months for the industry to recover.

And during this six-month recovery period, the guesthouse industry will incur USD 28.9 million in losses, projects GAM.

It found that many guesthouse businesses had taken out loans to set up their business, and spent a significant portion of their revenue on rent, salaries, and utilities.

A 2019 survey showed guesthouses spent 56 percent of their revenue on payroll, other expenditures and community-linked expenditures; and 26 percent of their revenue on utility bills such as water and electricity, and taxes such as TGST and Green Tax.

“This is evidence of the significant contribution of the guesthouse industry towards increasing the income of individual citizens, and the government,” said GAM in its statement.

GAM noted that guesthouse businesses were linked with local communities, and that the revenue earned by guesthouses went to local communities, both directly and indirectly.

It said it planned on sharing the results of the survey with the government and other stakeholders in order to devise a plan to mitigate the significant loss.