Thursday, December 26, 2013

Guest House Business - my journey

Back in 2009, I started a new venture, along with a very close friend, Mohamed Shihan. Back then, it was something very new, something that nobody has started yet. We called this venture ‘WhiteShell’as we rented a small house right on the beach of Maafushi. As the Government opened up to allow guest houses in local inhabited islands, we were the first to submit our registration. As a result, WhiteShell Beach Inn, is the first guest house to be registered on a local island. So we became the pioneers in it.

Initially, we invested about MVR 300,000 so that we could have 4 rooms fully furnished with AC, and very basic facilities. A small restaurant and a kitchen, and 4 employees. I was working full time in the public sector, as an Economist in MMA, during my weekends, I was busy with setting up of the business, and marketing it. As I did not have enough funds for a professional webpage development, I had to learn on developing websites, and tried my luck with it. Developed our first web site, uploaded it, and started the online marketing of it. Initial months of losses were borne by the monthly salary that I earned, and loans from my partner in business. We made sure the staff were paid on time, and utility bills paid every month. Some of my friends, and people from the tourism sector advised me that it would be a failure, as it is tourism without alcohol, pork, and bikini.

Six months in business, with the various online marketing efforts, we were able to get guests from Russia, Poland, Germany, France, and UK. With my efforts, I was able to put ‘Maafushi’ as a separate destination on various online booking sites, and travel sites. Before completion of the first year, I was able to rent the adjoining house, and later the house next to it, so that before the end of the second year, we were selling 10 rooms, and was running a successful beach restaurant. For the first one and half years in business, we were able to prove to everybody (especially those in Maafushi), that local island tourism can be successfully run for mid-market tourists, and it can be done without having alcohol, pork and bikini. During those months that we were the only guest house in the island, guests enjoyed their time on the beach, and Maafushi, without bikini (in covered clothes, of course), and there were no complaints from the locals. This was because, before the guests booked their holiday with us, they were given the information that it’s a local island and that government regulation does not allow swimming in bikini, just like they are aware that alcohol is not available. Hence, guests were fully informed and aware, and there was no room for complaints or unsatisfaction. Moreover, we got additional revenue because of this regulation; as guests preferred to spend their day in picnic islands, snorkeling, of fishing, and other activities, and that’s additional revenue for us!

Come 2013, we have altogether 20 guest houses in Maafushi now, and 144 rooms. Which means even if we didn’t consider the family rooms, that’d be 288 beds, and with 65% occupancy a 68,328 bed nights per year. Assuming average duration of stay is 4 days, that’s a 17,000 guests per year. With conservative estimates and past revenue records, it is estimated that about $9.7 million will enter the local Maafushi economy, and the guest houses will be paying the State as bed tax and GST a total of $1.3 million (equivalent to MVR 20 million). The income per head from guest houses alone is $4,425 per head in Maafushi. The total income per head of Maafushi after adding incomes from other sectors will be probably the highest in the country. It is a perfect example of making economic growth more inclusive, and a case study for Inclusive Development. In fact, I did present a paper last year in Islamabad, during a South Asia Economic Summit.

With the 20 guest houses, more than 100 locals are being employed in various jobs, ranging from speedboat crew, receptionists, waiters, room boys, accountants, and guest relations officers. Majority of youth are actively engaged in economic activities, without having to spend their times in coffee shops or elsewhere, as they did before. Women with children are able to earn at least MVR 10,000 a month doing laundry services. Last month we spent from our hotel MVR 17,000 for laundry, which is done by a local family.

We, the WhiteShell have played a key role in the expansion, and the success of Maafushi as a tourism destination by leading by example, and also assisting others in the setups. And thanks to MATATO, as we have recently been awarded the Maldives Travel Awards as the Leading Guest House, from the category which they have introduced this year.

There is no doubt that this newly developed industry provides huge economic benefits to the local community and the government in the form of taxes. It also provides other positive externalities like the guest houses taking charge of cleaning the beach area and streets, and taking care of waste disposal. The MWSC (water company), and STELCO are making huge profits from Maafushi, as the per unit rates are relatively higher in Maafushi compared to Male’. With the recently installed more that 144 air condition units, Maafushi is spending heavily on electricity. (There's still more to be done in terms of using efficient energy sources). 

There are many challenges as well, of course. With starting of many new guest houses, many have come to believe that bikini is not a problem, and guests are being told so as well. Less seem to complain though, as almost everybody benefits from the industry. We are yet to find an amicable solution to the issue, with serious discussions with the island council, tourism ministry and the guest house owners. Other social issues/problems can also be addresses in a similar manner. Which means, there’s still a lot of work to be done in order to make the business sustainable, environment friendly, and in order to make the this model a success in other islands. Wish you all a very happy new year!

20 comments:

  1. Good to read this.

    Would you mind if a Dhivehi translation of this is posted on dhathurunaamaa.tumblr.com?

    ReplyDelete
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  2. A success story worth sharing. Great initiative.

    ReplyDelete
  3. @Dhathurunaamaa you may translate it and post it.

    ReplyDelete
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    1. An informal Dhivehi translation of your story has been posted on http://dhathurunaamaa.tumblr.com/post/72861716727/translated-to-dhivehi-from-an-english-article

      Please feel free to share.

      Best wishes.

      Delete
  4. 2 Days back, around 4.30pm I came across a bunch of tourists wanting to go Maafushi. Originally they had their reservations done with some guest house in Maafushi, probably WS :) & then they asked the "i" counter about Maafushi ferry. The girl replied " it left at 3, sorry" , in return the tourist responded in a calm tone "So there is no other way to go Maafushi? & I have to stay here till tomorrow 3?". The point here is, you should have your people there to receive your guest regardless of flight delays. The moment he leaves his home, hoping to be with you, you have to keep an eye on him. Failing to do so, you could be the reason for MALDIVES losing its image in this very fragile industry!
    The other point to note is, Maafushi guest houses should not rely on just one ferry operating between Hulhule/Maafushi in a day. Since Maafushi has got so many guest facilities, i think it is high time for you to have 2 or 3 ferries daily (one in the morning, one in the afternoon and the last one in the evening)? This way you are increasing connectivity and accesability to your guest houses. So please give a thought on it. Wishing Maafushi all the best!

    ReplyDelete
  5. worth sharing it in social media. where are the buttons. have to do it old fashion way!. Happy new year and may your business thrive for years to come.

    ReplyDelete
  6. @AnonymousDecember 30, 2013 at 12:01 AM:
    Thanks for your feedback. There are ferries leaving in the morning at 10 and also at 3pm in the afternoon from Male'. In addition to that, there are more than 25 speedboats being operated by the guest houses and independent speedboat operators in Maafushi. Guests are normally briefed on the available options, and the prices.

    ReplyDelete
  7. Great article. !! wish you more success in 2014 and beyond. all the best.

    ReplyDelete
  8. Interesting article and happy to understand that the working class of tourists now have decent holiday in the Maldives and a additional revenue for the well being of the Islanders. Congrats and wish you all success. Keep our friends happy. :)
    Thank you for posting and a Happy New year.

    ReplyDelete
  9. Wish you more success and hope you expand this to further islands if possible!

    ReplyDelete
  10. Hello from Minivan News, can we publish this on minivannews.com? Please email editorial@minivannews.com

    ReplyDelete
  11. Guest House policy was stolen one from someone by MDP govt

    ReplyDelete
  12. Yea. Economically great. But what about negative environmental impacts and socio cultural impacts. Good question to ask is what are you guys doing to sustain the environment and culture? I am pretty darn sure that if Maafushi has 144 rooms and is increasing there wont be a beautiful beach left by 2030. Something to think about. And also what about the brand name Maldives? The only thing we think about is money isnt it?

    ReplyDelete
  13. Hence, it would be a good idea to share market analysis, for starters to build up a more sustainable and environmentally friendly business idea.

    ReplyDelete
  14. Great post. It is very useful for vacations planning. Thanks for sharing its inspire me a lot.
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  16. hi i would like to read the paper you have presented at Islamabad

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