Photo Credit: Courtesy Outrigger Hotels & Resorts

Maldivesin transition?

By Arnie WeissmannMarch 08, 2017

KONOTTA, Maldives -- In many ways, the island nation of the Maldives represents a microcosm of the challenges and glories of global tourism. Consider the remote island of Konotta: Visitors travel there from every region on Earth, drawn by the lure of a modern paradise, complete with upscale accommodations, private pools and beachfronts, superior gastronomy, a spa and a host of ways to take advantage of the crystalline water of the Arabian Sea.

All indications are that the guests are happy with what they find there, rating the Outrigger Konotta Maldives Resort five dots on TripAdvisor and following up with comments filled with superlatives.

But to build and maintain a stellar reputation, the relatively small resort -- it has only 53 keys -- had to create several micro-environments. The room placement and landscaping are designed to appeal to certain nationalities, and to market the property a variety of packages target the divergent preferences of a global clientele.

"Europeans and Russians love a room on the beach," said Silvia Collepardi, director of sales and marketing on Konotta. "The Chinese want a 'two-plus-two' -- two nights in a beach-pool unit, two nights in overwater bungalows. Guests from the Middle East want the beach, but with a lot of vegetation at the back to give them a sense of privacy. Americans want the overwater bungalows."

One bedroom overwater villas are 2224 square feet and come with a private pool. Photo Credit: Courtesy Outrigger Hotels & Resorts
One bedroom overwater villas are 2224 square feet and come with a private pool. Photo Credit: Courtesy Outrigger Hotels & Resorts

Japanese and Koreans, she said, add further complexity.

And then, of course, there are food and beverage considerations and resort activities.

"Germans want options, lots of activities, but included in the price," Collepardi said. "The Chinese like food and drinks inclusive, and they'll book fishing, parasailing and snorkeling excursions but they don't spend much time swimming. They'll choose excursions over spa appointments, but the Europeans are just the opposite."

Blue Salt, the resort's main restaurant, doesn't look nearly large enough to accommodate all the resort's guests should they decide to dine at the same time.

But that isn't an issue. Chris Ely, corporate director of planning and support and Asia Pacific general manager for Outrigger, who also acted as general manager of the resort for seven months last year, said, "The Chinese dine early, then the Americans come, then the Europeans."

If the resort represents on a small scale the contemporary operational complications of running a property wishing to attract a truly international clientele, it also reflects Outrigger's ambitions to continue its expansion outside its regional origins. Although the company expanded beyond the South Pacific more than 10 years ago, most North Americans still associate the brand with its Hawaiian properties and roots.

Today, Outrigger owns, operates or has under development 6,500 rooms in 37 resorts, condos and vacation properties in Thailand, Mauritius, Fiji and Guam, with Sri Lanka, the Philippines, Palau, Okinawa and the Seychelles either in the pipeline or on its target list.

"We're looking to secure prime beachfront in iconic tropical destinations," said Sean Dee, Outrigger's chief marketing officer. "And if that's your goal, the Maldives is a place you need to be."

Last December, the company, founded in Waikiki, Hawaii, in 1947 and privately held by the Kelley family for 69 years, was sold to KSL Capital Partners. The new owner announced its intention to speed growth through an infusion of capital, and KSL CEO Scott Dalecio recently took the reins as interim CEO, replacing former chairman Richard Kelley's son-in-law, David Carey III, who is moving to an advisory position.

Outrigger acquired the Maldives property from Raffles in 2014 after that company abandoned the project, having completed only 60% of its development plans. Outrigger expanded the number of villas and opened a year later.


The four-and-a-half strategy

Maldives' average daily rates are the highest in the world, in large measure because of the high percentage of five-star luxury resorts represented there. The first property in the world that cost $1 million per key to build (One&Only Reethi Rah) is in the Maldives, and operating costs throughout the country are higher than in most parts of the world because, other than freshly caught fish, very little can be locally sourced. And all those properties' fixtures, appliances, goods, fuel and consumables must be transported to the 100 or so resort islands spread across 35,000 square miles of ocean.

The timing of the opening of Konotta coincided with some rate softening across the country as the economy of China, the largest source market for both the country and Konotta, began to slow. Luxury room inventory increased unabated, and three-star options, previously few and far between, began to increase. On top of this, the uber-rich Chinese, many of whom find status in being first-movers, moved on to lesser-known destinations.

"The business from China was amazing and driving prices up," said a wholesaler who specializes in luxury resorts but did not want to be identified. "There was big business from Russia, too. But that dried up, and Europeans aren't spending as much."

The resorts, he said, have become more aggressive, "chasing wholesalers more than they used to."

But occupancy rates are still enviable and there is still plenty of profitability in the current rates, which he said are still the world's highest. He characterized the rate softening as a "correction" that, among other things, introduced seasonal fluctuations, with rates hitting peaks around Christmas, New Year's and Chinese New Year.

The wholesaler was dubious that the new three-star properties were sustainable: "Capital expenditures and the cost of imports are too high."

The private pool deck of a lagoon villa. Photo Credit: Courtesy Outrigger Hotels & Resorts
The private pool deck of a lagoon villa. Photo Credit: Courtesy Outrigger Hotels & Resorts

Konotta would be considered five-star in almost any other market in the world. But because the bar is so high in the Maldives, Outrigger believes they've found a sweet spot by positioning the property at four-and-a-half stars. The company prices below One&Only, Six Senses, Four Seasons and other global luxury brands in the country while delivering a product and service it feels will more than meet the needs of demanding guests.

"Luxury brands are plentiful in the Maldives," said Outrigger's Dee. "We see ourselves as upper-upscale or premium, with a price point that works well for families and honeymooners who are looking for value and service at a slightly better rate."

The positioning as a value-conscious alternative to over-the-top luxe is also complementary to the company's strategy to increase its brand awareness in China.

"That [market] is very strategically important for our company," said Dee, who added that Outrigger now has sales representation in Beijing and Shanghai. "And I'm happy to report that 40% [of our guests have been] from China, right out of the gate."

Outrigger is targeting "a different slice" of the outbound Chinese market, Dee said. "We're looking to those interested in an FIT experience, in culture, in the oceans. I think that's reflected well in the product."

The authenticity challenge

It's easy to have a Maldives resort experience that precludes any meaningful exposure to Maldivian culture. Most upscale resorts are self-contained on their own islands, and it's quite possible that a guest will speak with no Maldivian who doesn't also work for the resort.

The islands themselves tend to be small -- Konotta can be circumnavigate on foot in about 25 minutes -- and are extensively landscaped and manicured. Maldivian cuisine was on the menu when I was at Konotta, but so was foie gras. A teppanyaki restaurant is also on premises.

General manager John Allanson had been on the job for less than a week when I arrived, and he was already thinking about ways to try to introduce a greater sense of place.

"Yes, foie gras is on the menu, but won't be much longer," he said.

It's a challenge to incorporate Maldivian culture. There's a resident "climber" harvesting coconuts for in-the-shell welcome drinks; guests also receive, upon arrival, a necklace made by the staff who weave palm frond strands into traditional designs. Plastic straws have been replaced by lemongrass straws, also made by the staff, and Allanson was considering teaching guests a Maldivian word of the day.

He said he would look for additional ways to introduce native authenticity.

"You can make a difference," he said.

Outrigger requires that each of its resorts have a conservation project. The company has dubbed the effort "Ozone," and it's through Ozone that Konotta guests may get their most intense exposure to local conditions. The resort hosts a resident marine biologist, Caterina Fattori, whose work is also supported by Best Dives, a concessionaire that runs watersports on the island, and Germany's Deutsches Meeresmuseum, an oceanography museum.

Laundry day: A father and his two children in front of their home after laying out their clothes on the island of Nadalla, as their mother watches from the shade of their porch. Photo Credit: Arnie Weissmann
Laundry day: A father and his two children in front of their home after laying out their clothes on the island of Nadalla, as their mother watches from the shade of their porch. Photo Credit: Arnie Weissmann

Konotta is about 30 miles north of the equator, and the reef that encircles it is showing signs of extreme stress caused by warming waters, which reached 93 degrees last spring. In response to these abnormally high temperatures, Fattori said, the coral is bleaching: to conserve energy, some species have stopped producing normal coloration.

Fattori has been trying, with limited success, to improvise various methods to restore damaged portions of the reefs. And part of her job is to share what she is doing in presentations to guests.

Climate change poses a grave existential threat to the Maldives. Most islands are between 3 and 5 feet above sea level, and the highest elevation, on sand dunes, is less than 8 feet.

Should global temperatures continue to rise and the sea ice melt, it's estimated that 77% of the nation will be submerged by the end of the century, which would make moot Outrigger's 99-year lease on the property.

"The world is grappling with climate change, warmer oceans and potentially rising seas," Dee said. "It's a macroquestion. We're early in the process of evaluating its impact on our investments over the long term. You can see the erosion and the movement of the sand, but we believe conservation efforts can help address the issue."

As it happened, when I visited last September the annual rainy season had unexpectedly lingered and overlapped with my stay. This, too, was attributed to climate change.

In some ways, the extended rains proved to be the ultimate test of the resort's offerings. My wife, two sons and I would have preferred sunny weather, but we also made the most of the situation. (I was a fully hosted guest of the resort, and my family was partially hosted.)

We found that rain didn't have much impact on our snorkeling -- including guided night snorkeling -- scuba diving, pool time, a fishing expedition or a visit to the spa. It may or may not have been a factor in our not seeing any dolphins during our Dolphin Quest outing.

Although the resort would gladly have chauffeured us in covered golf carts from our villa to the restaurant, we just opened our umbrellas and walked, on the chance we would see fish and rays along the pier connecting our overwater rooms to the island.

And rain in no way diminished the dining experience.

Allanson, whose first days were likewise soggy, said the weather got him thinking about rainy day activities he might introduce, from wine tasting and sushi rolling to face painting for kids (the resort's Coral Kids Club provides a day care center, and parents get two hours of baby-sitting included in the rate).

The other Maldives

We did take full advantage of our one sunny day. My family went parasailing and sea-bobbing (holding onto an electrically propelled pod somewhat similar to what James Bond used in the opening scenes of "Thunderball") while I took an excursion to inhabited islands with no resorts.

The tour proved to be extraordinary. I was the only guest who had signed up that day, and my guide was Simo Ali, whom I had met earlier in his role as watersports manager.

He took me to his home village, Fiyoaree, population 1,500, which was about a 25-minute boat ride away. We passed dozens of small, low-lying islands populated only by palm trees and the occasional telecommunications tower.

The youngest of nine children, Ali took me first to meet his parents and one of his brothers. His brother lopped off the top of a coconut with a machete, and I sipped from it as I toured the small house and stood with his parents for a while watching what appeared to be Maldivian military exercises on their television, patriotic music blaring.

The atmosphere on the island was laid-back, to say the least. About 10 young men sat on plastic chairs in a small cafe, drinking tea and eating sandwiches, but Fiyoaree was by and large a hammock culture, with people lying or sitting in wide-gauge fishnetting strung between trees next to the sea.

A baby rests on his grandfather in a hammock on Fiyoaree. Photo Credit: Arnie Weissmann
A baby rests on his grandfather in a hammock on Fiyoaree. Photo Credit: Arnie Weissmann

A few of the older buildings lining the village's wide dirt streets were made of coral stone, but most were cinder block and covered with painted plaster, a few of the latter inscribed with political graffiti.

Ali said that much of the younger generation has, like himself, left the island for jobs on resorts.

As we walked around, he seemed to know, or was related to, everyone we met; the village comprised three families, he said. I was greeted warmly by all.

The village, like the country, is overwhelmingly Muslim; our tour included two mosques, a communal garden, a school and a shop. There was talk that a Singaporean had bought land and would build a four-star hotel that might cater to, among others, surfers (waves 18- to 25-feet high broke nearby), but Ali said it was nothing that could be depended upon.

What made the visit to that and another slightly more prosperous village most memorable was the slow unraveling of Ali's life story.

He was born on a boat that was bringing his mother to a medical center for his delivery. School went to seventh grade; he learned English, but his opportunities were limited to tuna fishing or tourism. He chose to go to a hotel school in Male, Maldives' capital.

After studying for three years, he worked first as a waiter and a tour guide. He learned to dive and had a job in watersports with a Jumeirah resort prior to coming to Outrigger.

But what seemed to be his proudest accomplishment was a successful lobbying effort to get the government to develop a waste management plan for his village.

"I wrote letters," he said. "I put on a tie and went to Male and spoke to many people in government, you wouldn't believe how many. But this is our country, and if we don't care, who will?"

The boat's captain, Adhil, brought us to Nadalla, where he was from. He introduced me to his family as well, and his brother climbed a palm tree and extracted an extraordinarily sweet sap, locally called coconut toddy, for me to taste.

Modern-day paradise in the Maldives
Overwater bungalows, each with a private pool, are especially popular with American and Chinese guests who stay at the Outrigger Konotta Maldives Resort. At the tip of the pier is the 6,458-square-foot, three-bedroom Grand Konotta Villa.<br /><br /><strong>Photo Credit: Courtesy Outrigger Hotels & Resorts</strong>Although the island-resort has only 53 keys, it has customized living quarters, packages and activity options for a global clientele that includes guests from Europe, the Gulf states, East Asia and North America.<br /><br /><strong>Photo Credit: Courtesy Outrigger Hotels & Resorts</strong>One-bedroom overwater villas are 2,422 square feet and each has a private pool.<br /><br /><strong>Photo Credit: Courtesy Outrigger Hotels & Resorts</strong>The one- and two-bedroom lagoon villas are smaller but can connect to create a three-bedroom …<br /><br /><strong>Photo Credit: Courtesy Outrigger Hotels & Resorts</strong>… and two-pool suite.<br /><br /><strong>Photo Credit: Courtesy Outrigger Hotels & Resorts</strong>Although there are 200 inhabited islands in the Maldives, most guests spend their time only on the resort island at which they’re staying. Some resorts, like Outrigger’s Konotta, offer opportunities to visit islands to better understand Maldivian culture. Nadalla is, like all the country’s islands, less than eight feet above sea level at its highest point.<br /><br /><strong>Photo Credit: Arnie Weissmann</strong>A Nadalla fisherman repairs his nets.<br /><br /><strong>Photo Credit: Arnie Weissmann</strong>Simo Ali, the watersports manager at Konotta, also doubles as an excursions guide; he poses with his parents at their home on Fiyoaree, the first stop on his tours.<br /><br /><strong>Photo Credit: Arnie Weissmann</strong>A hammock-culture prevails on Fiyoaree, where some men retreat from the midday sun to pass the time under the shade of palm trees.<br /><br /><strong>Photo Credit: Arnie Weissmann</strong>A wall covered in stencils with the image of exiled former president Mohamed Nasheed. Although Nasheed was deposed in a coup and initially jailed (he now lives in London), his Maldivian Democratic Party is still active, particularly on islands away from the capital, Male.<br /><br /><strong>Photo Credit: Arnie Weissmann</strong>A baby rests on his grandfather in a hammock on Fiyoaree.<br /><br /><strong>Photo Credit: Arnie Weissmann</strong>A tray is prepped for a cooking lesson on the beach on Konotta.<br /><br /><strong>Photo Credit: Arnie Weissmann</strong>Laundry day: A father and his two children in front of their home after laying out their clothes on the island of Nadalla, as their mother watches from the shade of their porch.<br /><br /><strong>Photo Credit: Arnie Weissmann</strong>A woman cuts taro root on her porch between puffs from her pipe.<br /><br /><strong>Photo Credit: Arnie Weissmann</strong>

I was surprised to see, on both islands, headquarters for the Maldivian Democratic Party, founded by exiled former president Mohamed Nasheed, who had been deposed in a coup and jailed before claiming asylum in the U.K., where he had gone for medical treatment. Additionally, a store had put a poster of Nasheed in its window, and his image was stenciled on walls.

For most guests, Maldivian politics doesn't intrude on vacations. I had planned to spend part of my first day in Male, but the day before my arrival I learned that there were frequent protests there and that new rules, designed to limit activity by foreign journalists, had just been adopted.

I abandoned the idea.

I had also been told that there was a movement in France to boycott vacations in Maldives due to the political situation, and I asked Outrigger's Dee if local politics caused him concern.

"It's something to observe and pay attention to, not just here, but also, for example, in the Philippines and Thailand," he said. "It's important on many levels, but we haven't seen any disruption. We remain vigilant."

Americans welcome

It surprised me when sales and marketing director Collepardi told me that currently, only about 5% of guests at Konotta are American, because it seems very much like a product that would appeal to Outrigger's U.S. base, which is already familiar with its Hawaiian product.

The various categories of rooms I inspected all seemed generous in size and amenities, and the overwater Grand Konotta Villa, an impressive structure with large public areas, a spacious deck and an infinity pool as well as three bedrooms, represents incredible value (it would be less expensive for three couples to share that than get three separate accommodations, according to Collepardi).

The service is excellent, the watersports are run very professionally and there's even a doctor in residence.

Simo Ali, the watersports manager at Konotta, also doubles as an excursions guide; he poses with his parents at their home on Fiyoaree, the first stop on his tours. Photo Credit: Arnie Weissmann
Simo Ali, the watersports manager at Konotta, also doubles as an excursions guide; he poses with his parents at their home on Fiyoaree, the first stop on his tours. Photo Credit: Arnie Weissmann

The food offering was consistently good and the teppanyaki chef was the most entertaining of dozens I've seen (he was an excellent cook, too). I particularly enjoyed a seaside cooking lesson and a torch-lit farewell dinner on the beach.

The atmosphere is serene; one Australian guest I met said he chose it because, on a previous visit to the Maldives, the resort he chose was too close to an island with a noisy, party scene.

The issue for most Americans, no doubt, is distance. There are no nonstop flights, though connecting service is available via the Persian Gulf States, India, China or Korea. Coupling the destination, as I did, with Sri Lanka proved a great combination, and Outrigger's Dee believes that as the company's portfolio fills out, there will be advantages in combining Konotta with other destinations that would be considered far-flung to North Americans.

"We did some preliminary studies, and think that we might see some opportunity in packaging," Dee said. "We can't pair it with Waikiki, certainly, but three or four days in the Maldives along with Seychelles or Sri Lanka -- an Indian Ocean package -- could do very well.

"To North Americans, it may seem a long way from everywhere," Dee said, "But the potential is significant."

And should Americans arrive in greater numbers, the resort will no doubt iterate once again, tweaking rooms, amenities and packages accordingly.

The strategies playing out in the boutique atmosphere of Konotta reflect a new reality in the globalized marketplace: Resources to continuously edit a hospitality product have become table stakes, and the ability to accurately interpret the complex preferences of different source markets is a baseline competency.