Thursday, 1st May 2023
The Maldives is a popular destination for luxury tourism in South Asia, known for its pristine beaches, crystal-clear waters, and luxurious resorts. While the primary focus of many visitors to the Maldives is relaxation and enjoying their vacation, it is crucial to acknowledge the potential impact that their spending can have on the workers in this island nation.
Understanding Service Charges in the Maldives: A Closer Look
One issue that has been gaining attention in recent years is the use of service charges in the Maldives hospitality industry. All the Resorts in the Maldives charge guests a service charge of 10% on top of their room rate. While this may seem like a small amount to travelers, it can make a big difference for the resort workers who rely on these service charges to supplement their income.
As someone who has worked in the hospitality industry for many years, I know firsthand how hard resort workers in the Maldives work to ensure that their guests have a memorable and enjoyable stay. From housekeeping and food service to front desk and entertainment, these workers put in long hours and go above and beyond to provide exceptional service.
Resort Workers: Low Salaries, High Reliance on Service Charges
Unfortunately, many resort workers in the Maldives, especially the front line staff, are paid low basic salaries and rely heavily on service charges to make ends meet. The truth is some Resorts in Maldives never distributed the service charge to their employees, leaving many workers struggling to make a living wage. Also some Resorts distributed a fixed amount or a small amount in local currency in Rufiyaa, that make the Expat staff loose lot of money in currency exchange to USD before sending this amount to his family or loved ones in back home. Therefore, for any future employee in the Maldives, before you accept any job offer it’s better you make your own research about this resort and the history of its distributed service through his current and ex employees or through our page of service charge.
Service Charge Distribution in the Maldives: Addressing Imbalance and Concerns
This issue has been the subject of much debate in the Maldives in recent years, with some workers and advocates calling for greater transparency and fairer distribution of service charges. It is worth noting that the distribution of service charges is now a legal requirement within the tourism industry. Failure to comply or uneven distribution can result in the Labor Relations Authority imposing a financial penalty of up to 22,250 USD on non-compliant businesses. The authority is also responsible for outlining the fine imposition process and potential sanctions against defaulting businesses.
Since the implementation of the service charge system in the Maldives, the number of resorts that pay service charge has increased significantly. What’s more, for some resorts, the amount of service charge distributed to each employee has skyrocketed. Just for example like last January 2023, it was reported that a handful of resorts paid over USD 3000 as service charge and the top of them was the Ritz-Carlton, Fari Islands that paid more than 4500 USD per staff. Several other resorts paid over 2000 USD and 1000 USD in service charge as well.
Questioning High Service Charge Figures: Transparency and Manipulation
These figures can largely be attributed to the high influx of tourists during the peak holiday season. However, the amounts distributed as service charge are for example, if a service charge of USD 3,200 is paid, USD 640,000 will be required to be spent on service charge for a resort with 200 employees, and USD 1.76 million will be required to be spent on service charge from a resort with 550 employees. Relative to the monthly income of a resort, this is a very high amount. These distributed amounts raise questions. Are all resort employees receiving such high service charges? Has the tourism industry improved to this extent? Or are some resorts manipulating their service charge distribution to create the illusion of high figures?
Until now the government has done little in practice to enforce these changes and address the existing issues. Consequently, some resorts have resorted to manipulating service charge numbers by outsourcing internal services. Under this approach, separate entities handle the Spa Centers, Kids Clubs, Restaurants, Security, Transport, Tennis, Water sports, Diving centers, and even Gift shops and other services… This is achieved either by establishing separate companies or by outsourcing these tasks to third parties. Therefore, only a limited number of employees are designated as resort employees, inflating the service charge per head. This practice remains concealed behind the seemingly high service charges observed in many resorts. Example all of Spa staff that are under Mandara Spa in different Resorts across Maldives they are not getting any single dollar from Service Charge while they are working hard everyday and up to 16 hours per day…
Some of this Resorts utilize a strategy where they emphasize the generous service charges they provide to their own employees. This practice aims to elevate their brand image and serves as a smart marketing tactic. Unfortunately, this approach results in their other employees (third-party employees in same island) being left unpaid, making them unintended victims of this scheme.
A prominent figure in the Maldives’ tourism industry stated that while many resorts do not genuinely pay service charges, it is challenging for those who do so. The monthly publicized service charge figures (especially by halamaldif.com) create an immense pressure for resorts. The company head affirmed their commitment to distributing service charges but acknowledged that the current scenario involves large service charges being paid by numerous resorts, but only to a select few employees.
However, not all resorts in Maldives engage in such manipulation of service charge figures. Some resorts diligently adhere to fair distribution practices (especially the international brands in Maldives), as expected by the law.
As travelers, it’s important to be aware of the impact that our spending can have on the workers in the destinations we visit. If you’re planning a trip to the Maldives, consider researching the resort’s policies on service charges and how they are distributed among their staff. By choosing to stay at resorts that treat their workers fairly, we can help support the local economy and ensure that everyone is able to benefit from the tourism industry.