The Tourism Dollar: Why Earning Dollars Is Not the Same as Having Them

The Maldives has built one of the world’s most successful tourism industries, generating billions of dollars from international visitors. But tourism earnings and foreign currency available to the wider economy are not necessarily the same thing. 

An industry built on global connections

The Maldives built its tourism industry by connecting itself to the global economy. Foreign capital helped finance resort development. International hotel companies brought brands, management expertise and access to global markets. Overseas tour operators connected Maldivian resorts to travellers around the world, while foreign lenders helped finance expansion. The industry developed as part of an international tourism system rather than as an activity contained within the domestic economy.

It was an extraordinary economic transformation. In little more than half a century, a small island nation with limited conventional exports created one of the world’s most valuable tourism industries. The Maldives turned geography, an archipelago once considered a constraint, into its greatest economic advantage.

But an internationally integrated industry also has international financial flows. The connections that allow Maldives to earn billions of dollars from tourism also influence where those dollars are collected, how they move and what obligations they ultimately meet. That openness was central to the industry’s success. It also means that tourism earnings are tied to financial flows that extend well beyond Maldives. It does, however, raise an increasingly important question:

When Maldives earns a tourism dollar, how much of that dollar becomes available to the Maldivian economy?

The rise of the tourism dollar

The growth of tourism earnings has been remarkable. In 2011, tourism receipts were approximately US$1.94 billion. By 2019, before the disruption caused by Covid-19, they had increased to approximately US$3.16 billion. The pandemic temporarily interrupted that growth, with tourism receipts falling sharply in 2020 as international travel stopped. Recovery was rapid: receipts rose to approximately US$3.51 billion in 2021, US$4.50 billion in 2022 and US$4.79 billion in 2024. By 2025, tourism receipts had reached a record US$5.57 billion.

Over fifteen years, the scale of the industry changed dramatically. A country with a small domestic market and limited manufacturing exports built the capacity to generate billions of dollars annually by selling services to international visitors.

Yet alongside this success, another reality emerged. Despite record tourism earnings, access to foreign currency became an increasing concern for businesses. The foreign-currency pressure could not therefore be explained simply by a failure to earn dollars. Tourism was generating more foreign currency than ever before. The question was how much of those earnings ultimately became available to the domestic economy.

Tourism receipts measure the value of services sold to non-resident visitors and are the standard measure of tourism export earnings. They should not, however, be interpreted as a simple count of dollars entering Maldivian bank accounts. A tourist spending on a Maldives holiday generates a tourism receipt in the Balance of Payments. But that does not mean an equivalent amount of foreign currency immediately becomes available within the domestic financial system. Where the payment is collected, what obligations are met from it, how much is retained within Maldives and how much is converted locally all affect the amount ultimately available to the wider economy. Understanding that distinction requires following the tourism dollar through its journey.

Following the tourism dollar

A visitor paying for a Maldives holiday may complete the transaction long before arriving in the country. Payment may involve an overseas tour operator, an online travel platform, an international hotel booking system or direct payment to the tourism operator. Even Maldivian owned tourism groups may operate through international sales networks and commercial arrangements.

The journey of the tourism dollar therefore does not necessarily begin inside Maldives. Depending on the booking channel and commercial arrangements involved, part of a payment may first pass through overseas distribution networks. Travel agents and online platforms receive commissions, while other international service providers may also receive payments before the tourism operator receives its share.

The financial path may also differ significantly between tourism businesses. A foreign-owned resort operated under an international brand can have a different structure from a Maldivian owned and operated resort. A locally owned resort using an international management company may have another. A Maldivian tourism company selling rooms through overseas distribution channels may have another again.

Ownership matters, but it does not by itself determine what happens to the tourism dollar. What matters equally is where revenue is collected, what contractual claims are made against it and how much ultimately becomes available within Maldives.

The costs of being a global industry

A successful international tourism industry inevitably has international costs. Resorts operate through global supply chains and import food, beverages, equipment, machinery, furniture, technology systems and many other operational requirements. International hotel operators may receive management and brand fees. Overseas booking platforms and travel agents receive commissions. Foreign lenders receive interest and principal payments.

These payments are not anomalies in the tourism model; they are part of the commercial architecture that makes a globally competitive industry possible. A tourism economy could not compete at the level Maldives does without access to those global networks.

Foreign investment creates another important connection. The ability to repatriate capital and profits is a fundamental part of attracting investors. Investors provide capital because they expect legitimate returns and the ability to realise those returns. For Maldives, that proposition has been important in developing a capital-intensive tourism industry.

From a foreign-exchange perspective, however, those returns can also represent movements of currency across borders. A foreign-owned resort contributes to Maldivian tourism receipts, employs workers, purchases goods and services and generates economic activity inside the country. But profits arising from that activity may ultimately accrue to foreign owners and, when distributed abroad, become an outward foreign-currency flow.

The Balance of Payments records investment-income payments from the economy as a whole, including dividends, profits, interest and other investment returns across multiple sectors. In 2025, Maldives recorded approximately US$816 million in investment-income payments. The figure cannot be treated as tourism profit repatriation because it covers the wider economy. It does, however, illustrate the scale of external claims on income generated within an internationally integrated economy.

The point is that the value of tourism exports and the amount of foreign currency ultimately available to the domestic economy are not necessarily the same thing.

The dollars that remain within Maldives

The tourism dollar does not only create outward flows. Tourism also leaves substantial economic value within Maldives and channels foreign currency into the domestic economy.

The state captures an important share of tourism activity through Tourism Goods and Services Tax, Green Tax, tourism land rent, Departure Tax and other tourism-related revenues. Tourism also generates income for Maldivian employees, purchases from local suppliers and service providers, and profits for locally owned tourism businesses.

That distinction is important. Economic value retained within Maldives is not automatically the same thing as foreign currency retained within the domestic financial system. A Maldivian salary, a purchase from a local supplier or profit earned by a local owner is domestic economic value. Whether it also leaves foreign currency available in the banking system depends on how the underlying payment is made, retained, converted and subsequently used.

Tourism businesses also need rufiyaa for domestic obligations, including local wages, local suppliers, utilities and other expenses. When foreign currency is sold through the domestic banking system to meet those requirements, those dollars become available within the formal foreign-exchange market.

The question, therefore, is not whether tourism generates foreign currency for Maldives. It plainly does. The question is one of proportion and flow: how much ultimately remains available within the domestic economy, and how much is required to meet the normal international obligations of a globally connected industry?

There is also a wider context. Tourism earnings have risen dramatically, but so too have imports of goods and services. Over much of the past fifteen years, tourism receipts and imports of goods and services have remained relatively close in scale. Yet the increase in tourism earnings was not accompanied by a steadily widening margin over imports of goods and services.

This does not mean tourism should be expected to finance all of the country’s imports, nor that those imports are driven solely by tourism. They serve the entire economy. What the comparison shows is that even as Maldives became much more successful at earning foreign currency, the wider economy was becoming more dollar-intensive at the same time.

The striking feature is the absence of a sustained widening gap. The enormous increase in tourism earnings did not create a correspondingly large margin over the economy’s imports of goods and services.

That helps explain why the route taken by tourism dollars increasingly became a matter of economic policy.

Changing the plumbing

As foreign-exchange pressures intensified, the government introduced measures intended to increase the amount of tourism-related foreign currency flowing through the formal financial system.

The Foreign Currency Act, which came into effect in January 2025, introduced mandatory foreign-currency conversion requirements for tourism establishments. For Category A establishments, including resorts, the requirement was set at either US$500 per tourist or 20% of monthly gross foreign-currency sales, depending on the applicable option.

The reform attempted to change the plumbing: to direct a defined portion of tourism earnings through the domestic banking system.

In 2025, businesses subject to the new requirements converted US$670.8 million through commercial banks. By redirecting part of existing tourism earnings through the banking system, the measure sought to increase the formal supply of foreign currency available locally.

The unanswered question

In 2025 alone, Maldives generated US$5.57 billion in tourism receipts. But that headline figure cannot, by itself, explain foreign-currency availability.

Between the moment a visitor pays for a Maldives holiday and the moment a Maldivian business seeks dollars for an overseas payment, the tourism dollar may pass through international distribution networks, meet imported input costs, service financing and investment obligations, generate income and profits within Maldives, contribute to government revenues, and be converted through the domestic banking system.

Some of those earnings become available within Maldives. Others meet the legitimate international obligations of a globally integrated economy. The challenge is understanding the balance.

Maldives has shown that it can earn dollars at extraordinary scale. The larger question is whether the way those dollars move through the economy, together with the economy’s growing demand for foreign currency, allows enough of them to become available where they are needed.

Editor's Note: This is the first article in a series examining Maldives’ foreign currency challenge and the structure of an increasingly globalised tourism economy.

(Sources: Maldives Monetary Authority, Balance of Payments Statistical Database (Analytical Presentation) — tourism receipts / Travel services data and investment income statistics; Maldives Monetary Authority, Foreign Currency Act 2024 and related regulations on mandatory foreign currency conversion requirements for tourism establishments; Maldives Monetary Authority, Annual Report 2025; Maldives Inland Revenue Authority revenue statistics and annual reports on tourismrelated taxation.)