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News Archives - May 2009
MTDC demands return of Herethere Resort
A letter demanding the return of Herethere Resort was sent by the government-owned Maldives Tourism Development Corporation (MTDC) to Yacht Tours yesterday.
The letter comes just days after a court ordered Yacht Tours to pay around US$8 million in outstanding rent to MTDC.
Managing Director of MTDC Mohamed Mihad said the corporation will now withdraw funds from the US$10 million bank guarantee given by Yacht Tours to secure the resort during the bidding process.
“Yacht Tours doesn’t have the right to stay on the island and do business without paying rent…We have sent them a letter asking them to leave as soon as possible,” said Mihad.
He added MTDC would file a court case if Yacht Tours refused to hand back the island.
Once MTDC regains possession of the resort, the board will meet to discuss how to proceed, he said.
The letter will come as a further blow to Yacht Tours, which yesterday announced it would be axing jobs.
Addressing press yesterday, Yacht Tours CEO Ahmed Mohamed said the terminations were necessary as 600 staff were working at the resort while there were only 28 tourists. He did not specify how many jobs would be cut.
He added the resort was losing Rf100,000 (US$7,800) a day.
The global economic slump has taken its toll on the tourism industry in the Maldives, with a 13 per cent drop in tourist arrivals in March compared to the same time last year.
Speaking to Minivan News today, Ahmed said, “We have been forced to cut jobs. We don’t want to do it but we have been unable to do business since November…We have never terminated staff until now. It will be a gradual process.”
Yacht Tours stopped paying rent in December 2008, claiming MTDC had failed to fulfil a contractual obligation to build a channel between Herethere Resort and Hulhudhoo, an adjoining inhabited island, by 30 November 2008.
MTDC responded by terminating the company’s contract and giving Yacht Tours seven days to hand over the resort.
In response, Yacht Tours lodged a civil case to sue MTDC for US$47 million in compensation for the incomplete channel and projected losses.
“But the court said it could not establish if we had lost this money due to the channel,” said Ahmed.
He added Yacht Tours was still hoping for an “amicable solution” with MTDC.
