Nika, the resort on this island, takes its name from the beautiful banyan tree that grows in the centre of Kudafolhudhoo, which is over 350 years old, its name in Dhivehi being "nika". Kudafolhudhoo Island was opened to tourism in 1983 and was one of the first to introduce a luxury hotel in the Maldives. It is one of the most confidential islands in the country. The beach is pretty, but unfortunately punctuated with dikes to hold back the sand. The villas have an original architecture inspired by the Maldivian style. But the island's facilities leave a bit to be desired. The island is mainly frequented by an Italian clientele, very fond of diving.

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