Reflections and warnings on tourism
Former Tourism minister Karmenu Vella has worn many hats in his time.
He is currently the MLP's spokesperson on tourism and a Deputy Chairman
Corinthia Hotels International. However, apart from being a former tourism
minister, he has also held the posts of minister of public works and
industry. Here, Mr Vella speaks to Ray Abdilla on tourism and whether
the country is, indeed, on the right track.
Karmenu Vella reminisces on the great extent to which the industry
has changed over the last 20 years, explaining that the process is continual
in its bid to adapt to consumer trends, demands, tastes, travel motivation
and travel patterns. These changes, he explains, are also apparent in
the sector's products, service, costs, operations and the level of competition.
However, Mr Vella explains that the real question is whether we as a
country have managed to adapt and respond to these market fluctuations.
He explains, "I don't hesitate to say that tourism past and present
are two completely different entities and that this ever-changing and
developing industry is, in turn, having a real impact on the economies,
societies and the environment on global, national, regional and local
"Starting from scratch and keeping up the momentum are both important.
As in any kind of business, the challenge is always twofold. The first
challenge is getting off to a good start, setting ourselves in the right
direction and achieving positive results from the outset. Secondly,
and equally important, is the challenge to maintain and enhance results
while simultaneously sustaining the right course of action."
However, when it comes down to the brass tacks of the sector. Mr Vella
contends that there is a significant difference in attitude between
the two main political parties in terms of commitment, the order of
priorities and overall strategies for the industry.
He elaborates, "I dont believe the present government is
as committed to tourism as the Labour government was through its complete
attention and total commitment towards the industry. All ministries
were, in one way or another, pooled into Labours dedicated objective
of setting tourism back on the right track.
"However, the present administration is assuming a very relaxed
and passive role. As opposed to taking heed of and coming up with solutions
to the industrys ailments and concerns, it persists in conjuring
up figures and statistics in attempts to make all those concerned believe
that we have never had it so good. "The government's public relations
machine is trying to make a drooping duck look like a super swan, by
being more committed to hiding rather than solving tourisms problems."
The shadow tourism minister believes that the economically crucial tourism
industry is being overshadowed by the present administration's all-consuming
urge to join the EU, as he explains, "The government's priority
is to join the EU at any cost. This priority has left all other matters,
including tourism, unattended to. If anything, the current government
has shown that it can't handle more than one priority at once.
"I believe that the economic and financial mess were in today
is the result of the present governments deficiency in dealing
with the right priorities.
"I can see how different governments have different priorities,
but I fail to comprehend how any government can assign tourism, with
its 25 per cent contribution to GDP, lower priorities than those of
other sectors. The EU issue has taken over the economic issues of tourism.
Effectively, he stresses that Malta's tourism product has been and is
once again, being grossly neglected.
"Our tourism product is rapidly deteriorating. While the private
sector is doing its utmost to improve and protect its investment, the
government is not even addressing tourisms very basic needs. Competitiveness
is constantly deteriorating and the sector's marketing people are required
to sell an appalling product at an uncompetitive price."
In the search for the right type of tourist to fit Malta's bill, according
to Mr Vella, one must inspect the positive and negative effects that
various types of tourism have on our economy, society and environment.
He explains, "To be honest, I have never come across a destination
that doesnt handle some type of mass tourism. Obviously, there
are many shades of the so-called mass tourism and we often tend to equate
mass tourism with low revenue and high negative environmental impacts.
But this is not always the case.
"To give an example, non-mass cultural groups bring about very
few negative impacts but they also tend to spend less. On the other
hand, rich golfers tend to spend more but hold a potentially great impact
on our environment by demanding vast areas of land."
However, Mr Vella emphasises that, when talking about mass and up-market
tourism, we must bear in mind that only some 10 per cent of Maltese
bed stock is able to cater for the up-market tourist, while the remaining
90 per cent still depends on mass-tourism.
"Whatever the type of tourist, the important thing is that we learn
how to manage our tourism industry. We must decide what we want and
then plan to achieve what we want.
"Lets be honest, for a number of years tourism in Malta was
not planned or managed - it just happened. 40 years later, we have wound
up being a mass tourism destination. This cannot be eradicated overnight.
It is time for us to start managing tourism and not to remain in a situation
where tourism is managing us.
"I agree with the fact that its better for the country to
get fewer tourists who spend more, than more tourists who spend less.
This has long been said but its never been done. Can you expect
to get fewer tourists when youre continuously increasing your
bed stock? Can you get better rates when youre increasing the
supply at a faster rate than the demand? Its all elementary, yet
we do the exact opposite and continue to reposition ourselves facing
in the wrong direction.
"I think it is important that we get a good mix of all types of
tourism, as both volume and spending are important. Without volume,
airlines would not achieve the critical mass to justify operations.
If we stamp out, for example, volume tourism from the UK, the airlines
would reduce their operations and we would end up also losing the higher
spender. We can only start reducing mass tourism once we have built
a high enough volume of high spenders."
He points out some differences between the present administration's
tourism policies and that of the opposition, "Nothing is being
done about the product and its competitivity. There has not been any
improved working relationship between government and the private sector
- if anything, these have worsened. The previous governments policy
to retain Air Malta within the tourism portfolio has been reversed -
during the Labour administration this had proved to be an excellent
"Ventures, which were intended as tourism projects, ended up as
real estate development with speculative intentions. The avalanche of
bed stock increase will cause a downward trend on rates, attract cheaper
tourists, and reposition Malta backwards. Plans to improve roads, beaches
and the general environment have literally vanished.
"To be honest, I sincerely doubt whether the Nationalist Party
has any tourism policies at all. At least I don't see anything really
spelt out, or anything being applied in practice."
The country's former dependence on the British tourist has, according
to Mr Vella, been continuously diminishing over the years - not by decreasing
UK arrivals, but by increasing arrivals from other markets. "Other
European markets are improving but not as much as we would have liked
them to. However, I feel that there are other markets that we have been
totally neglected. The Middle East, the Gulf Area, Spain and Portugal
are just a few examples. We have always looked north, while totally
neglecting our Eastern and Western flanks.
"In order to attract new markets, we need to constantly revise
and review our tourist offer. Our traditional product was developed
for the British market and it is very difficult to sell such a product
to the Swiss, Austrians, Scandinavians and other non-UK tourists. We
cannot discard this highly important issue any longer and the sooner
we tackle it the better."
Regarding the decline in numbers Mr Vella is adamant that the number
of bed nights are a better indication than arrivals.
He explains, "Last year we lost around 12 percent on bed nights
and most of the loss came from our core markets. This year, NSO statistics
show that we can partly recover that loss. Governments optimistic
statements try to give the impression that we could not have had it
"However, MIA figures are contradicting NSO statistics. MIA figures
on passenger movements are showing that the number of passengers coming
into Malta is decreasing. The indications and feelings within the industry
are more in agreement with the MIA rather than with the NSO figures."
When asked about the Frosch Touristik crisis and the way in which it
was tackled, he believes that the FTI crisis was completely mishandled.
"I had read several statements that appeared on local papers and
then during a meeting I had with an FTI official, it was very clear
that there was another side to the coin.
"Last year, FTI moved some 120,000 German tourists to Malta. Airtours,
who had bought FTI to Malta, decided to downsize their operation to
Malta. They had two alternatives they were prepared to discuss and if
they could obtain some rate reductions from hoteliers and some assistance
from government, they would downsize from 120,000 to 80,000. However,
without assistance, they would have to downsize from 120,000 to 40,000.
"I was assured that FTI did not want to discuss a reduction on
all rates with all hotels, but only partial rate reductions with fifteen
certain hotels. I do not think the hoteliers were in a position to reduce
rates and this proposal was unfair on them. They did the right thing
not to concede any rate decrease and I think that FTI understood this.
Although I still think that the hoteliers might have overreacted.
"But the government didnt play its cards right. Without going
into too much detail, I am absolutely certain that there was room for
negotiation. But, as far as I know, the FTI official was never even
granted a meeting with any high level government or MTA officials. And
so, I believe that the whole issue was never even seriously discussed.
Today we all know what the result is. Anyway, thats water under
the bridge now.
"Having said that, and looking at things with a more positive eye,
one might argue that this could help Malta reduce its over-dependence
on a single operator in the German market. It could also be argued that
other smaller operators could very well replace what was lost through
FTI. Provided we dont end up bringing in the same FTI volume at
more reduced rates, this could also work out fine.
"But, as yet, there is no tangible sign that this is being achieved.
In addition, it seems that Airtours has FTI under control and is reducing
its losses. In fact, Airtours recently stated that load factors and
prices are improving significantly. So lets hope for the best."
As far as projections for the sector's performance next year is concerned,
Mr Vella emphasises that performance is not measured by forecasts, but
by actuals, explaining, "For the last few years we have had nothing
but very positive forecasts. More often than not, these forecasts were
turning into less attractive actuals. Projections for 2000 and 2001
were also showing a "rosier" picture than they actually turned
out to be.
"After the Ministers forecast of a "rosier 2002",
we can only keep our fingers crossed. But forecasts are useless and
mean nothing unless they are backed by some sound economic reasoning
and serious action plans. Otherwise we would be right in assuming that
forecasting is only being done to divert our attention from past and
Mr Vella is currently working for the Corinthia Group, a position he
relishes, "I must say that Im enjoying it immensely. The
Corinthia Group has a very positive and broad international outlook,
is well focused on its objectives, and has attained a high level of
professionalism in its approach to doing business."
Regarding the affect the EU has on tourism, he believes that it is very
important to look at the EU with a more sober approach that bears Maltas
political and economic interests in mind.
"There is no direct correlation between EU membership and guaranteed
tourism growth. As a matter of fact, there are many non-EU countries
within Europe with higher tourism rates than other EU countries. Poland,
the Czech Republic, Hungary and Switzerland are all performing much
better than Germany, Ireland, Greece, Denmark, Finland, Sweden, Luxembourg,
Belgium and Holland.
"Another case in point is that fact that, although Sicily has been
an EU member for over 40 years, its tourism rates lower than Malta's.
So its very misleading to relate full EU membership directly with
"One of the most important factors that will have a major bearing
on tourisms growth is competitivity. The key issue we have to
address in manufacturing industry and tourism is, whether by joining
the EU, we will become more competitive or less.
"In this respect, the governments report on the adoption
of the Acquis says it all. I quote 'The adoption of the internal prices
of several commodities could have a direct bearing on domestic costs
and may affect negatively Maltas international competitivity in
the industrial and tourism sector.'"
He adds, "Malta would lose its flexibility and must adhere to someone
elses decisions on matters of currency rates, VAT rates on services,
Duty Free goods, the issuing of visas, timeshare operations, incentives,
airline operations and other tourism issues. EU policies on all these
matters will affect negatively our tourism industry.
"It is highly improbable, if not impossible, that decisions taken
by other countries would be compatible with the solutions to our problems.
During a recent speech, Minister Refalo deplored the fact that 'many
of us are content to let others think for them.'
"I wonder, given that, how he can accept the fact that many of
us will have to be content to let others decide for us."
Mr Vella warns that Malta is rapidly approaching its tourism carrying
limit, which means that foreign service providers are no longer moving
to Malta to generate new business but to take business away from the
existing operators. These types of operators include operators, guides,
incoming travel agencies, DMCs, excursion organisers, transport providers,
and normal workers.
All this, according to Mr Vella, will also result in heavier economic
leakages out of Malta, explaining that Malta risks reducing its net
positive income from tourism while still being left with all the negative
social and environmental impacts.
He adds, "Some argue that we can improve on environmental issues.
But then why do we have to wait and depend so much on the EU to rectify
the very basic problems such as rat infestation, beach pollution, roads
and cleanliness? These are not simply tourism issues. Regrettably, these
are harmful and hazardous health issues for the whole Maltese population.
"In a nutshell, we need to come up with a better product, which
we have to be able to sell at a competitive price, and then begin marketing
it in a more effective and efficient manner.
"I would say that our future challenge is not only to attract more
tourists, but - more importantly - to manage our tourism better. In
the long run, unmanaged tourism could have a more detrimental effect
on the country than having no tourism at all."