Tourism - nurturing the golden goose

It was three years ago that the minister for tourism amid much fanfare announced the unique Tourism Strategy for the years 2021–2030. Then, Malta like most other resorts was badly hit by Covid and a generous furlough state scheme of €800 monthly per worker was announced by hon Silvio Schembri, which with hindsight boasted that it saved 100,000 jobs. Now, that Covid restrictions have been lifted Malta, witnessed a healthy return of visitors spurned by the phenomenon of ”revenge tourism”.

Being one of the smallest countries in Europe, following the end of the pandemic, our elected leaders have done their best to recover and start the path to become an economic powerhouse.  Back to the theme on the revival of tourism, one is emboldened to read in latest NSO publications that total inbound tourists for May 2024 were estimated at 351,839, an increase of 23.5 per cent when compared to the corresponding month in 2023. Total nights spent amounted to May were 2,026,623, and total expenditure surpassed €310.7 million.

Going into detail one notes that the largest share of guest nights (88.9 per cent) was spent in rented accommodation establishments. What did the exchequer collect from this bonanza so far?  A cool figure of tourism expenditure for the period January-May 2024 was estimated at €957.5 million, ambitiously one aims at an annual take of €3.2 billion. In perspective, realistically one recalls that we have registered a highest annual deficit in Europe, so the earnings from all sources including tourism are sorely needed to balance the books. Perhaps extra earnings from tourism and a gradual cut of State €320m energy subsidy will cool the nerves.  

A look on last year, we had close to three million visitors, and 2024 is promising to top that.  Tony Zahra (long time president of MHRA, a premium hotel and restaurant lobby group which so far had the ear of the movers and shakers in Castille) says new building of hotels must stop. In fact, he laments that planning for new hotels and extensions already approved by the Planning Authority will add 27,000 rooms, demanding 15,000 more staff.

Zahra is pointing to a lack of infrastructure planning to accommodate this meteoric rise in visitor numbers. He has access to the individual gross earnings reported by members and these do not make cheerful reading. He sees demand weakening for five-star hotels, where discounting will damage profitability for all, especially more mo­dest hotels becoming unable to compete. But one may stop and reflect how this important industry can be saved and nurtured as the goose that lays the golden egg.  

Much publicity has been aired on PBS and One news how the Prime Minister discussed with the party faithful promising fresh government's plans to reform the economy, focusing on key areas such as population growth, electric infrastructure, medical infrastructure and road infrastructure. How does his prognosis compare to what the Opposition, ADPD and the chamber of commerce say especially as regards tourism. Starting with Dr. Melissa Bagley, ADPD Deputy Chairperson, she stated “Whilst tourism can have some benefits, when not managed properly, this can lead to over tourism, which favours the few and leads to great burdens on all the rest”. 

ADPD Chairperson Sandra Gauci criticised the current “growth-focused mindset”, asserting that it is counterproductive and unsustainable. She pointed out that the government’s proposed strategic plans for the tourism sector need to be implemented as in the 2021-2030 plan.  Moving on, and as always State propaganda is cheap. It’s time for the government to walk the talk. Actions speak louder than words. One very valid suggestion refers to the overdue revision of the current eco-tax, which stands at only €1 per bed-night. Other countries charge much higher.

An ebullient CEO of the Chamber of Commerce has also thrown her towel into the ring. The chamber said a strategic workforce plan was needed to address shortages and ensure a balance between staffing and the country's capacity to accommodate more TCN’s workers.  Among major valid suggestions, it wants temping agencies to cap the percentage of non-EU workers, all this to buttress concerns of overpopulation.

The chamber said such capping should not apply to businesses providing essential services or where it is otherwise crucial. MHRA after paying top dollar to a local consultancy firm three years ago, it recently refreshed tourism agencies about its dire predictions. The Deloitte detailed study shows serious challenges to the country’s infrastructure such as the sewage system. Inter Alia’s, its findings show that the sewage network is operating “vastly beyond designed capacity” in certain key tourism areas.

This is leading to sewage seeping into the sea. The lack of professional attention by Infrastructure Malta will increase pressure on the sewage system, which is already strained, and exacerbate the strain on tourism hotspots. Many agree about this ubiquitous fly in the ointment.  A most popular Balluta bay this summer was closed for swimming for over three months due to contamination. Overcrowding saw visitors sunbathing in Comino already lying down less than 1m from each other in 2019 and this space will further decrease over the coming years if tourist arrivals as predicted shoot up to 4.7 million.  

A similar picture of intense overcrowding, even if less dramatic than Comino, will be experienced at Għadira beach, Golden Bay and Ramla Bay in Gozo.  A stern warning came during MHRA conference by mega hotelier owner Ian Decesare, who said that hosting almost five million tourists will simply render the island as a two-star destination because of the pressures this will cause on basic infrastructure, beaches and other tourism attractions.  

Cataclysmic predictions in Deloitte’s study show that for hotels to achieve the same occupancy they enjoyed in 2019 – the last boom year before the pandemic struck – Malta will have to attract 4.7 million tourists.  On a positive note, currently, Malta is ranked in the top 30 richest countries in the world, with the GDP per capita ranking 23rd, as per Global Finance Magazine.  Let us hope 2025 budget carefully nurtures the golden goose.