Tourism - doing more with less

For many years a nascent tourist sector was welcomed by politicians as a means to help balance annual budgets (mostly in deficit) create part-time jobs while investors of top hotels encourage training of quality staff (particularly those run under a foreign franchise). Each year, as the sector grew it gives a healthy boost to ancillary trade & commerce. It has a good multiplier effect particularly with import agents, transportation, travel agents, agriculture and fisheries. All politicians pay surreptitious respect to the milk cow even though tourism had its ups and downs - being a rather volatile industry.

Having spent millions trying to attract more tourists, (a surreal €20 million advert at Manchester United football club) the Malta Tourist Agency is compensating low-cost airlines in their drive to develop new markets and niches. This paid good dividends as arrivals kept increasing and post Covid did reach three million plus, visitors. To help improve beaches and other public amenities, a nominal day tax per tourist is levied on all arrivals. This rate needs to be revised upwards to act as a deterrent to low-value visitors frolicking on cheap beer and green fingers in Mdina and Cittadella.  

On a global scale, it comes as no surprise that quoting the World Travel and Tourism Council - tourism directly accounts for nearly three per cent of the world's GDP. McKinsey, a consultancy, reckons that one in five new jobs is generated by tourism. Whereas manufacturing employ relatively fewer people due to increased automation, tourism employs legions (including a high ratio of TCN’s). There are side benefits, since local policies, such as quality health & safety inspections on hotels and restaurants, improve standards and also lure investors to invest in Michelin star hotels.

As the global middle class grows, and annual foreign holidays become routine, the world's most popular destinations expect heavy increases in the number of visitors. To elaborate on this topic, one notes how the Mediterranean remains a relaxing resort for history, sea and sun lovers. For Malta, this means airport overcrowding due to baggage clearance delays, but on a positive side transportation improved with Uber and App hailing cabs -these are mushrooming. Airbnb facilities are popular. Attracting lower budget, the less attractive the island becomes for high spenders. It results in overcrowding; yet it also brings hidden social, health and environmental costs.

This yoke is borne by residents who find pavements, public areas, sandy beaches, residential roads and cycle lanes clogged. Armchair critics warn us, that we should upgrade the sector to attract richer tourists and stop subsidizing low-cost arrivals which many book Airbnb for fun accommodation. By contrast, arrivals for the whole of 2019 reached nearly 2.6 million as restaurants saw an average spend per tourist of a mere €104 prior to Covid (our 18% VAT rate on food and drink is almost double that charged by countries eg Zurich charges 7.7% vat on food in restaurants.

The daily spend so far this year, reached approx. €142 per head (ideally it should be double), while statistics show a drop in the share of nights spent in hotels and a strong rise in those spent in facilities as advertised on Airbnb. The rise in numbers staying in private accommodation is substantial - in 2018, 614,480 tourists stayed in Airbnb or other similar accommodation types, and this rose to 714,157 in 2019.  But banks and financial institutions stand to gain from larger volume of tourists. For example, this year, hurray as MTA is drumming up support for a new Renaissance by launching new A.I tools in marketing.  

Good to discover a 5.4% year-on-year real GDP growth in 2024 Q3 as Malta stands out as one of the fastest growing economies since 2019.  Party apologists rejoice that overall, post Covid era the economy rose by 4.6% above its pre-pandemic level, with notable variations among EU member states. All this compliments tourism in Europe. No wonder Spain welcomed 90 million visitors compared to a 100 million in France. Quoting MHRA president Tony Zahra, he welcomed the results, emphasizing the need to enhance service excellence, efficiency and productivity, with a stronger focus on attracting higher-spending tourists.

After all, the tiny rock attracted a record-breaking 3.56 million tourists in 2024, 19.5 per cent more than the previous year. Many dream about the day when the MTA succeeds to attract the Monaco high-heeled visitors. However, the average length of stay went down by five per cent compared to the same period in 2023. Three-star hotels saw the biggest increase in occupancy year on year, with a gain of 4.4 percentage points.  Occupancy levels in five-star hotels in quarter 4 reached 65.7 per cent - an increase of 1.1 percentage points. Four-star occupancy remained approximately at par with 2023 levels (82.6%). 

No mean feat, considering we attracted a record-breaking 3.56 million tourists in 2024, 19.5 per cent more than the previous year. Their average daily spend reached €141.91, a 7.5 per cent increase year on year. Pity that the average length of stay went down by five per cent compared to the same period in 2023. Three-star hotels saw the biggest increase in occupancy year on year, with a gain of 4.4 percentage points.  Tourism remains a cash cow for our economy but comes at a high ecological cost. Dispassionate analysts, however, are justified in looking beyond the mouth-watering number of tourists.  

They are asking whether the search for the holy grail of quality tourism is just a mirage rather than a realistic objective pursued with determination by policymakers and industry operators. Politicians continue to hail these numbers ignoring the underlying cost of servicing such over-crowding. Complacency has now settled in and many console themselves that over-crowding in Comino and most bays will persist - a deja vu. Our over-worked sewage system, our narrow roads, fragile water and electricity infrastructure, poor air quality and limited beach facilities all point to another heartache this season.

Promoting off-season travel, expanding eco-tourism, and investing in high-end experiences can help ease pressure on resources while attracting quality visitors. Additionally, better urban planning and securing direct connections to high-spending tourists are essential.  Tourism policymakers had better follow other Mediterranean destinations, who also persistently face similar challenges. When will the penny drop? The natives are sick and tired of the noise and traffic congestion. They refuse to drink from a poisoned chalice depicting another summer chaos. Popular voices are seriously pleading for a change. Both Barcelona and Venice had started charging extra to calm the inflow of visitors and protect their resorts. But in Malta, will the new tourism minister bite the bullet?