Beyond the Twin Towers and SARS

Thousands of families whose livelihood depends on tourism in Malta and Gozo are very worried about their future as the sector continues to face serious difficulties. They did breathe a sigh of relief that the recent 20% hike in the rate of VAT was not extended directly to tourism but they are concerned that for the foreseeable future prospects remain bleak. Rising costs and falling profits are squeezing local tourism. A few overseas tour operators set prices and local hoteliers have no option but to accept them.

A study compiled on the prices of the Thomson holiday brochures for next year shows that a seven night package in Malta is being sold in the UK nearly 12% lower than this year. If this year Thomson set the price at 108.7, next year it will be 96.4. This price, while hurting local hoteliers, is still higher than Tunisia, Croatia, mainland Spain and the Balearics.

Talking to local hoteliers in the four-star category one can collect anecdotal evidence of operators demanding that tourists will be charged Lm5 a day half-board. At this rate, even if the numbers keep coming, and they have been declining, the sector is having serious problems to make ends meet. I know of cases where hotel employees have not been paid for months and the same hotels have to pay thousands of liri to their meat and vegetable suppliers. No wonder that a number of hotels are closing down, some of them to reopen as homes for the elderly.

While the number of tourists visiting Malta continues to decline, more tourists are visiting rival destinations in the Mediterranean. A foreign study on the competitiveness of Maltese tourism concludes that "compared with other Mediterranean resorts, average receipts per tourist in Malta remain still low: for example, in 1999 in Cyprus and the Canary Islands receipts per tourist were $738.08 and $711.65 respectively, while in Malta they were only $559.62."

The same study points out that tourism from the UK picked up again due to the Forward Buying Rate (FBR) mechanism and more so through the Tour Operator Support Scheme (TOSS) that subsidised directly local hoteliers. This study concludes that TOSS proved more effective than advertising in attracting tourists to Malta and Gozo as it had a direct impact on prices.

Government has had to remove TOSS as it is not allowed by European Union membership regulations. This is making life much more difficult for the thousands of persons in Malta and Gozo whose livelihood depends on tourism.

'No problem' mindset looks for no solution

Recently the chairman of the Malta Tourism Authority complained that Malta is not delivering what it promises tourists. Local entrepreneurs felt hurt at such a generalisation, which let Government off the hook. Most of them have had to invest millions of liri to upgrade their facilities while Government has fallen behind in upgrading Malta and Gozo to make them compete with other destinations in the Mediterranean. Roads, the quality of the environment, zones frequented by tourists, museums and historic sites - all of which are the direct responsibility of Government - leave much to be desired.

Other destinations in the Mediterranean are attracting more tourists as they have improved their product and offer a higher quality of services at more competitive prices. No wonder that three years ago 9.9 million tourists visited the Canary Islands. In the same year, nearly 11 million visited the Balearics while just fewer than three million visited Cyprus. In that year - 2000 - 1.2 million visited Malta and Gozo.

The same study referred to above stresses that there is a high level of competition among these destinations: any change in the pricing policy and quality of the product has an impact not only on the destination itself but also on the other competing destinations.

Instead of addressing the serious causes for concern in tourism government behaves as if there no real problems in the sector and blames any shortcomings, obviously not on itself, but on SARS and the September 11th terrorist attacks on the US. Tourism in Malta and Gozo has been stagnant since 1995 much before the Twin Tower attacks and SARS.

When real problems are not even acknowledged as problems, solutions become even more difficult, if not impossible.