How many square pegs can you fit into round holes? It’s a question hoteliers may well have found themselves asking after leafing through a market analysis conducted by Deloitte and presented to them last week.

The analysis revisited a 2022 report which found Malta had too many hotel rooms and that the country would need well over four million tourists a year to keep an 80% occupancy rate. 

When faced with that sort of forecast, the logical thing to do would be to find ways of slowing down the growth of the hotel sector.

It turns out we are doing the exact opposite. We have 1,115 more hotel rooms now than we did when the original report’s data was compiled, with a massive 13,543 more in the pipeline.

It is as though policymakers want to pretend that the supply side of the problem does not exist.

Instead, attempts to mitigate the impending disaster have focused purely on the other side of the equation.

Policymakers and stakeholders have poured fuel on tourist demand, driving tourism numbers higher and higher to historical records.

That is all well and good, but now we have reached a point where even the prime minister says he believes Malta has reached “maximum capacity”. 

So, what do we do now? How do we square this circle?

There are many other concerning indicators flagged by the updated Deloitte report.

Tourists to Malta are getting younger, spending less time here and no more money than they were many years ago, report authors found. And roughly half of them travel here on low-cost airlines.

None of that information aligns with the ‘high-quality’ tourists that Robert Abela wants Malta to focus on.

Nor does another datapoint that emerges from the report: despite record tourist numbers, five-star hotels are not making any more money, because the number of available rooms is outpacing demand for them.

It is as though policymakers want to pretend that the supply side of the problem does not exist

Supply of five-star hotel rooms, by the way, is expected to increase by 36% in the coming years.

And despite the government heralding a push towards ‘quality tourists’, the number of three-star hotel rooms is on track to increase by a massive 129% in the coming years.

In their 2022 report, analysts made five key recommendations. Two years on, they concluded that not a single one has been addressed. In one case – that of keeping a lid on the growth in hotel beds – things have regressed.

That regression, incidentally, also runs counter to the government’s own tourism strategy document. Released in 2021, that strategy noted that a key challenge would be “re-directing potential investment in bedstock into other key areas”.

So where does all this leave us?

The first question that arises is why our policymakers seem intent on ignoring the reality staring them in the face. The data clearly shows we are adding too many hotel rooms, but we see no signs of new hotel projects being disincentivised. On the contrary.

In many ways, the non-response is similar to the approach adopted to fix our systemic traffic problems.

The root problem – having too many cars on the road – is ignored. Instead, policymakers tinker on the margins and hope that will be enough to prevent the metaphorical wheels from falling off.

The second question that arises is whether a sudden drive to regulate hotels’ main competition – short-term Airbnb rentals – has anything to do with this.

The proposals floated by the Malta Tourism Association would dramatically reduce the number of short-term rental units available.

Policymakers have highlighted how that would ease strains on the long-term rental market. But there is another group that benefits from clamping down on such accommodation: the hotel owners and developers whose primary drive appears to be build, build, build.