Malta could see an additional 483 hotels crop up on the island if all the planned tourism accommodation projects in the pipeline ever come to fruition, new data has shown.
The information was shared during the Malta Hotels and Restaurants Association’s hospitality forum during a presentation on hotel occupancy by Deloitte.
With a disclaimer stressing that not all projects in the pipeline may materialise, Financial Advisory Director Matthew Xuereb said that, if all of them do come to fruition, this would see a 70% jump in rooms available for tourists in Malta.
He also added that due to the nature of these projects, there is no definite timeline on which they may be completed and noted that the data did not take into account any existing property whose use may not remain for tourism purposes in the future.
Xuereb said the vast majority of these planned accommodations (41%) are designed to be 3-star offerings, which means such projects might not necessarily align with the national vision to accommodate "high quality" tourists.
Another 32% of the planned accommodations are labelled as "other", while 5-star and 4-star accommodations are set to take up 10% and 18% respectively.
Xuereb highlighted his concern about how the majority of the 3-star and "other" planned accommodations are set to have less than 100 rooms, throwing into question whether these can actually survive in the long term.
Some 1,664 of the planned 3-star accommodation are only planned to have 0-50 rooms, with a further 2,658 planned to have 50 to 100 rooms.
Of the accommodations rated as "other" 4,165 of these are planned to have 0-50 rooms, with only 116 projects planned for 100-200 rooms.
“Looking at planned 5-star and 4-star accommodations, those aren’t small numbers but they could potentially be managed,” Xuereb said.
“But when it comes to 3-star and others, where we are looking at an increase of some 10,000 hotel rooms, the majority of which have 50 rooms or less, how can that operate sustainably?”
Hoteliers and other stakeholders in the tourism industry have been sounding the alarm on the pace of supply of tourist accommodation since at least 2018, when the MHRA called for a study to determine the maximum amount of tourists Malta could possibly cope with due to its limited size and population density.
In 2022, an MHRA-commissioned Deloitte study found that Malta would need to see 4.7 million tourists a year to keep its occupancy rates afloat, although the study stopped short of naming what a sustainable number of tourists the country should aim for.
In 2021, an MHRA survey also found that an economic slowdown was on the cards for the Maltese tourism industry irrespective of the COVID-19 pandemic, as a sharp increase of available tourist beds had started to outpace demand for them in 2019.
During Xuereb’s presentation on Wednesday, he found that 5-star hotels had managed to stay profitable by upping room rates despite a minor slowdown in occupancy, while hotels that were performing in the median and lower percentile struggled to break even and in some cases were making a loss.