Planned tourist beds increase causing concern

Tourism Minister Michael Refalo has warned in parliament that a sharp rise in the number of tourist beds would not be sustainable.

Speaking during the debate on the estimates of the Malta Tourism Authority, Dr Refalo said that on the basis of a Carrying Capacity Study, the government in 2001 had introduced a new policy on the building of hotels and other tourist accommodation.

The study had concluded that capacity should be at the maximum of the 2002 levels.

The policy was being implemented by the MTA in an effort to strike a balance between supply and demand for tourist beds.

Unfortunately, however, a number of permits were issued in the late 1990s, before the study was concluded. Should all those projects come on stream, Malta would have 10,000 more new tourist beds on the market.

"I do not believe this is a sustainable amount and we have to review the conclusions of the capacity study" the minister said.

In his speech, Dr Refalo said the opposition still had to explain its tourism policy and how tourism could benefit from its proposed partnership with the EU.

The Malta Hotels and Restaurants Association, the biggest organisation within the tourism sector, had on Tuesday strongly endorsed EU membership because, clearly, accession would be good for tourism. It took its decision objectively after a through study. A similar view had also been expressed by the tourism industry in Cyprus, also an EU candidate country.

The Labour Party, after opposing VAT, had now decided to retain the system but was saying it would review the VAT rate for tourism. The MHRA had said that current rates did not have a negative impact on the competitiveness of the tourism product. The current VAT rate on hotels was among the lowest in Europe. VAT on restaurants was in line with the European average. Should this be reduced, how would the lost revenue be recouped?

The MHRA had also found that accession would not negatively impact on food prices in restaurants.

Turning to the tourism performance in 2002, Dr Refalo said preliminary figures showed that arrivals reached 1.14 million, which was slightly more than projected. This positive performance was mostly thanks to the last quarter of the year.

Despite the removal of subsidies, tourism arrivals from the UK last year was at 2001 levels, with arrivals in December up by 20 per cent. The German market was still under pressure but the last quarter was better than in the previous year. The Italian market broke all of its records. The French market was at the previous year's level. There were gains from Belgium but losses from Holland, Sweden, Austria, Libya and other North African countries and the Middle East. Performance from the Scandinavian market was, as expected, not good, but positive results were achieved from Spain, Japan and Russia.

In all, Malta last year saw tourism drop by 3.5 per cent, from a projected drop of 7.5 per cent.

Clearly, Dr Refalo said, Malta had in the last quarter recovered from the impact of the September 11 (2001) events, even though most other destinations were still reeling.

January (last month) marked the fourth successive month of growth.

In reviewing the activities of the MTA over the past year, Dr Refalo said that even though regulations for tourist guides were already identical to those in the EU, no foreign tourist guides had come to work in Malta, showing that the scaremongering of the impact of EU membership was all false. If anything, EU membership would be good for tourist guides because more tourists would come to Malta.

Labour MP Joseph Cuschieri said the minister had not presented a study of his own on the impact of EU membership on tourism.

Tourist arrivals had gone up in the two years of the Labour government but the industry had been in decline since, and that decline started well before the September 11 events.

The MTA was doing a lot of useful work, Mr Cuschieri said, but it was time now for its directorates to start working effectively. Studies and power point presentations, on their own, did not solve the tourism industry's ills.

The tourism product was continuing to lose its competitiveness. What was the authority doing about it.

In lauding the EU, the government was not saying that tourism would be negatively effected by the adoption of the euro, the introduction of via requirements on tourists from non-EU countries, VAT harmonisation, the influx of foreign workers and the removal of duty free facilities.

Dr Refalo used to say that the Institute of Tourism Studies was a certificates factory and the ideal number of students should be 500. Yet, how many were there now?

Winding up after a speech by Opposition tourism spokesman Karmenu Vella (who was reported yesterday), Dr Refalo said his comments about the ITS being a certificates factory were made at a time when entry requirements had dropped.

Reacting to Mr Vella's criticism of the MHRA decision and the speech by its president, Dr Refalo said the president in his speech had quoted reports by Lino Briguglio, Gordon Cordina and Gabriella Pace, all of whom had expressed a professional opinion on the impact of EU membership on tourism. No one could cast a bad light on them because one of the shareholders of the company which had been commissioned to carry out the research was a government MP.

Furthermore, it was not the MHRA council which had decided in favour of the EU but 99 per cent of the members who replied to a survey.

During this year, the MTA would build on the 2002 results. Savings from the Tour Operator Support Scheme (TOSS) would be chanelled to more aggressive marketing in various markets.

During this year, UK tour operators would be increasing their programmes to Malta. The German market, which had done well this winter, was also expected to do well this year although the German economy was still weak.

The Italian and French markets were expected to perform as well as this year and there were possibility of increases from the Benelux countries, Austria, Finland and Russia, the latter because of Air Malta flights to St Petersburg, even though Aeroflot was considering dropping a flight from Moscow.

All in all, performance in 2003 should be close to 2002 but one had to caution that results would be affected if war broke out and there was a surge in terrorism. Indeed, the threat of war had caused some cancellations by long haul travellers for Malta and elsewhere.

A contingency plan based on the experience gained during the Gulf War, was being prepared for implementation should war break out. It would be aimed at safeguarding tourism as much as possible and would also seek to turn certain circumstances to the country's advantage.

In his speech Dr Refalo said EU membership would be good for tourism and for Air Malta. Among other benefits, Malta would be eligible for EU funds which would enable it to improve the tourism package. It would also be cheaper and easier for tourists to come here. At the same time, the EU would open new training opportunities for the Maltese.

The estimates were approved after a division, with the opposition voting against.

The House on Wednesday also approved the estimates of the Malta Transport Authority. In his speech, Transport Minister Censu Galea announced that the authority was planning to introduce a night bus service. He also said that the replacement of the bus fleet was being speeded up. Bus owners were being given Lm32,000 for every new bus they introduced (and not Lm132,000 as inadvertently reported yesterday).