Foreign and Tourism Minister Ian Borg, in an interview with Times of Malta, addressed the issue of licensing and the current operations of unlicensed Airbnbs. In reality, the issue is not the apartments rented for short terms but the ones that are not licensed, creating an uneven playing field.
The latter do not pay their licence or taxes and, in most cases, do not adhere to the minimum standards specified by the Malta Tourism Authority. This is undermining the quality of our touristic product. Thus, it is not about creating new policies but properly enforcing the ones we have.
In real terms, an operator holding a licence is required to pay the applicable licensing fees, eco-tax – which is calculated on a per capita basis – and taxes on the income generated by the business. When all costs are accounted for, it becomes evident why some properties charge €30 per night while others must charge €100 per night to cover their expenses.
The pricing structure alone serves as a clear indicator of which operators are licensed and which are not. Consequently, even a routine search on platforms such as Airbnb or Booking.com can provide a foundation for verification.
The lack of licensing has consequences not only for the government, which is notably foregoing tax revenue and licensing fees, but also for the country as a whole. By avoiding these costs, the unlicensed operators can decrease the price of a single night’s accommodation, resulting in lower market prices for touristic accommodation. This would mean that those tourists who have limited purchasing power and cannot afford to go to other European cities, because the accommodation is too expensive, would come to Malta instead.
This is not the type of tourist we should be targeting. They place a significant strain on our infrastructure while providing minimal economic return.
Booking platforms, such as Booking.com and Airbnb, submit annual reports to the tax authorities that provide information about operators’ earnings. Consequently, it is relatively straightforward to determine which operators are not licensed. One must cross-reference the reports submitted by the booking platforms with the registry of all operators registered with the Malta Tourism Authority.
The lack of licensing has consequences- Pamela Cann Rodgers
It is certainly not a matter of collaboration among authorities, as the Malta Tourism Authority promptly informs the tax authorities about new operators as soon as their licences are approved. Therefore, how is it possible that the data is not synchronised in the reverse direction between the authorities?
There are means and ways how to eradicate abuse, and technology facilitates this, but when there is no willingness, everything becomes impossible.
In Malta, we have always faced challenges with enforcement because the moment a politician tries to act, he is instantly threatened with votes. These threats are not exclusive to the tourism industry or to this government or the previous one. However, what many people overlook is that the majority follow the rules and they go out of their way to comply. Consequently, when they see people not abiding by the policy, it creates a sense of frustration. Thus, the risk of losing the majority’s votes is much higher than satisfying the minority by letting certain behaviours slide.
It was refreshing to witness a minister openly discuss enforcement matters and provide candid remarks, even during public interviews. It was bold of him to retract measures that were set to be erroneously implemented by his predecessor.
However, with these assertions, the onus now lies on him to ensure that the current situation improves. I have no doubt about his determination; however, the tourism industry is dependent on all other sectors, both public and private, while it necessitates a significant skill set to manage individuals’ expectations.
Pamela Cann Rodgers is a lawyer and PR consultant.