Malta is fast reaching maximum capacity for tourists and the country has probably been “too successful” at attracting low-spending concertgoers and cruise liner visitors, Tony Zahra fears.

In a Times of Malta interview, the Malta Hotels and Restaurants Association president lambasts the Planning Authority for its failure to adequately vet applications for new hotels and says it is not realistic to completely overhaul the infrastructure to keep squeezing in additional tourists.

Fixing these problems and growing Malta’s tourism sector sensibly will require a “vision”, he says.

While the country is on track to draw a record three million tourists this year, Zahra warns that things are looking less rosy at the top end of the market.

Malta’s five-star hotels are reporting lower-than-expected occupancy at the peak of summer for the first time in years, he says.

“Demand has not been as strong as anticipated for July and August. As a result, these hotels are being forced to offer discounts, which will inevitably impact the four- and three-star hotels as well,” Zahra tells Times of Malta.

Zahra believes it is time authorities reevaluate their tourism strategy for Malta. In his view, the country should be targeting older, higher-spending tourists.

“Given that we’ve now reached the limit on the number of arrivals we can accommodate, it’s essential that we maximise the potential of each one,” he says.

“In recent years, there has been a focus on hosting numerous parties and concerts. These have attracted younger tourists and lowered the average age of arrivals. However, we may have been too successful in this regard.

“Now, we need to re-calibrate our target market.”

We need a vision, and older, high-end tourists who spend more- Tony Zahra

Zahra is also critical of how little cruise liner passengers spend in Malta.

“The average spend of the cruise liner passenger is Malta is €60. Cruise liners have become fully inclusive operators and passengers get whatever they want on board. On the other hand, we are providing those passengers an open-air museum. This is why the spend is so low.”

But Zahra stops short of saying how this can be addressed. He even brushes aside the suggestion that Malta should emulate Venice by capping the number of daily tourists by imposing a fee.

“We don’t have to go down that road. We are tiny compared to a lot of other places. So we can be clever and offer quality. People are willing to pay for quality. So let’s not compete on price anymore. Let’s compete on quality.”

Malta has experienced record tourism numbers in recent years. In 2023, the country drew 2.98 million tourists, a 30.1 per cent increase over the previous year.

Tourism numbers rose a further 23.4 per cent from those record highs between January and June this year, making the country on track to break through the three million arrivals mark this year.

Combined tourism expenditure is expected to reach €3 billion.

The MHRA president acknowledges that this is a feat, but says arrival numbers “are probably at the extreme part of sustainable”.

Zahra remains vociferous about unregulated apartments being rented out as Airbnbs, which compete with traditional tourist accommodation while dodging tax and regulation.

He insists he has “absolutely no problem with Airbnbs” but says “the 4,000 units that are not complying have to be brought in line”.

When asked how he would address all of these issues if he were the tourism minister, Zahra implies there is currently no vision.

“I would begin by establishing a vision – a 10-year vision.”

Zahra believes Malta can only aspire to become a destination of excellence by capitalising on its cultural and environmental assets.

He identifies over-development as a significant problem, placing considerable strain on the infrastructure.

Earlier this month, a clip of Zahra telling sectoral stakeholders that the incessant push for more hotels was “madness” went viral, striking a chord with many viewers.

But the MHRA boss says he often feels like a “voice in the wilderness” when arguing that point, as the government has remained “consistently silent”.

He criticises the Planning Authority for turning into a “permitting authority”.

“I understand that 99 applications for hotels and extensions have been approved. The Planning Authority should ask these hotels: ‘What are your plans for managing drainage, energy, and staffing?’”

Zahra notes that these projects will add 27,000 rooms to the current stock and will require 15,000 additional employees to operate.

“Are we expecting more tourists to fill these rooms? Are we aiming to attract five million tourists? How many more can Malta realistically accommodate?”

Zahra proudly points to the Deloitte Carrying-Capacity Report commissioned and published by MHRA in 2022.

That report warned that Malta would need five million tourists a year by 2027 to avoid a glut of empty hotel rooms.

It also warned that more development in St Paul’s Bay would only put more strain on the drainage system in the area.

“If we had to improve our infrastructure [to cater for the increase] we would have to re-do all the drainage and energy distribution network,” Zahra says.

“That would mean digging up more roads as we try to live [on this island].

“There are many things you can do but is it practical to do them?”

Addressing complaints on the lack of Maltese staffing in hotels and restaurants, Zahra insists that the Maltese have become ‘choosers’, and had it not been for foreign workers, including third-country nationals, the industry would ground to a halt.

“The alternative for a restaurant or a catering outlet would be to close down.”

The government recently introduced a skills pass meant to maintain the level of hospitality services on offer in the local tourism industry.

Zahra says this “was a very interesting idea but we warned the government about the difficulties in its implementation. In theory everything works. In practice... [not as much].”

Pressed further to highlight what the challenges are, Zahra insists they are primarily administrative and the result of lack of co-ordination between the different government departments involved.

Refusing to give a clear judgement on the first few months of operation of KM Malta Airlines, the new national airline introduced on March 31, Zahra says that if the airline faces the same level of political meddling its predecessor Air Malta did, “then we’ll end up in the same place”.

“It is extremely important that it keeps flying. If it doesn’t keep flying, we’ll have a major problem one day.”

Despite all the challenges that the Maltese tourism industry faces, Zahra remains upbeat.

“If it was not for tourism, we wouldn’t have had the successes we have had up till now. Can it be better? Of course, it can be better. Everything can be better. We can do it better.”

He is also adamant that local hoteliers should be looking to expand their businesses abroad.

Given the lack of space for further expansion in Malta, Maltese hoteliers should focus their efforts on exporting their knowledge and capital abroad.

“We have now matured. We should be getting together, putting funds together, and buying properties abroad.”