There is no doubt that tourism is economically beneficial to the host destination, in that the expenditure by visitors generates income and employment in that destination.
In Malta, tourist expenditure amounted to about €2.2 billion in 2019, according to NSO statistics. I calculate that in recent years the import content of tourist expenditure was about 35%, meaning that 65% of such expenditure, amounting to €1.4 billion, was on goods and services produced in Malta (i.e. excluding imports).
Given that GDP in 2019 amounted to €14.2 billion, tourism therefore directly contributed 10% to Malta’s GDP. This percentage is likely to remain about the same in 2023.
Tourism also generates income in other sectors of the economy, such as agricultural and fishing for the provision of food, and laundry services for bed linen washing. There is no reliable estimate of this indirect demand generated by the tourist industry, but some estimates indicate that this could be about 5% of GDP in 2019. The direct and indirect contribution of tourism therefore would add up to 15% of GDP.
The positive economic contribution of tourism, large as it may be, should not be considered in isolation from the negative social and environmental side effects associated with this industry
This is a relatively large share and is a confirmation that the tourist industry is a major contributor to the Maltese economy. In addition, like all other expenditures, tourist expenditure also generates what is known as an induced income multiplier effect, given that those involved directly and indirectly in tourism will respend their income and generate further income and expenditures.
However, a large proportion of the income generated from tourism in the Maltese islands goes to foreign workers and the agencies that recruit them or is retained as profit by the tourism operators. These constitute leakages in the tourism multiplier effects.
There are also negative economic side effects associated with tourism. A large tourist inflow can lead to increases in prices of goods and services in the host destination. In some countries, including Malta, tourism is associated with precarious employment. Excessive dependence on tourism can also lead to an unbalanced economy (too many eggs in one basket), and therefore prone to the risk of large unplanned economic fluctuations.
These costs are difficult to measure accurately. However, it is likely the even after taking account of such ‘unaccounted for’ costs, tourism leaves a relatively high net economic benefits to the Maltese islands.
The positive economic contribution of tourism, large as it may be, should not be considered in isolation from the negative social and environmental side effects associated with this industry. The social downsides relate mostly to social discomfort caused by overcrowding, traffic congestion and disagreeable behaviour by some tourists, including late-night noise. Major environmental disadvantages of tourism include the land take up of environmentally sensitive sites, the generation of waste and air pollution resulting from increased traffic.
This matter was the subject of a workshop at the University of Malta in October, attended by about 33 academics from different university departments and institutes.
The participants were invited to discuss strategic directions for sustainable tourism in Malta, and to identify the most salient and possibly urgent issues which should be addressed over a three-year time frame.
During this evert, a view that was often expressed was that in the case of Malta, given its small size and very high population density, the strategy should first and foremost address the number of incoming tourists. Participants agreed that this means making choices about the type of tourism that best suits the country, with due regard to the quality of life of the host community and the islands’ fragile ecosystem.
It emerged very strongly that a change of direction with regard to tourism in Malta is of paramount importance in the pursuit of sustainability. The discussion focused on four interlinked strategic directions, namely controlling the quantity and improving the quality of tourists; improving the Maltese tourism product needed to attract quality tourists by providing them with a quality experience; directing tourism publicity and promotional funds, mainly to attract quality tourists; and by involving a wide set of stakeholders in tourism decision making.
The term ‘quality tourism’ featured prominently in the discussion. The background document prepared for this workshop defined quality tourists as those discerning visitors “who care for and respect the host community, its culture and its physical environment, and recognise the value of and accept to pay the right price for what is experienced in the host destination”.
Participants at the workshop also acknowledged that controlling tourist inflows, possibly leading to no-growth or a reduction in inbound tourism, could lead to a decrease in tourist expenditure, unless better quality tourists are attracted through the provision of a quality tourist offer. If such a decrease in revenue materialises, the income of many Maltese businesses and households would be negatively affected.
Those present at the workshop agreed that a sustainable tourism strategy should consider this possible deficit. This calls for careful planning on the future of tourism to attenuate the hardship on those that would be negatively affected. Yet, it was also noted that quality tourism is likely to usher in new business opportunities and better-paid employment prospects.