Remember the headlines one year ago that warned that we would need some 4.7 million tourist arrivals to fill the rooms that were being added to the tourism stock?
Soon after, the president of the Malta Hotels and Restaurants Association, Tony Zahra, reassured me that the headlines had shocked the tourism industry and that many investors were rethinking their business plans as clearly this was not sustainable – at least not for all of them. The law of survival of the fittest would eventually cull the weakest. And no one wants to be the weakest…
But something strange happened after that: the number of applications for beds did not drop. It actually increased. It was reported that there were 55,600 beds in 2019 which increased to 71,015 in 2023 and that there are 25,000 more beds in the pipeline.
The CEO of the Malta Tourism Authority, Carlo Micallef, said during a recent Malta Business Network event that there were some 25 new applications a week related to tourist accommodation.
Granted, not all of these were for large hotels or even for extra floors on large hotels. Some were for guesthouses and extensions and short lets...
But it still means that investors are creating a scenario where we will require the 2022 levels – of 2.3 million arrivals – to virtually double. Just to fill those additional beds and reach 80 per cent occupancy, considered to be the magic benchmark for feasibility.
Let us assume that there is enough demand out there and that there will be 4.7 million tourists lined up, all clamouring to come to Malta (presumably ones who have not been following social media posts about the island’s deplorable state).
How would they get here? According to Deloitte’s report, we would need an extra 17,000 flights to bring those tourists here, more than two flights more each and every hour if they were added across the year. But of course, they would not be: there is far higher demand in summer than in winter.
Will those extra flights be added? Even the CEO of Malta International Airport, Alan Borg, warned that we could not expect the same rates of growth for years to come. He added: “And I don’t think that we should want it”, saying it was not wise to go for growth just for the sake of it.
Where would those tourists go? Let us take the beaches. Comino’s Blue Lagoon already had a density in August 2022 of 2.6 square metres per person.
“Reach out and touch someone” is not the best slogan for people who are duped by the postcard perfect pictures of Blue Lagoon taken in mid-winter when it is empty.
And don’t fall for the seasonality pitch: we all know about the measures put into place in Venice to cope with sustainable tourism. And yet the Deloitte report had warned that places like Valletta and Mdina were already perilously close to that. And that was with far fewer tourists than 4.7 million.
Next question: what impact would they have on the infrastructure? Whether we discuss bus capacity, traffic, rubbish or sewage, it is clear that the island is already not coping.
Zahra pointed out that the drainage in Buġibba and St Paul’s Bay needed upgrading. Are we ready to close off the roads in the whole area for the time it would take for this to be replaced? He said it could take two to three years and I don’t think he was joking.
It is far easier to lose a reputation than it is to painstakingly build it up- Vanessa Macdonald
What else could happen between now and then? The length of stay is already going down, for a variety of reasons, so we might actually need more tourists to reach the same number of bed nights.
Their spending could change – even if this is due to reasons that have nothing to do with Malta, like inflation in their home country which is eating away at their disposable income. In fact, although spending per tourist has gone up just a tad for 2022/2023, when you look at the actual amount, it has not kept up with inflation.
It does not help to have business interests driving policies and decisions. How could the same country encourage investment in top-end boutique hotels and then allow late night music in Valletta? Are the people who pay a few hundred euros a night the ones who want to step over vomit when they come back to their hotel?
Zahra was sarcastic: “That is how democracy works. It is all down to government. We elect them and they have to decide. We lobby but the government has to show vision,” he shrugged.
Enough said: blaming the media and influencers and trying to pooh-pooh their criticism is not going to make the problem go away.
The investors in the tourism product are businessmen and in a perfect world they would not invest if they thought that they would not recoup that money, and with a handsome margin. So why are they jumping onto a boat that is already floundering? They will not all survive in the tourism business, and empty beds mean that they will need to drop prices.
So is the cunning, devious plan for them to rub their hands in glee as the price war heats up and hotels fail so that they can turn them into apartments or offices? Seriously? Because that is what Malta really, really needs?
There are solutions and, Micallef said, it is not too late. However, I am not sure that I agree with him. It is far easier to lose a reputation than it is to painstakingly build it up, not to mention the cost of doing so.
We need to revisit the incentives we offer to add floors to hotels.
We need to see whether tax incentives are encouraging investment in the right sectors. We need to insist on quality and not just tickbox exercises when giving accommodation permits.
And we need, oh boy do we need, enforcement. Everywhere. Across the board. In every sector. The laws are meant to be a deterrent, and encouraging people to jump onto the bandwagon and find ways to skirt the law is hardly smart.
We need to understand where we want to be and then work towards it, not caving in to a few dozen private interests in entertainment, accommodation, construction or transport.
Vanessa Macdonald is a freelance communications consultant.