As the new cabinet gets into its stride, one of the linchpins of economic recovery going forward will be tourism, which accounts for a huge chunk of the island’s GDP.
Clayton Bartolo has been retained as tourism minister and his challenge will be help steer the country in the right direction to revive this vital sector.
In theory, his work will be aided by a strong, accumulated travel appetite in Europe, as evidenced by a steady increase in holiday bookings to southern European destinations. The Easter tourism flows will be a litmus test for the local industry, which is looking to achieve the 2019 levels of visitors.
Logistics issues recently grabbed the headlines. A few days before the election, Charles Pace, the head of civil aviation, flagged safety concerns over long lines at the airport’s arrival lounge caused by COVID checks.
Alan Borg, the Malta International Airport CEO, asked the authorities to lift all travel-related restrictions, for fear of putting off prospective travellers.
The juggling of health and economic priorities will continue to be challenging for the government. It would be dangerous to assume that COVID is now completely behind us.
The newly sworn-in prime minister’s pledge to lift all restrictions is undoubtedly music to the ears of the industry, although it might prove counterproductive to go too far to that extreme.
Still, the tourism industry’s challenges will not disappear once restrictions are lifted. While there is growing optimism, the changing behaviour of travellers and the new economic realities dampen the prospect of a quick recovery.
International travel experts are beginning to project scenarios of how European tourism is likely to evolve after COVID is truly behind us.
The EU’s Policy Department for Structural and Cohesion Policies, in a study published last September, argued that “travel and tourism patterns and practices have changed due to the pandemic, showing a tendency towards closer destinations (domestic travel, tourism of proximity, short-haul trips), longer holidays, last-minute bookings, and increased concern about safety and hygiene.”
Malta’s tourism product suffers from the size limitations of the country. Overcrowding on Malta’s beaches and tourist hotspots like Buġibba and St Julian’s is unavoidable in peak season. This may be a big concern for many tourists. In the post-COVID era, they will be even more attentive cleanliness and will want to feel safe.
For too long, the tourism industry has relied on a business model based on low-cost labour, reasonable energy costs and a steady flow of bookings thanks to low-cost airlines. All these key success factors are now being challenged.
Catering operators have complained that many third-country, low-paid workers left the island with the onset of the pandemic.
These workers may have found better-paying jobs in Greece and Italy and are unlikely to return unless they are offered better wages.
The Ukraine war has spooked the commodities market, especially food and fuel, and the full impact of this shock on the economy has still to be felt. The tourism industry is energy-hungry, especially in summer.
There is a limit on how much taxpayers can finance the food and energy subsidies that have so far protected both households and industry. The tourism industry will undoubtedly ask for special treatment in the form of reduced VAT and more subsidies for water and electricity to help them survive in the intensely competitive environment.
Rethinking the tourism economic model is long overdue. Mass tourism on an overcrowded island is not sustainable in the long term. New economic realities now affect the tourism market. It will be crucial for the minister to consider new business models that have so far been discarded.