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Malta Approaching Tourist Capacity Warns President of the Hotels and Restaurants Association
August 11 2024 13:02 by PCLMedia
MHRA President Questions Sustainability of Malta’s Tourism Growth
Malta is nearing its maximum capacity for tourists, with the country potentially being "too successful" in attracting low-spending visitors, such as concertgoers and cruise ship passengers, warns Tony Zahra, President of the Malta Hotels and Restaurants Association (MHRA).
In an interview with *Times of Malta*, Zahra criticizes the Planning Authority for its inadequate assessment of new hotel applications, arguing that it’s unrealistic to overhaul infrastructure just to accommodate more tourists. He stresses that addressing these challenges and ensuring sustainable growth in Malta’s tourism sector will require a clear vision.
While Malta is on track to welcome a record three million tourists this year, Zahra notes a concerning trend at the higher end of the market. For the first time in years, five-star hotels in Malta are reporting lower-than-expected occupancy during the peak summer months.
"Demand has not been as strong as anticipated for July and August," Zahra explains. "As a result, these hotels are being forced to offer discounts, which will inevitably impact the four- and three-star hotels as well."
Zahra believes it’s time for authorities to reassess their tourism strategy, suggesting that Malta should shift its focus to attracting 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 maximize the potential of each one," Zahra says. "In recent years, there has been a focus on hosting numerous parties and concerts, attracting younger tourists and lowering the average age of visitors. However, we may have been too successful in this regard. Now, we need to recalibrate our target market."
Tourism: The Lifeblood of Malta's Economy
Tourism is a vital pillar of Malta's economy, contributing approximately 27% to the nation’s GDP and directly employing thousands of people in various sectors, from hospitality to transportation. The island's rich cultural heritage, crystal-clear waters, and warm Mediterranean climate have made it an attractive destination for tourists worldwide. In recent years, Malta has seen a significant increase in the number of visitors, with 2023 marking a milestone of 2.98 million tourists—a 30.1% increase over the previous year.
However, this success has also brought challenges. The rapid growth in tourist numbers has put considerable pressure on Malta's infrastructure, leading to concerns about over-tourism and its impact on the local environment and quality of life. The crowded streets of Valletta, the island’s UNESCO-listed capital, and the overdeveloped coastal areas like Sliema and St Julian’s are visible signs of this strain.
The Shift in Tourist Demographics
Historically, Malta has been a destination for a wide range of tourists, from budget travelers to luxury seekers. However, the recent focus on large-scale events, such as music festivals and cultural celebrations, has shifted the demographic towards younger, lower-spending visitors. These events, while boosting visitor numbers, have not necessarily translated into higher revenue for the local economy.
The average spend per tourist in Malta is significantly lower compared to other Mediterranean destinations. While some tourists opt for all-inclusive packages, which limit their spending outside the resort, cruise ship passengers—who account for a substantial portion of visitors—spend on average only €60 during their short stay. Zahra points out that this is partly because cruise liners now offer extensive on-board amenities, reducing the need for passengers to spend money ashore.
"Malta is offering these passengers an open-air museum experience, but this does not encourage higher spending," Zahra notes.
Balancing Quantity with Quality
Zahra advocates for a shift in strategy to target older, more affluent tourists who are willing to spend more on high-quality experiences. This approach could involve promoting Malta’s rich history, gastronomy, and luxury offerings, as well as improving the overall visitor experience.
The idea is not just about increasing the number of tourists, but about enhancing the quality of their experience in Malta. "We should focus on quality rather than quantity. People are willing to pay for a premium experience, and Malta has the potential to deliver that," Zahra emphasizes.
Challenges of Over-Development
One of the most pressing issues Zahra highlights is the over-development that has taken place in recent years. The construction boom, fueled by the surge in tourism, has led to the approval of numerous hotel projects, often without adequate consideration of their environmental impact or the strain on local infrastructure.
Earlier this month, a video of Zahra describing the relentless push for more hotels as "madness" went viral, resonating with many viewers. However, he says he often feels like a "voice in the wilderness" on this issue, as the government has remained "consistently silent."
Zahra criticizes the Planning Authority for becoming a "permitting authority," noting that 99 hotel-related applications have been approved, which will add 27,000 rooms to the current stock and 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 asks.
He refers to the Deloitte Carrying-Capacity Report, commissioned by the MHRA in 2022, which warned that Malta would need five million tourists annually by 2027 to avoid a surplus of empty hotel rooms. The report also highlighted the strain that further development in St Paul’s Bay would place on the local drainage system.
"If we had to improve our infrastructure to cater for the increase, we would have to redo all the drainage and energy distribution networks," 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?"
The Workforce Conundrum
Another challenge Malta’s tourism sector faces is the availability of local labor. As Zahra points out, the local workforce has become more selective, leading to a reliance on foreign workers, particularly from non-EU countries. These workers have become essential in keeping the hospitality industry running, but their presence also raises concerns about integration and the long-term sustainability of the industry.
Addressing the lack of Maltese staff in hotels and restaurants, Zahra argues that without foreign workers, the industry would grind to a halt. "The alternative for a restaurant or a catering outlet would be to close down."
The government recently introduced a skills pass to maintain service levels in the local hospitality industry. Zahra acknowledges the idea’s potential but points out challenges in its implementation, mainly due to administrative issues and a lack of coordination between government departments.
Future Prospects and International Expansion
When asked about the new national airline, KM Malta Airlines, Zahra refrains from passing judgment, but warns that if the airline faces the same level of political interference as its predecessor, Air Malta, it could face similar problems. "It is extremely important that it keeps flying. If it doesn’t, we’ll have a major problem one day."
Despite the challenges facing Malta’s tourism industry, Zahra remains optimistic. "If it wasn’t for tourism, we wouldn’t have had the successes we’ve had up till now. Can it be better? Of course, it can be better. Everything can be better. We can do it better."
He also encourages local hoteliers to look beyond Malta for expansion opportunities, suggesting that they should consider exporting their expertise and capital abroad due to the limited space for further development in Malta. "We have now matured. We should be getting together, putting funds together, and buying properties abroad."
As Malta continues to break tourism records, the island faces the dual challenge of sustaining this growth while preserving the quality of life for residents and maintaining its appeal as a destination. The path forward, as Zahra suggests, lies in a strategic shift towards quality tourism, careful management of resources, and a long-term vision that prioritizes sustainability over sheer numbers. Only then can Malta ensure that tourism remains a viable and beneficial industry for years to come.
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