Maltas Private Holiday Rentals: A Mixed Landscape of Growth and Regulation Gaps

November 17 2024 08:37:59 by PCLMedia

A recent report by the Malta Hotels and Restaurants Association (MHRA) reveals that a significant portion of private holiday rental accommodations in Malta operates without the necessary licenses. Conducted by Deloitte as part of a tourism carrying capacity study, the findings highlight a growing divide between licensed and unlicensed rentals in the sector.

The Licensing Gap

Data from the Malta Tourism Authority (MTA) shows that, as of 2023, 5,771 permits were issued for holiday-furnished premises. However, an analysis of listings on platforms like Airbnb and VRBO indicates that approximately 10,043 properties of this type are on the local market. This suggests nearly half of the private rental properties operate outside regulatory frameworks.

The study also shows private rentals account for nearly a third of all tourist guest nights in Malta, climbing slightly from 31.9% in 2019 to 32.4% in 2023. Seasonality heavily impacts the sector, with rental availability surging during summer months but dropping significantly in winter. For example, Airbnb data reveals 6,000 entire homes available for rent in summer, compared to just 3,000 between January and March.

Trends and Challenges in Private Rentals

The report notes that property owners often use private rentals strategically, capitalizing on peak summer demand and withdrawing properties during off-peak seasons to cater to long-term tenants. This approach helps maintain occupancy rates comparable to traditional accommodations like hotels.

Amid these dynamics, regulatory changes are on the horizon. The MTA recently proposed stricter rules requiring condominium neighbors’ approval before licensing properties for short-term rentals. Failure to comply will prevent landlords from obtaining the necessary license.

Tourism Growth and Sustainability Concerns

The MHRA survey projects that Malta will need to attract over one million additional visitors annually to sustain current occupancy levels. Deloitte’s analysis suggests that to maintain 2019 occupancy standards, 4.5 million annual arrivals would be required. The planned development of over 13,000 new rooms across Malta and Gozo—a 70% increase in collective accommodation capacity—amplifies concerns about potential oversupply.

Q3 2024 figures show promising growth, with 1.2 million tourist arrivals (up 18% from Q3 2023) and guest nights increasing by 871,000. Expenditure also rose, reaching €1.27 billion—a 22% year-on-year increase—while the average spend per tourist slightly increased to €1,080.

Government and Industry Perspectives

Tourism Minister Clayton Bartolo hailed the sector's resilience post-Covid, emphasizing government support through energy subsidies and efforts to enhance Malta’s connectivity. He acknowledged ongoing challenges but expressed optimism about the industry’s future, citing active discussions with airlines to further strengthen Malta's position as a top destination.

However, PN Shadow Minister for Tourism Mario De Marco raised concerns about public resistance to increased tourism. He noted that public sentiment has shifted since 2007, with growing calls for an upper limit on tourist arrivals to address sustainability issues.

A Call for Balanced Solutions

The findings underscore the need for a balanced approach to Malta’s tourism growth, focusing on tighter regulation of private rentals and sustainable planning for collective accommodations. As the sector continues to evolve, collaboration between stakeholders will be essential to address challenges and turn them into opportunities for long-term success.