Prime Minister Lawrence Gonzi has warned that, notwithstanding the good results, Malta must not be complacent about tourism. Speaking at a seminar, he pointed out that the positive achievement of a 12 per cent rise in performance, coupled with an improvement of 20 per cent in tourist expenditure, needs to be sustained in the years to come. These results are due to careful planning in the lean years since 2008. The opening of new routes to Malta certainly meant greater accessibility, and this is considered a major factor.

Negotiating a subsidy for low-cost airlines, which started operating to Malta in 2006, has paid good dividends. It has been reported in the media that roughly 40 per cent of those who fly travel on low-cost airlines. One notes how, in a short period of time, Ryanair is now carrying 20 per cent of our tourists.

Critics of low-cost airlines blame the losses being registered by Air Malta on the stiff competition they face, and being disadvantaged by their old style business model. On the other hand, one expects structural changes to be implemented by the national airline if it hopes to survive the next winter without massive subsidies. It is a fact of life that the airline business today is composed more than ever of independent travellers who apparently save on tour operators by booking online and thus have more money to spend during their stay. Extra spend means an increase in second “city break” holidays in the shoulder months. Finally, the penny has dropped that the island’s strong points are a good climate, warm hospitality, unequalled scuba diving and heaps of history and culture.

Nothing can beat a relaxing holiday with a swim before lunch followed by a tour of Valletta, the Knights’ legacy of architecture dating back to the 16th century, followed by a cosmopolitan nightlife. Throw in for good measure an evening spent at a village festa with colourful fireworks or enjoy free MTV events under the moonlight at The Granaries in Floriana. For history lovers, nothing equals an educational morning tour of the Hagar Qim prehistoric temple now under new management.

But there is a fly in the ointment in that the quality of the service tourists receive must continue to improve. Losses suffered in 2009 have forced hotels to cut back on quality and some may have resorted to trimming service levels. It is all a reality check. How can one reconcile owners making do by keeping their staff employed while seeing a poor return on their capital. One may slate profit as being a dirty word and say that banks are only there when it is sunny and withdraw support when it is cloudy, but profits fire the industry’s cylinders. Yes, there is a grave risk that, due to the losses suffered in the past, there is now a race to the bottom. This has to be resisted, because the lasting impression a first-time tourist gets is from quality of service in restaurants and hotels (not to mention a ride on rickety buses). Another factor is the damage to the environment inflicted by the dense population of both locals and tourists during the peak season. MHRA has warned its members that if we destroy the environment, we destroy the hospitality industry in the long run. The model of sun and beach tourism, which we chose and have marketed since the 1960s, has caused both the spectacular urban, demographic and economic demise of small coastal towns once inhabited by farming and fishing families who eventually came to make their living from tourism, and the increasing degradation of their natural setting. A case in point is the burgeoning MIDI sprawl at the tip of the Tigné peninsular, with grey concrete gradually replacing green trees and rocky beaches. This impact, together with the obvious ones caused by demographic change, has resulted in the degradation over the years of the coastal scenery of the island.

In the 1960s, the government of the day incentivised hotel owners to build hotels and complexes on virgin seafront land, given away at ridiculous low rates on a 100-year lease. Thirty years down the line, after milking hotel profits and paying regular trips to bank managers abroad, some developers persuaded Mepa to grant them a change of use to turn hotels into luxury apartments. All this has turned hotel owners into members of the exclusive millionaires club, proud of themselves as skippers of ocean-going yachts, since each apartment with a view changed hands for millions of euros. From baron contractors they branched out into many other unrelated sectors. Is this sour grapes? Perhaps, since some of these developers took the rough with the smooth and ran their hotels during difficult times when arrivals were relatively low. The examples are too numerous to mention but established ones include the Hilton, now turned into a mega development with a world-class marina and two casinos, Mgarr Hotel, Les Lapins, which was torn down to build hundreds of luxury apartments, and the Holiday Inn hotel. The industry is changing to the extent that hotels other than 5-star are not really profitable in the short term and almost none have been built in the past five years. Concurrently, 14 hotels closed in the Bugibba/Qawra area last year.

This is partly reflected in a survey compiled by MHRA, the union representing hotel owners, which reported a 45 per cent fall in profits this year compared with 2008, which was a record year. MHRA goes on to blame the government for delays in launching the energy-saving scheme and a three per cent interest subsidy on refurbishment programmes, which would have saved them thousands in electricity costs and helped finance refurbishment.

The survey shows inter alia that when compared to 2008 there has been a slight decrease of 0.3 per cent in tourist arrivals, and a decrease of 3.3 per cent in guest nights. The positive thing is that by comparison tourist spend had increased by three per cent during the second quarter of 2010 when compared to the same quarter two years ago. There was a marked improvement in rates but the survey reiterates that increases were not sufficient to make good for the decline in 2009 (gross operating profits remained 25 per cent below 2006-8). As can be expected, the airport (now privatised) reflects the steady increase in business. The company reported a 10.3 per cent growth for the first half of 2010, while passenger movements in July increased by a substantial 15.8 per cent reaching a record high of 401,952 movements. The strong increase of 9.2 per cent in seat capacity, particularly due to low cost airlines while the average seat load factor improved by 1.4 percentage points reaching 69.0 per cent for the period January to July 2010. All this despite the Icelandic volcanic ash cloud in the first quarter, which reputedly cost Malta some 14,000 tourists.

Really and truly the welcome news of the turnabout is euphoric but even politicians are warning us to be cautious. We are still not out of the woods. The pain suffered in 2009 still hurts and has not been healed by the excellent results that blessed our islands this year. Such good results need to be maintained for the next three years if hotel owners want to recoup accrued losses. The magic that motivated such a turnabout was the wise policy adopted by MTA of a gradual diversification in tourist markets. Over the past years, through select advertising campaigns in competing European cities, MTA managed to reduce the dependence on the British market. One associates the mass market British tourist with the bucket and spade brigade and/or the lager louts, which hardly dent our annual budget deficits.

MTA’s judicious market diversification thankfully lowered the losses arising from the ravages of the UK recession.

Equally, the sustained increases in language students who arrive in droves (this year more from Spain) now exceed 70,000 in summer. Unfortunately, the local community has labelled some students as troublemakers and hedonists – drinkers of cheap alcohol who reputedly sleep drunk in Sliema doorways or loiter half naked on a popular beach in St Julian’s. Residents may criticise the unruly behaviour of language students and even question the viability of the overall contribution to the economy considering their shoestring holiday budget. Still it is good while it lasts and of course language schools do employ a lot of part-time English teachers. But if Malta gained this year, which were the countries that suffered? To start with, Greece had a difficult time alongside Spain, Cyprus and Madeira. In the first two months of the year, Greece saw a 10 per cent slump in tourist numbers. Cyprus’ €17.2 billion economy contracted 1.7 per cent in 2009, as revenue from a once-buoyant real estate sector and tourism tumbled. It is not surprising to notice how British-dependent Cyprus has seen an increase of just 0.7 per cent. Madeira also reported a slight drop. Hotels on the Portuguese island, 350 miles off the West African coast, reported a spate of cancellations due to a natural landslide this year. Cruise ships scheduled to call at the one of Madeira most popular spots on the itinerary have been urged to find alternatives and this may account for the increase in cruise liner traffic switching to Valletta harbour.

To conclude, it is astute to heed the Prime Minister’s clear warning to be vigilant. A radical approach is recommended: leading to the adoption of measures by MTA which entails launching a revamped tourism model, focused on sustainability and the integration of tourism with the environment and the local population. Complacency will kill the goose that lays the golden egg.