Many wonder why the evening news is upbeat when it reports the exponential growth in tourist arrivals. The message is loud and clear - hurrah, the season was excellent and we have registered a higher percentage growth of mass tourism compared to previous year. This is all well and good.
Some may remember how it all started in the 1960s when the island was facing a services rundown and the colony was trying to build up an alternative source of income to sustain jobs. The government was advised to incentivise local entrepreneurs to risk their capital and build a welcoming tourist infrastructure by way of hotels and millions were poured to improve access to scenic spots such as beaches, places of interest and historical monuments. The government granted various incentives to budding hoteliers, starting with discounted seafront sites, 10-year tax holidays and training grants for catering staff. Banks were also pulling their weight and took the risk to fund projects connected to the industry. This progressed slowly with the setting up of a national airline in the early seventies. Advertising helped to place Malta on the destination map for sun, sand and sea where beer is cheap and public transport on rickety buses (quaintly painted in rainbow colours according to destination) attracted the British tourist in droves. Food and drink were cheap and the Mediterranean was being discovered by the masses who booked their place in the sun for bargain holiday resorts in Spain, Cyprus, Greece and Malta.
In Malta, the hotel lobby grew strong and influenced public opinion in a positive way. The rise in employment in hotels and restaurants over the past 50 years contributed significantly in reducing unemployment queues and generated direct and indirect benefits to the economy. The sector was welcomed by politicians as a means to help balance the annual budgets (mostly in deficit) and give a boost to ancillary sectors involved in importation, transportation, travel agents, agriculture and fisheries. All pay tribute to the milk cow even though tourism is a volatile industry.
Having spent decades trying to attract tourists, the Malta Tourist Agency is compensating low-cost airlines to develop new markets and niches. To improve beaches and other public amenities, a nominal day tax per tourist is levied on all arrivals. It comes as no surprise that the World Travel and Tourism Council remarks that tourism directly accounts for nearly three per cent of the world's GDP. McKinsey, a consultancy, reckons that one in five new jobs is generated by tourism. Whereas manufacturing employ relatively fewer people due to automation, tourism employs legions. There are side benefits, since policies designed to attract tourists, such as quality inspections on hotels and restaurants, improving general health and safety standards also lure foreign investors. As the global middle class grows, and annual foreign holidays become routine, the world's most popular destinations expect heavy increases in the number of visitors.
To expand on this topic, the Mediterranean is not a favourite stop for Asians so far, but it may soon be discovered and this will tip the scales, which will result in acute overcrowding.
Official sources note that at present only four per cent of the Chinese population, 55 million people, own a passport. When passport ownership in China reaches the Japanese rate, 340 million Chinese people will have passports. If and when that phenomenon happens, then expect the hazard of overcrowding to surface in the Med. For Malta, this means pushing away the most valuable visitors. The bigger the low-budget crowds, the less attractive the island becomes for the high spenders. Such overcrowding brings hidden costs, which are borne by local residents who find that pavements, roads and cycle lanes are clogged. We cannot hide the fact that the number of nights spent in tourist accommodation in 2018 grew in nearly all EU member states so Malta is no exception. Armchair critics warn us that we should upgrade the sector to attract more upmarket tourists and stop subsidizing low-cost arrivals which mostly book AirBnb for cheaper accommodation.
The NSO reported that arrivals for the whole of 2018 rose by 14.3 per cent to reach nearly 2.6 million while total expenditure per capita stood at €809, a decrease of 5.5 per cent when compared to 2017. Employment in food and beverage service activities based on 2016, showed 5,902 full time workers with over 7,000 low paid (mostly non-EU) part timers. Restaurants saw an average spend per tourist of a mere €104 (our VAT rate on food and drink is almost double that charged by neighbouring countries).
In The Malta Independent of February 2018, the president of the Malta Hotels and Restaurants Association Tony Zahra said the sector is doing well, but tourist numbers are exposing "faults in our system". He highlighted the need to turn Malta into a destination built on quality and not just numbers. This has been the MHRA's battle cry for many years. Only recently, the Prime Minister Joseph Muscat said at a political activity that Malta will attract three million tourists by the end of the year. He was enthusiastic about the future prospects of the sector, projecting that soon we should start attracting tourists who spend €5,000 a night.
However, there is a silent majority that is voicing concern about the unbridled growth and the dire consequences on the quality of life. This silent protest has coincided with extraordinary growth in visitor numbers, traffic congestion in our narrow streets and the consequent deterioration in air quality persisting through the summer months. More tourists fan the appetite for more hotels being built or extended and this results in the island looking more like an open construction site. We must ask ourselves: can we expect upmarket tourists when there are obtrusive tower cranes and unsightly debris in tourist zones. Increasing the numbers to three million means more carcinogenic fumes and aircraft noise.
Europe's CO2 emissions increased by about 80 per cent between 1990 and 2014, and it is forecast to grow by a further 45 per cent between 2014 and 2035. NOX emissions doubled between 1990 and 2014, and are forecast to grow by a further 43 per cent between 2014 and 2035. Will the tiny island be spared this poisoned chalice? Can MTA plan a five-year policy to reverse the damage to the environment by going for quality not sheer numbers?
Mr Mangion is a senior partner of PKF, an audit and consultancy firm, He can be contacted at [email protected] or on +356 21493041.