The Malta Independent 13 August 2022, Saturday

Do we really want 100,000 tourist beds?

Stephen Calleja Sunday, 26 June 2022, 09:30 Last update: about 3 months ago

If all the plans that we know about come to be, Malta is set to have a staggering 100,000 licensed beds for tourists by 2030. Other projects may surface in the next years, so that number could grow bigger than that.

At present, the bed stock is around 55,000. So what we are envisaging is that the number of beds will nearly double over the next eight years.

With an industry that is still in recovery after the Covid-19 pandemic, with the future of Europe looking dim because of the war in Ukraine, and with the economy under pressure because of both the pandemic and the war, questions are being raised as to whether doubling the bed stock would be the ideal way forward.

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And, even if everything is plain-sailing – when the pandemic and the war (hopefully) are over, and the economy is in full swing – do we really need to have so many beds available? Can tiny Malta sustain them?

Do we really want to have them, given that their availability would mean the probability of a heavier burden on the infrastructure, more traffic issues than we already have, and an even worse feeling of oppression – we are already overcrowded, overpopulated and over-built. Beds have to be housed in buildings, and so it would practically mean that to double the tourist bed stock we would need to double the number of existing collective establishments.

Before Covid, and of course before the war, Malta was already reaching its saturation point with regard to the number of tourists. We were achieving record after record, ending with 2.8 million tourists in the whole of 2019.

We would have probably surpassed three million in 2020, if Covid had not upset the whole system and our way of life. To put everything in perspective, three million tourists is more or less six times the population of Malta. And it would mean that, if these three million are equally distributed across the year, we would have 250,000 tourists at any given time – so, effectively, the population would increase by 50 per cent at any given time.

Excluding tourists, Malta is in the top 10 of the most densely-populated countries in the world, certainly the most crowded European Union member state. Having an average of 750,000 in 315 square kilometres might explain why sometimes we feel like living in a nightmare.

Sustainability

Over the past decades, tourism has grown into one of the main pillars of our economy, and nobody would like to see it suffer. We were all concerned when the number of tourists dropped substantially at the peak of the Covid pandemic when no vaccination was available.

This inevitably meant that hotels, restaurants and all other sectors which mostly rely on the industry received a huge blow. Jobs were terminated, and the government had to intervene to give financial assistance so as to keep them (and most other sectors of the economy) from shutting down shop.

But, even as, in pre-Covid days, we saw the numbers grow, and income from tourism rise, deep down we all knew that there is a limit to everything. We have been speaking for years about the need to attract higher-quality tourists. One tourist who spends €100 is better than ten tourists who spend €10 each – that one tourist is leaving the same amount of money in the country as all the others put together, but the effect on the infrastructure is 10% of what the other 10 tourists would leave.

Then again, with 55,000 beds available, some collective accommodation establishments are already finding it hard to maintain a capacity that makes it profitable. So what will happen when we will have nearly double that? If the supply increases but the demand does not grow in the same proportion or remains the same, the only way out would be to reduce prices. Therefore increasing the bed stock goes against the target of attracting higher-end visitors. Reducing prices will mean lower-quality services, which would in turn attract lower-quality tourists.

There have been occasions in the past when this already happened. Hotels lowered their prices to ridiculous levels, which meant that their profit margin was drastically cut down, while at the same time attracting tourists who look for cheap holidays, and leave little else in the economy.

Moratorium

The Chamber of Commerce has seen the perils of what is taking place.

It commissioned a report which found that, in the best-case scenario, with 3.2 million tourists arriving in 2030, and all of them staying for seven nights, this would result in 22.4 million guest nights.

Having 100,000 beds available would mean a projected capacity of 36.5 million nights, 14.1 million more than the 3.2 million tourists would fill if they all stay for seven nights.

This would result in a capacity of just 61 per cent, which is certainly not what hotel operators expect.

And remember that this is the best-case scenario – people are going for shorter holidays (not seven nights), and there are then tourists who do not stay in hotels. So the probability is that the capacity will be lower than 61 per cent.

These findings pushed the chamber to call for a moratorium on new applications for tourism accommodation.

It does not seem that its suggestion has been accepted.

Slowdown

There’s another thing that one has to keep in mind.

Although the pre-Covid tourism numbers were on the rise, Malta’s tourism sector was still likely to have faced a slowdown, irrespective of the pandemic.

A report presented at the National Tourism Forum last October, by Raphael Aloisio, a financial advisory leader at Deloitte, showed that increasing supply of accommodation property was starting to have an impact on profit, with a ten-year-growth having started to stall in 2019 – that is before the pandemic started.

He had pointed out “signs of overheating” as revenue began to stabilise despite tourist numbers continuing to rise. This was a clear indication that as the number of beds available increased, room rates started to go down.

If profitability was already being negatively affected with 55,000 beds available, it is more than likely that matters will be worse if the number of beds is doubled without there being a corresponding rise in the volume of tourists coming over.

Then again, reaching this volume is not necessarily a good thing, as it would mean an even worse situation of overcrowding.

No mass tourism

It has been said before that Malta should concentrate on quality tourists, rather than volume. It has also been said before that there should be a focus on event, cultural and religious tourism, instead of mass tourism. It has also been said before that there should be a stronger effort to spread tourists more equally throughout the year.

Whatever has been done to satisfy these requirements, it is clear that they have not been as successful as we would like them to be. Events that can attract tourists are still mostly held in the warmer months.

Only last week, a Hungarian MEP who works specifically in the tourism sector warned us of the dangers of seeking just numbers. Istvan Ujheli, from the Hungarian Socialist Party, said that focusing exclusively on mass tourism is dangerous because it leads to more overcrowding which both the tourists and the locals will grow to dislike.

He was being polite by saying that this will happen in the future if we are not careful. Because it is already happening now. And it will only get worse if what is planned will come to be.

As to quality tourists, we cannot say that we have managed to attract more high-end visitors. Our hotels may be five-star, but the rest of the country is not.

We will discuss that another time.

 

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