The Malta Chamber of Commerce has called for a moratorium on new applications for tourist accommodation properties in a bid to counter a projected oversupply of hotel beds.
The recommendation was made during the chamber’s launch of its vision for the future of the tourism industry, after consultation with stakeholders, including some of its members as well as industry experts.
Based on data from the Malta Tourism Authority, the Chamber’s research, conducted by Seed, revealed that there were 55,597 licensed tourist beds available in 2019, and the number of licensed beds could reach 100,000 by 2030 if all tourist accommodation projects currently in the pipeline materialize.
Based on “best case scenario” projections, with 3.2 million tourist arrivals expected per year by 2030, this would translate to 22.4 million overnight stays, or 14.1 million fewer overnight stays than projected capacity.
“This will result in an unprofitable occupancy of 61.3%. Taking into account those who would stay in non-rented private accommodation, currently 16% of all nights, this would lead to an increase in the excess capacity of available nights to 17.7 million. Adding unlicensed beds would further dilute occupancy, which the consultation paper said was nearly 50%,” the report said.
The Chamber also urges those with pending applications to rethink their investment plans and find more sustainable ways to grow their business.
Plans for a number of large-scale hotels made headlines last year, including the approval of db Group’s controversial project in Pembroke, approved plans for an 81-room five-star hotel on the site of the former Tattingers nightclub in Rabat and construction magnate Joseph Portelli said he plans to build a 500-room hotel on the site of the former Jerma Palace hotel in Marsascala.
Last month, a report on the state of tourism presented to the National Tourism Forum revealed that the industry was already facing a downturn before the effects of the COVID-19 pandemic began. He said the increase in housing supply was one of the factors contributing to the decline in profitability.
The Chamber said the moratorium should take effect immediately and added that permits that have already been granted but are still in the planning stage should be reviewed by the MTA, offering investors incentives to revise their plans and find other ways to grow sustainably.
The Chamber’s report is structured around eight themes; branding and marketing; digital innovation; lodging; sector infrastructure; culture and identity; governance and institutions; human capital; and connectivity.
Special protection status for Gozo
In a bid to provide more unique experiences for tourists, the report also recommends that a strategy be devised for Gozo and that “any development aimed at further undermining Malta’s natural and cultural assets” be halted.
“Gozo deserves special protected status in this respect to retain what ultimately makes it unique and different from Malta.”
Further encroachments on ODZ land must be halted to preserve the islands’ natural and cultural assets, the report says.
Among its other recommendations, the Chamber also recommends that VAT on all tourist services be reduced to 7%, unless that service is already tax exempt, and that the funds be allocated to improving wages in service sector jobs.
“With this vision, the Malta Chamber is confident that Malta will cement its place as an all-year-round quality destination of the highest standard, at the forefront of international industry trends,” said the CEO of the Chamber, Marthese Portelli.
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