Josef Formosa | Budgeting for tourism

Are you confident that the €37 million budget allocation in MTA's budget announced last week will be enough to retain Malta's present momentum in tourism?

In the constantly changing international economic scenario and the ever-evolving tourism industry one could argue that no amount of money is enough for a destination to carry out its various duties in the tourism field. However, our experience over the last years has shown that the funds made available to MTA through successive budgets have proven adequate to enable the Authority to reach its stated objectives of growing Malta's tourism inflows in line with Government policy. The allocation of available budgets is obviously always subject to strict prioritisation to ensure the best possible use of available funds.

Government also announced that licensed hotels will benefit from Investment Aid on 15% of capital expenditure as tax credits. Will this be enough to convince hotel-owners to invest further despite the on-going global financial downturn that is affecting tourism figures?

This measure is the latest in a number of schemes and incentives aimed at encouraging the accommodation sector and other tourism operators to invest in upgrading and innovation to enhance their own competitiveness and ensure its sustainability. The fact that 15% of any investment can be recouped by way of tax credits is undoubtedly a significant factor that will help convince hotel owners to invest further. Malta's record tourism performances of the past few years have strongly contributed to the vibrant feeling prevailing in the industry that is leading to investment in a wide number of areas. To this one must add the other investment which Government is undertaking in a wide range of infrastructural and zonal areas, all of which contribute towards the amelioration of Malta's tourism offer thus further enhancing our competiveness in the international tourism field.

A scheme was also launched whereby boutique hotels are encouraged. Is there a demand for such hotels?

The Malta Tourism Authority (MTA) is launching a pilot project to invite entrepreneurs to submit proposals for the establishment of Luxury heritage Tourism accommodation within historic buildings. The aim of this pilot project is to catalyse the conservation and rehabilitation of historic properties by encouraging their adaptive reuse as luxury tourism accommodation.

The adjudication of the projects submitted will be based upon satisfying the following criteria:

- That the property is located in a building of historic and aesthetic value, ideally scheduled as a Grade 1 or Grade 2 property by the MEPA;

- That the building is located within an authentic historical urban core or within a rural part of the countryside;

- That the conservation and restoration of the property is carried out professionally with minimum intervention upon the original historical fabric of the building. Any proposed extensions must be kept to a minimum. Proposals that include internal gutting of historic buildings will not be considered.

The MHRA recently urged government to take measures to return the hotel industry to profitability and increase winter arrivals. Will this budget achieve this?

One of the MTA's major objectives continues to be focus on the generation of higher-than-average growth during the off-peak low season months. In fact, while Malta is already one of the least seasonal Mediterranean destinations, MTA continues to strive to channel growth into the leaner months that definitely have strong potential to receive such growth. This budget continues to support MTA's efforts to attract further growth during this period of the industry's operation by providing adequate funding to sustain year round operation of airline routes together with the further development of off-peak tourism segments as a means of attracting tourists which travel during the quieter periods of the year.

Air Malta Chairman Louis Farrugia also hinted towards the desirability of a privatisation or partial privatisation of Air Malta. Is this being considered?

From the MTA perspective, the viable operation of Air Malta is an essential pre-condition for the sustainable operation of our tourism industry. It is up to the airline's major shareholder, Government, to decide on the best way forward for the airline's viable operation to be sustained.

Government also announced a scheme to incentivise domestic tourism to Gozo, which the Gozo Tourism Association welcomed. Is it enough? Is the price of a ferry ticket the only thing discouraging Maltese from holidaying in Gozo?

Gozo's tourism offer is almost neatly divided between its domestic and its international tourism demand. The two streams of tourists feature a number of similarities and differences when compared with each other. In terms of similarities, both foreign and domestic tourists select Gozo on the basis of its natural beauty, its ideal offer in terms of peace and relaxation as well as its highly developed potential in terms of activity holidays, wellness, rural tourism and quality accommodation offer.

Where they differ lies mostly in terms of the island's potential as a short break destination where the domestic market tends to view a Gozo holiday as a short break while island is more of a longer stay destination for foreign tourists. Factors such as ferry price tend to assume a higher importance weighting in terms of shorter stays, but the causes of shifts in domestic demand for Gozo definitely go beyond ferry ticket prices alone and also include competition from other destinations which offer an alternative experience to Gozo's.

While overall departing tourism figures are improving year-on-year, the average length of stay is currently below what it was in 2007. When can we expect to return to 2007 figures in this regard, and how?

It is a mistake to attribute a decline in the average length of stay as a negative indicator, particularly when the main reason behind such is decline is due to the attraction of shorter staying segments such as MICE, short-breaks and wellness.

What is more important is the fact that overall volumes have increased, total overnights are also increasing and tourist expenditure is not only increasing but also featuring shifting patterns which imply that the tourist Euro is spreading more evenly throughout the Maltese economy.

Hotel rates and hotel occupancy are showing year on year growth while aircraft utilisation is also featuring higher load factors: all indicators of an industry performance that is healthy and achieving respectable yields.