Tourism in 2012 will require additional funding – MHRA

The additional €1 million allocated to the Malta Tourism Authority will not be sufficient to meet marketing challenges in 2012, the Malta Hotels and Restaurants Association said in its budget reaction, which was coupled with a prediction of a likely shortfall next year.

"Tourism is one of the sectors that delivered, and which contributed to government earnings handsomely. Its value added for the economy is very significant and the MHRA expected that in these very particular circumstances government would invest more to sustain the momentum of economic growth registered to date in tourism," the association said in a statement.

"The funds afforded to MTA have to be considered as worthwhile investment which is immediately paid back in the form of government earnings."

The MHRA said the €20 million allocated to Air Malta was an important signal to support the future of the national airline. But it said the restructuring process could not be left pending indefinitely.

"This uncertainly is negatively affecting tourism prospects. During the same budget period last year we were aspiring to see the process concluded by the end of the year, but a year on, this remains pending."

The MHRA said it was pleased to note that government did not burden the tourism sector with any additional taxes or charges. It was also pleased to see that government is looking at ways to control the inflation rate next year, as this will support our competiveness level at a time when the market is extremely price sensitive.

"The MHRA also acknowledges the introduction of a number of incentives which will continue to help small businesses which are more prevalent in the restaurant sector. The MHRA also welcomes the scheme aimed at high volume energy users linked to tax credits."

The MHRA acknowledged government's ambitious targets, forecasting a growth in revenue of €260 million against an increased spend of €200 million, did not allow it much room for manoeuvre.

"We stress on the predominant role the tourism industry, in terms of economic growth rate, gross value added and employment, and how an increase in tourist nights would eventually disperse itself across the economy.  MHRA feels that we are still in time to work towards increased growth in tourism despite the challenges ahead of us.

"However this requires further investment. The MHRA is concerned about the consequence of substantial drops in tourist arrivals next year, which will have devastating affects worse than those registered in 2009, given the substantial increases in operating costs since."

The MHRA said it was disappointed to note that government did not refer to the problem of unlicensed accommodation, which continues to grow from year to year at an alarming rate, and which is presently estimated to reach the conservative figure of circa €24 million annually.

"In dealing with this issue government can benefit from another source of revenue, which in turn can be reinvested in the tourism industry. It would also give a signal that government will no longer permit this situation. But at things stand, illicit trading is being encouraged."