Issue link: https://maltatoday.uberflip.com/i/1188660
28.11.19 12 OPINION George Mangion T ony Zahra, president of the Malta Hotels and Restaurants Associa- tion, was recently quoted saying that "we can't keep increasing the number of beds we have. If we do this there is go- ing to be a blood bath". It is a dire warning to mega developers who are contemplating building more hotel rooms. He insisted that for every three tourists that come to Malta, hotels needed an additional employee, many of whom were now being brought from countries outside the EU. at is a seasoned opinion but un- doubtedly the hospitality sector (ir- respective of its chequered history) is indispensable for the economy. Nostal- gically, readers may remember its hum- ble origins. It all started in the mid 1960's, when the island was facing a services run- down and as a British colony was trying to build up an alternative source of in- come to sustain jobs. e government was advised to incentivise local entre- preneurs to risk their capital and build a tourist infrastructure by way of hotels and quality restaurants. In the process, millions were poured by the state to improve access to scenic spots such as beaches, places of inter- est and historical monuments. Various incentives were granted by the govern- ment to budding hoteliers, starting with granting of heavily discounted seafront plots, ten-year tax holidays and training grants for catering staff. Banks were also pulling their weight and took the risk to fund construction projects connected with the industry. e strategy was further helped with the setting up of a national airline in the early seventies. Advertising aided Malta on the desti- nation map for sun, sand and sea where beer is cheap and public transport on rickety buses (quaintly painted in rain- bow colours according to destination) attracted the British tourist in droves. en, food and drink were cheap and the Mediterranean was being discov- ered by the masses who booked their place in the sun for bargain holiday re- sorts such as Spain, Cyprus, Greece and Malta. In Malta, the hotel lobby grew strong and influenced public opinion towards endearing the sector. e meteoric rise in hotel/restaurant employment over the past fifty years contributed signif- icantly reducing the unemployment queues and generated direct and indi- rect benefits to the economy. e volatile sector is welcomed by politicians as a means to help balance the annual budgets (mostly in deficit) and give a boost to ancillary sectors in- volved in tourism such as importation, transportation, growth in travel agen- cies, with a decent boost to agriculture and fisheries. All lauded the milk cow even though tourism is an unstable industry. Having spent decades trying to attract tourists through legacy airlines, the Malta Tourist Agency is now compen- sating low-cost airlines to develop un- tapped markets and niches. To improve beaches and other public amenities, a nominal day tripper tax per tourist is levied on all arrivals. e cruise liner sector is also booming expecting about 900,000 visitors annually. As always, success breeds more suc- cess – the maintenance of quality stand- ards in the sector by MTA encourages better health and safety standards - in turn it lures serious investors. As the global middle class grows, and annual foreign holidays become routine, the world's most popular destinations in 2020 expect heavy increases in visitors. One observes that the Mediterranean is as yet not a favourite stop for Asians but experts think that it may soon be discovered. When this happens, it will tip the scales resulting in acute over-crowding. Quoting official sources, one notes that at present only 4% of the Chinese population, that is 55 million people, own a passport. When passport owner- ship in China reaches the Japanese rate, 340 million Chinese people will have passports. If and when that phenome- non happens, then expect the threat of over-crowding to curse the Med. For Malta, with more low-budget crowds this renders it a less attractive island. It is no brainer to say it turns away the likes of up- market visitors. Such overcrowding brings hidden costs, borne by local residents who find most pavements, roads, subways and cycle lanes are clogged. Armchair critics warn us that we must upgrade the sector to attract more up- market tourist and halt the incentive to low-cost airlines - the latter mostly book AirBnb for cheaper accommoda- tion. Quoting NSO, one observes that ar- rivals 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 with over 7,000 lower 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 Med coun- tries). Quoting the Independent Feb 2018, Tony Zahra remarked that with minor exceptions in the 4/5 star cohort, the sector is doing well, but the tourist numbers are exposing "faults in our sys- tem". Only recently, the Prime Minister Jo- seph Muscat said during a political ac- tivity that Malta expects to attract three million tourists by the end of 2019. He was ebullient on the future prospects of the sector projecting that soon based on projections of new mega hotels (yet to be built) such largesse will end attract- ing high spenders on €5,000 a night. Be that as it may, there is a silent ma- jority which is voicing concern against such unbridled growth and the dire consequences on the quality of life. is silent protest reflects extraordinary growth in visitor numbers, the traffic congestion in our narrow streets and the consequent deterioration in the quality of air persisting during the sum- mer months. We need to ask, can we expect high quality tourists when there are obtru- sive tower cranes, intensive road widen- ing sprees and unsightly building debris in tourist zones? Surely, opening the airport gates to three million visitors means more car- cinogenic fumes and aircraft noise. Europe has witnessed CO2 emissions which increased by about 80% between 1990 and 2014, and it is forecast to grow by a further 45% between 2014 and 2035. Needless to mention, NOX emissions have doubled between 1990 and 2014, and are forecast to grow by a further 43% between 2014 and 2035. Now that the country enjoys a nation- al surplus, we ought to be able to afford to scale back the hushed impairment to the environment - going for quality not sheer numbers. As always, politicians tell us this is easier said than done. Mass tourism may push visitor count to over three million George Mangion is a senior partner of an audit and consultancy firm, and has over 25 years experience in accounting, taxation, financial and consultancy services. His efforts have seen PKF being instrumental in establishing many companies in Malta and ensured PKF become one of the foremost professional financial service providers on the Island