Issue link: https://maltatoday.uberflip.com/i/1504102
8 OPINION 20.7.2023 MTA attracts more tourists George Mangion George Mangion is a senior partner at PKF, an audit and consultancy firm, and has over 25 years' experience in accounting, taxation, financial and consultancy services. His efforts have made PKF instrumental in establishing many companies in Malta and established PKF as a leading professional financial service provider on the Island I t seems that hotel owners are finding tough competition from private ac- commodation -this is the new bully that is challenging the status quo. is season could feature about 84% tourists preferring rented accommodation. is was not the norm when tourism started quietly in the mid sixties. For many years, a nascent tourist sector was welcomed by politicians as a means to help balance the annual budgets (mostly in deficit) create part-time jobs while bigger hotels invest- ed in training of quality staff (particularly those run under a foreign franchise). Each year, as the sector grows it gives a healthy boost to ancillary trade & com- merce. It has a good multiplier effect particularly with import agents, trans- portation, travel agents, agriculture and fisheries. All politicians pay surrenptious respect to the milk cow even though tourism had its ups and downs, being a rather volatile industry. Having spent millions trying to attract more tourists, the Malta Tourist Agen- cy is compensating low-cost airlines in their drive to develop new markets and niches. is has paid good dividends as arrivals kept increasing and post Covid may reach three million visitors. To help improve beaches and other public amen- ities, a nominal day tax per tourist is lev- ied on all arrivals. On a global scale, it comes as no sur- prise that quoting the World Travel and Tourism Council - tourism directly ac- counts for nearly three per cent of the world's GDP. McKinsey, a consultancy, reckons that one in five new jobs is gen- erated by tourism. Whereas manufac- turing employs relatively fewer people due to increased automation, tourism employs legions (including a high ratio of TCN's). ere are side benefits, since local policies, such as quality health & safety inspections on hotels and restau- rants, improve standards and also lure investors to invest in Michelin star ho- tels. As the global middle class grows, and annual foreign holidays become routine, the world's most popular des- tinations expect heavy increases in the number of visitors. To elaborate on this topic, one notes how the Mediterranean remains a relax- ing resort for history, sea and sun lovers. For Malta, this means overcrowding due to baggage clearance delays, but on a positive side transportation improved with Uber and App hailing cabs - these are mushrooming. Airbnb facilities are popular. e bigger the low-budget crowds, the less attractive the island becomes for high spenders. Such over- crowding means more consumption taxes collected yet it also brings hidden social, health and environmental costs. is yoke is borne by local residents who find pavements, public areas, sandy beaches, residential roads and cycle lanes are clogged. Armchair critics warn us that we should upgrade the sector to attract more rich tourists and stop sub- sidizing low-cost arrivals which mostly book Airbnb for fun accommodation. e NSO reported that arrivals for the whole of 2019 reached nearly 2.6 million as restaurants saw an average spend per tourist of a mere €104 prior to Covid (our 18% VAT rate on food and drink is al- most double that charged by neighbour- ing countries eg Zurich charges 7.7% vat in restaurants). e daily spend so far, this year reached approx. €120 per head, while statistics show a drop in the share of nights spent in hotels and a strong rise in those spent in facilities as advertised on Airbnb. e rise in numbers staying in private accommodation is substan- tial - in 2018, 614,480 tourists stayed in Airbnb or other similar accommodation types, and this rose to 714,157 in 2019. In an interview carried in Business To- day, Malta Hotels and Restaurants Asso- ciation chief Tony Zahra warned of this very same trend and said that services such as Airbnb were of concern to the industry. is has been the MHRA's bat- tle cry for tightening the tax regime so that Airbnb arrivals are fully accounta- ble. Tony Zahra, an ex-owner of hotels, strongly protests that private accommo- dation is unregulated and presents unfair competition. He also spoke about the inconvenience Airbnb units caused to other residents in the apartment block. Nonetheless, private accommodation is being sought after because it is more competitive and fun. e contribution to tourism by private accommodation goes beyond expectations and the writing is on the wall, rented accommodation nights may soon outnumber the hotel sector. Is this a bad sign? Operators have said that the advent of low-cost airlines and private accommodation was inevitable, with Ryanair welcoming 2,439,915 pas- sengers to the island in 2017. All this hits the national airline with extreme competition - it is haemorrhaging cash losses and its chairman surreptitiously announced it will close down by year- end. Some argue that Airbnb facility is a democratic way how to share the returns from tourism and this means that there is a trickle-down effect to household owners who in their hundreds are ac- tively participating in the profits of such a proverbial milking cow. It is almost akin to a social service. It helps to pay the mortgage, cool down inflation pressures on landlords, and bal- ance living expenses. Really and truly, the private accommodation model fits more in the profile of the sun and sea visitor who seek a short, three- to four- day break. Private accommodation in- troduces visitors to a more authentic feel of the Maltese Islands and society in general. Moreover, it argued that house accommodation adds a new dimension to a traveller's experience rich in local traditions. Ex-prime minister Muscat was enthu- siastic about future prospects of the sec- tor, projecting that soon we should start attracting tourists who spend €5,000 a night in super luxury hotels which gov- ernment wants oligarchs to build. e trend of cheaper holidays certainly de- feats arguments for promoting six-star hotels (some hotel owners were granted prime sites by the Illuminati in Castille at fire-sale prices to support such extrava- gance). But wait a minute - there is a fly in the ointment. ere is growing concern about the un- bridled growth of hotel towers and the dire consequences on the quality of life. is silent protest has coincided with ex- traordinary growth in visitor numbers, traffic congestion in our narrow streets and the consequent deterioration in air quality persisting through the balmy summer months. Increasing the visi- tor numbers to three million generates much needed cash, yet it also means more carcinogenic fumes, a shameful ca- cophony in Comino isle with loud music and overcrowding, loaded public buses and aircraft pollution. Take a dip in our crystal-clear water where thousands of sea urchins previ- ously thrived but now they face their death knell - officially declared extinct.