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14 maltatoday | SUNDAY • 8 FEBRUARY 2026 OPINION JP Fabri Economist Let's please look beyond the headlines when discussing tourism THE debate on tourism in Mal- ta has become trapped in head- lines. We focus on numbers of arrivals. We celebrate re- cord-breaking years or lament "quality erosion" based on frag- ments of data. But tourism is not a static industry and it cannot be judged by a single metric. It is a living ecosystem that responds to shocks, incentives, prices, connectivity, demographics, and infrastructure. If we are serious about steering it toward quali- ty, we must first learn to read it properly. The starting point must be honesty about the journey Mal- ta's tourism sector has been on since 2019. The pandemic did not merely interrupt growth. It forced a full reset. Borders closed. Connectivity collapsed. Direct routes fell from well over 100 to around 70. Demand evap- orated. What followed from 2022 onward was not business as usu- al, but a rebuilding phase. Analy- sis by the Central Bank of Malta shows that inbound tourism by air only started to consistently exceed 2019 levels from 2023 onwards. Since then, growth has been particularly strong, with in- bound tourism growth by air av- eraging 38% in Malta since 2024 compared to 26% in Greece, an- other tourism-dependent coun- try often used as a benchmark. That stronger rebound in Malta has been explicitly linked to the persistence of elevated air fare inflation, suggesting very robust demand pressures. Reconstituting after collapse This matters because it re- frames the narrative. What we have been living through is not a mature market expanding smoothly, but a system reconsti- tuting itself after collapse. Any serious analysis must therefore use time series and context, not snapshots. The Central Bank's Business Dialogue Volume 4 of 2024 carries a very interesting analysis of the industry and ho- tel sector. Data comparing 2019 with 2023 already shows that inbound tourists increased from 2.75 million to 2.98 million, an 8.1% increase. Nights rose by 4.7%. Total expenditure rose by 20.3%. Expenditure per capita rose from €807 to €898, an in- crease of 11.3%. Expenditure per night rose from €115 to €132, a 14.9% increase. These are not figures of a sector in collapse. They are the figures of a sector rebuilding volume while also lift- ing nominal value. The 2024 data strengthens this picture. Between January and August 2024, inbound tourists grew by 21.1% compared to the same period in 2023. Total ex- penditure grew by 23.3%. Ex- penditure per capita rose again from €888 to €904, while ex- penditure per night rose from €130 to €141. This is the trajec- tory of recovery combined with price growth, not stagnation. Quarterly time series data re- inforces the trend. In the second quarter of 2025, tourist expend- iture reached €1,055.7 million, up from €883.1 million in Q2 2024, a 19.5% increase. Expendi- ture per capita rose from €876 to €949 over the same period. Over multiple quarters, arrivals, ex- penditure, and spend per visitor are all moving upward. This is the underlying reality over time, even if the pace fluctuates. There is also a narrative of stag- nating spend. This often rests on inflation-adjusted arguments, suggesting that real spend per tourist has barely moved since 2019. That is an important lens, but it is only one layer of the ecosystem. If air fares have been experiencing inflation rates of over 40% year-on-year in parts of 2025, significantly above the euro area, then a larger share of a tourist's budget is being ab- sorbed before they even land. The Central Bank's Outlook for the Maltese Economy Q3:2025 shows that Malta recorded air passenger transport inflation of 46% in April 2025 compared to 14% in the euro area. Even in May and June, inflation remained ex- ceptionally high at 42% and 25%. This is not a trivial distortion. It mechanically suppresses on-is- land discretionary spend even when overall trip costs rise. A tourist may be spending more overall but allocating a rising share to airlines rather than ho- tels, restaurants, or experiences. This is why the industry must be analysed as an interconnected system rather than a single line on a chart. Connectivity expand- ed rapidly again after COVID. Direct routes rose from 70 in 2020 to 100 by 2023 and further in 2024, supported by rising seat capacity. The same Central Bank material notes that average seat capacity exceeded 2019 levels by 17% in 2024 and by 35% in 2025. Passenger movements were al- ready 24% above 2019 levels in 2024 and 42% above in 2025. That volume growth inevita- bly reshapes the visitor mix. It changes who arrives, how they travel, how long they stay, and what they spend on. Market rebalancing The data confirms this compo- sitional shift. The Business Dia- logue report explicitly notes that Malta has seen growth in the youth segment, drawn by the is- land's reputation as an entertain- ment destination, and that this group tends to have lower ex- penditure levels. It also records feedback from five-star hotels reporting a decline in average spending power, with tourists downgrading from five-star to four-star accommodation. That is not evidence of collapse. It is evidence of market rebalancing. More volume at the mid-mar- ket, pressure at the top end, and intense competition as capacity expands. Capacity growth itself is an- other layer often ignored in public debate. The number of accommodation establishments increased from 215 in Janu- ary 2020 to 317 by mid-2024, a 47.4% increase. When supply expands that rapidly, price dy- namics, occupancy patterns, and profitability inevitably shift. In such a context, flat or modest growth in spend per tourist does not necessarily indicate failure. It may simply reflect the math- ematics of a market absorbing new capacity. Seasonality adds another di- mension. Air transport price in- dices show pronounced seasonal peaks, with prices rising sharply in summer months. Hotels re- port strong performance in peak season but persistent weakness in winter months. Five-star op- erators explicitly argue for a stronger strategy to promote Malta as a winter destination. A quality strategy, therefore, is not only about who comes, but when they come. Extending the season, attracting business trav- el, conferences, culture-driven tourism, and longer-stay seg- ments would change the struc- ture of demand far more than obsessing over annual arrival totals. Transition and quality If we peel back the layers, a more nuanced picture emerges. The time series shows recov- ery and growth. The inflation data shows that external cost pressures, especially in aviation, are distorting traditional meas- ures of value. The capacity data shows a market that has expand- ed rapidly and is still adjusting. The compositional data shows a shift in demographics and prod- uct mix. These are the dynamics The real challenge is whether we have the intellectual honesty and strategic maturity to guide that transition wisely Photo: James Bianchi/MaltaToday