Issue link: https://maltatoday.uberflip.com/i/181770
12 Interview maltatoday, SUNDAY, 29 SEPTEMBER 2013 By James Debono Too chummy with TONY Zahra, hotelier and president of the Malta Hotels and Restaurants Association, is visibly irked when I ask him directly whether his organisation is too chummy with the new government. I ask this question in light of the organisation's support for the government's plan to partially privatise Enemalta. For I find it a bit difficult to see a direct link between the desirability of Chinese shareholding in Enemalta and the fortunes of Malta's tourist industry. But his answer to my question, which suggests that any solution is preferable to the status quo, says a lot about the sense of frustration felt by the private sector at the dismissive attitude of the previous government towards any criticism by those sectors which were traditionally close to its fold. Still, Zahra seems oblivious to the risks entailed in the current government's policy of co-opting the private sector in decision making. A case in point is the participation of the MHRA in a committee entrusted to draft a new policy on hotel heights, which would effectively allow hotels to rise over and above the extra two storeys above local plan limits granted to them in a policy devised by the PN government. Zahra himself is a direct beneficiary of the policy proposed by the previous government and enacted in May by the present one. I'm reminded of this just I enter the hotel: I can't help but notice a planning application dating back to 2009 stuck to a column, which foresees an extra two storeys for the San Antonio Hotel. The interview starts on a chummy note, for it's very difficult not to warm to Zahra's charm and his media friendly demeanour (in fact, he accepted to be interviewed just an hour after landing in Malta from a long business flight). He literally enters the hotel with luggage in hand. MY KINGDOM FOR A EURO "[Former finance minister Tonio Fenech] offered me Enemalta for one euro I point out to Zahra that the MHRA immediately welcomed the memorandum of understanding signed between the Maltese government and China with regards to the sale of part of Enemalta to a state-owned Chinese company, which would also take on part of the corporation's debt. But how does selling a stake in Enemalta to China benefit the tourism industry? Zahra immediately points out that the MHRA has been vociferous on the energy issue over the past five years. "We have consistently said that what was happening in Enemalta was not correct." He explains that over the past years, his organisation has been hitting out at inefficiencies at Enemalta, especially in discussions held at the Malta Council for Economic and Social Development. He refers to statistics showing that for every €1 of oil that is burnt, the extent of electricity produced stands at 30 cents. Moreover, electricity revenue was at about 25 cents. On the other hand, in Europe the energy produced stands at 50 cents for every euro spent. This was due to the various inefficiencies plaguing the corporation. "We were constantly telling the government that it was making us completely uncompetitive. We were always told that there were no solutions. So when someone came up with a solution, we said, 'Ah, so there are solutions', and we welcomed any initiative that will help us turn this dinosaur in to a viable operation." I point out to Zahra that the alternative being proposed would entail a loss of sovereignty over the energy sector, because not only Enemalta will be partly privatised, but it would also buy its fuel for 18 years from the same private supplier through a different agreement with a yet-to-bechosen bidder. Isn't there a risk that decisions related to energy from then onwards will be taken by foreign companies who aren't sensitive to local realities (among them concerns related to tourism)? Zahra's answer suggests that, at this stage, things can't get any worse. "The energy organisation, as it stood, was a millstone hung around the country's neck and there was absolutely no effort to take away this millstone from our neck. So I welcome any investment in Enemalta." He asks, "Why should we be concerned that someone is at least doing something? We should be very happy because for five years we were told that nothing can be done". He also reveals how two years ago, he had discussed this issue in a meeting with former finance minister Tonio Fenech, who at that time was also responsible for Enemalta. "He offered me Enemalta for one euro… he told me that provided that I was willing to buy the corporation with all its debts, I would have it for just one euro. That was the value he gave to Enemalta." I point out that foreign energy companies are not charitable institutions and will come here to make a profit. But as "long as they supply energy more efficiently than Enemalta", Zahra is not concerned. It is at this point that I ask Zahra whether the MHRA's position in favour of the partial privatisation of Enemalta is a case of the MHRA becoming buddy-buddy with the new government. Zahra is visibly taken aback by the question. "I'm sorry… I am chummy with any government, but I will always say it as it is. And for five years, whenever I raised the Enemalta issue, I was ridiculed and told that there is nothing to do because of the price of oil. Then, we found that there were other factors influencing the price of oil," Zahra says, alluding to the oil procurement scandal. "Nothing was transparent, and I said this in January, before the election." He also insists that the only alternative to this was the solution put on the table by the new government, suggesting that if other alternatives were presented he would also welcome them. "So if welcoming this solution means that we are chummy with the new government, so be it. I am representing my members, and my members want action." That said, Zahra makes it clear that the MHRA will be very vigilant to ensure that the new government honours its electoral commitment to decrease energy bills for the private sector as from 2015. On its part, the government has been keen to involve the MHRA in drafting planning policies which have a direct bearing on the industry. The new policy drafted by a committee mainly composed of industry representatives is proposing a complete relaxation of building heights for four- and five-star hotels located in development schemes and outside urban conservation areas. The objectives of the new policy on hotel heights proposes that four- and five-star hotels will be free to add more than two storeys than permitted in the local plan, as long as the design "constitutes a landmark having unique aesthetic characteristics within the urban context". A policy drafted by the Malta Environment and Planning Authority under the previous government and approved by the current administration in May limited the number of floors to be added to two. The working group appointed by the government to draft a new policy regulating hotel heights is composed of two MEPA officials and six representatives of organisations involved in the tourism sector, namely the Malta Hotels and Restaurants Association, the Chamber of Commerce and the Malta Tourism Authority. My first question is, wasn't it enough to give hotels the privilege of being allowed to build two extra storeys over and above local plan levels? Zahra points out that the idea of two extra floors on hotels – over and above the local plan – had been "agreed upon with the previous government before the election". The newly elected government immediately approved the policy proposed by the previous administration, which had been issued for public consultation under the Nationalist government. "The new government believes that there is scope for having landmark buildings. We are not against having landmark buildings, as these buildings can become attractions in themselves. So we are sitting on this committee and agreeing with the new policy, provided that the policy is aimed at having landmark buildings." I point out that MHRA legitimately represents the financial interests of its members. Is it wise to have a committee entirely composed of representatives of the tourism industry? Zahra disagrees, pointing out that the Chamber of Commerce cannot be labelled as a representative of the tourism industry and that the government itself is represented by the Malta Tourism Organisation, and ultimately the committee is chaired by a MEPA officer. "In any case, we did not select the committee ourselves. We were asked to sit on it and we are participating in it." Is there a risk of an oversupply of rooms through the addition of extra floors on existing hotels? Zahra points out that the aim is a "consolidation" of the industry. "What we are looking at is not necessarily an increase of rooms. I think we will lose some rooms which are not sustainable, and these will be replaced by others which could be more profitable. One needs a readjustment to market conditions." Isn't there a risk that this new policy will result in a lot of construction work taking place in prime tourist areas, something which could backfire on the industry? "I am far from convinced that all hotels will be asking to develop extra storeys," replies Zahra. I point out to Zahra that the San Antonio Hotel, of which he is one of the owners, applied for two extra floors back in 2009, and that this was only made possible by the new policy allowing hotels to rise above the limits imposed by the local plan. Zahra insists that this application has been pending for three years. "Three years ago we did not know that there was going to be a change of government." He also clarifies that the extra two storeys were already foreseen in the policy proposed by the PN government, something which shows crossparty agreement on this particular development. The new government also has plans to encourage agritourism, which Zahra welcomes. "It will help bring more visitors to rural areas, while helping farmers to rent some of their rooms. It will attract a new niche market we need." Isn't there a risk that we end up with a number of small hotels interspersed in the Maltese countryside, thus justifying more construction outside development zones? Zahra insists that agritourism establishments should be limited to a CONDONE AND BE DAMNED? If welcoming this solution means that we are chummy with the new government, so be it. I am representing my members, and my members want action maximum number of rooms, as happens in other countries. "If you have more than 15 rooms it should not be even considered as agritourism. There should be a clear limit on the number of rooms one is allowed to have." Does it make sense to continue building new hotels, considering the existing establishments already occupy a significant part of Malta's limited coastline? Zahra replies that there are no applications for new hotels at the moment, a claim which is not entirely true, since an entirely new hotel has been recently proposed in St Julian's. But on principle, Zahra is sceptical about the need to have more hotels. "During the peak season, we are reaching a level which we cannot surpass. We are what we are: we have a small land area and you cannot fit a