The moratorium effects of a non-moratorium

Until relatively recently hotel building was helped along by a generous incentives package and the grant, on favourable terms, of government land. Tourism, despite its imponderables and volatility, is Malta's largest industry, the powerhouse of our economy. That, in post-1998, incentives and handouts were withdrawn was the government's way of conveying a message on the need for restraint and that future hotel development had, figuratively speaking, to stand on its own two feet.

Since a couple of years back the MTA applies more stringent and qualitative conditions that call for larger spatial dimensions and make it difficult for developers, only intent on a fast buck, to squeeze bedrooms into cubbyholes. Moreover, regulations for new four- and five-star hotels provide that a large proportion of rooms must have pleasant views, a condition that has disqualified a number of prospective sites and eliminated rooms initially destined to peer down internal yards and service shafts.

Official pronouncements about over-supply have also had their effect. Not least on banks that, rather than accepting real estate and other cover as collateral, have since looked more closely at operational track records, project viability, prospects, the competition, at the wider picture, locally and in nearby destinations.

In late 2002 the Ministry of Tourism gave out a further signal and offered a two per cent subsidy on bank loans taken out for refurbishment and small extensions to existing properties with a maximum of 100 rooms. The banks were briefed on government policy, short- and medium-term prospects and the problem of over supply. It is the banks that have the final say on loan applications.

Another disturbing factor is tourism's dismal international image following the euphoria of mass acquisitions and globalisation. Not least, conditions in the world's major economies. Mix in September 11, Afghanistan, terrorism in Morocco, Tunisia, Kenya, and Bali, the fear of flying, a depressed stock exchange and the bursting of the dot.com bubble, Iraq and Palestine, the festering sore of an unstable Middle East and that alone should provide prospective investors with a greater dose of realism. No wonder, therefore, that holders of HCEB hotel building permits on virgin land, some issued in 1997 and 1998, a repeat of 1987, have wisely marked time.

One cannot expect entrepreneurs to abandon construction when at a relatively advanced stage but MTA can undertake a repeat of the exercise conducted in the early 1990s and discover the intentions of permit holders whose projects include the thousands of beds that Din l-Art Helwa, for one reason, and MHRA, for another, are worried about.

Despite optimal results from the Institute for Tourism Studies, prospective hoteliers should also consider the lack of trained personnel at the base of the workforce pyramid. This problem, prevalent even in an enlarged EU, means that hopes and plans to attract trained personnel from overseas sources are as misguidedly foolhardy as they would be expensive. Some hoteliers rely on occasional black-market labour, mainly single mothers, and other unregistered moonlighters. This social and industry problem calls for urgent solutions.

To say that Malta has, in volume terms, reached saturation point is totally wrong. A comparison of occupancy levels and availability in January to congestion in July/August proves that there is room at the inn, if at a different time and for a different client, such as senior citizens, grey panthers, in the new demographic terminology for my age group ( 55+ to infinity), who have more time to travel, as well as the means and desire to gain new travel experiences.

Moreover, one must also see how the supply chain of greater airline accessibility, financially healthier tour operating partners and an increasingly better product, develops. In the meantime there is enough in the pipeline to worry the most optimistic of pipe dreamers.

Concluding part tomorrow: A moratorium based on commonsense.