Labour will review taxes on operators and hotels

Opposition leader Alfred Sant yesterday stressed the need for "national political leadership" for the tourism industry, which was "in crisis".

Vital for the country's economy, the "cure" for the "sick" industry had to be prioritised and be the focus of the Prime Minister together with ministers and entrepreneurs.

One minister, empty words and the Malta Tourism Authority alone could not handle such an important industry. It required on-the-ball leadership from the top and a strategic plan, Dr Sant said.

A Labour government would review taxes and other measures imposed on operators and hotels, easing government-induced costs, he said.

Speaking about the "huge problems" in this most important field, the MLP's tourism spokesman, Karmenu Vella, said that since 1999, arrivals have decreased by 7.3 per cent.

Revenue has dropped, costs increased and profits disintegrated, while the quality of tourists was declining, as was their daily spending - from Lm25.24 to Lm20.60. This decreased by 18.5 per cent in three years, Mr Vella said.

In Gozo, which suffered more than Malta, domestic tourism decreased by 14.5 per cent, while foreign tourism fell by 4.7 per cent, he said.

Mr Vella mentioned Malta's late recovery from the effects of outside factors, such as September 11 and SARS, when compared to its competitors, which had already recovered.

Internally, instead of stimuli from the government, the tourism industry was facing a hail of expenses in the form of taxes and other burdens. These cost increases were leading to a drop in demand, competitiveness and profitability.

Operating costs were rising, without a rise in productivity and an improvement of the product, he said. Value for money was on the decline leading to customer dissatisfaction.

A Labour government would be "part of the solution and not the problem", Mr Vella said, adding that it would give the product a push by ensuring that it is not inferior and catered for the market.

He pointed out the need for a strategy to strengthen Malta's competitiveness and the setting up of a Tourism Competitive Index.

The marketing of the product had to be improved, Mr Vella said, adding that the budget for marketing had never increased.

Policies had to be quality-driven and not based on quantity, with the focus on high quality, not low prices. If Malta continued to compete on prices, standards would continue to decline, he said.

Bed stock should be improved, not increased, Mr Vella said, pointing out the 8.8 per cent increase in supply, while the demand in the same period decreased by 7.2 per cent.

Continuing to paint a bleak picture of the tourism situation, the MLP's spokesman on hotels and Air Malta, Joseph Cuschieri, said the current situation was having a negative impact on hotels, which, in turn, had a ripple effect on other related sectors, including restaurants.

Mr Cuschieri listed, as causing negative effects, the bad planning in the spending of the MTA marketing budget, tourists' declining spending power, the lack of investment in infrastructure and the VAT increase.

Mr Cuschieri said that despite the situation the government had refrained from intervening. It had ignored appeals for a further allocation for marketing in the winter months.

Hotel prices for the winter have, therefore, decreased drastically, with five-star hotels going down to between Lm12 and Lm15 per person, bed and breakfast; four-star hotels were selling at Lm6 to Lm9; and three-star between Lm3 and Lm5, all this despite drops in arrivals.

In the first quarter, five-star hotels decreased their rates by five per cent, and two per cent in the second quarter.

Surveys showed that over 80 per cent of hotels were operating at a loss and others were closing down, Mr Cuschieri said.

The government's performance in the face of these facts and figures was poor and weak, he said, adding that uncertainty among employees and job losses had to be curbed.