Hoteliers expect more aggressive growth rate

The Malta Hotels and Restaurants Associations said yesterday it was very pleased with the budget measures announced on Wednesday in relation to the tourism industry.

It said that from a tourism perspective, the government has given a very clear signal that it is looking at this industry as a vital tool to drive Malta's economy in future.

The confirmation of the restructuring of the Malta Tourism Authority is particularly welcomed by the MHRA which, it recalls, was a catalyst in bringing the issue to the forefront late last year.

The MHRA also welcomed the retention of the five per cent VAT rate on accommodation, the removal of which would have been catastrophic on the industry as a whole due to the negative price elasticity of the Maltese tourism product.

"Unfortunately despite the MHRA's recommendation for VAT rates to be reduced on restaurants, the rate has remained the same. The MHRA once again states that a reduction on the VAT rate on the restaurant industry could help improve our competitiveness in this sector, generate a higher level of demand as well as increase employment numbers. Such results have been achieved in countries like France when the VAT rate on restaurants was reduced," it said.

The MHRA welcomed the fact that although the MTA budget has been cut back from Lm 8.5 million last year to Lm 8 million for the year ahead, the government has been wise to include a performance based bonus of Lm500,000 to the MTA if pre-set targets are reached.

The association believes that this kind of performance-based management is what is needed on the island and it encouraged the government to introduce similar performance-based formulae across other authorities.

In as far as the electricity tariff surcharge is concerned the MHRA is concerned that the cost base of the hotel and restaurant product will once again be negatively affected. It however appreciates the fact that the government has introduced a capping system for hotels that will minimise the impact of the surcharge on the hotel industry.

The MHRA said it was pleased with the decision that public holidays that fall on weekends will now no longer be added to the leave balance of employees. It feels such a measure will help hotels begin to address the problems they are facing with their level of competitiveness.

The MHRA said its main concern with the budget measures is that the real GDP growth over the year ahead is only forecast at 1.5 per cent. The association believes that a more aggressive growth rate needs to be achieved if the country is to move forward successfully. It also strongly believes that the tourism industry can be the main economic tool in achieving such growth.