Warning against increased costs for tourism industry

The Budget for 2011 must ensure Malta remained competitive as a tourist destination by guaranteeing airline seat capacity and accessibility, the Malta Hotels and Restaurants Association said.

In its Budget proposals, the association said the country could not afford a drop in occupied bed nights or tourism expenditure, warning that any measures which undermined competitiveness or accessibility could put the entire tourism industry in jeopardy.

Rising costs and lower profitability had been a major concern for hoteliers and restaurateurs in recent years. An economic impact report it conducted showed Malta had the lowest levels of profitability among competing destinations, the association said.

It stressed no government-induced costs should be introduced in the Budget because the industry could not continue to absorb further increases.

“Profitability is not only necessary for the very survival of the businesses but also for further investment in the tourism product, which is vital if we are to compete successfully,” it said.

The MHRA stressed the importance of extended support to airlines to maintain accessibility and possibly the increase of seat capacity and new routes. This was becoming “increasingly critical, given that Air Malta may be constrained to scale down or cancel its operations from established routes next year”. The MHRA said the main stakeholders had to be kept informed about the ongoing discussions with the EU regarding the future of Air Malta in order to ensure that measures to mitigate any adverse affects be put in place at the earliest stage possible.

The association called on the government to tackle the problem of unlicensed operators, particularly in the accommodation sector, so as to “bring to book all those that get away without paying licences, permits, VAT and taxes, while competing unfairly with the rest of the law-abiding operators in the industry”.

The MHRA urged the government to find alternative ways to provide grants to finance green technology investment schemes for the hospitality industry to mitigate the impact of the rise in the utility rates, which would help restore some of the lost cost-competitiveness.

It said it expected long-promised projects in tourism zones to start next year.

With regard to the bed tax, the introduction of which had been postponed three times since the last Budget, the association reiterated its position that this could not be introduced in a manner which discriminated against the hotel sector because that would further erode Malta’s competiveness.