The revival in tourism

The end-of-year anno­un­cement that 2010 was a record year for tourism is the best bit of economic news in an otherwise unexciting end to the first decade of this millennium. Tourist numbers were significantly higher than in 2008, as was the amount of money spent by tourists.

The advent of low-cost airlines has certainly contributed to this success, as has Air Malta’s continuous effort to provide seat capacity on most European routes, even if at times these routes are economically not viable. The marketing campaign by the Malta Tourism Authority has been effective. It was also free from previous gaffe prone strategies that distracted attention from the main aim of a pragmatic tourism campaign – telling our prospective visitors that Malta is a desirable holiday destination.

Many argue that the product we sell to tourists was also improved especially in the important aspect of cleanliness in places frequented by tourists. But, possibly, the most important element that brought about this success was the reasonable pricing of accommodation and travel facilities that are the main considerations for anyone planning a holiday.

But an analysis of the future prospects of this industry should never stop at extrapolating recent results in the near or medium term future. The operators in this industry need to understand the economic dynamics of this business that go much deeper than the crude number of tourists that have visited us and the money they spent here.

It is time for a thorough investigation of the effect of tourism on Malta’s economy beyond the impact that this activity has on hotels and restaurants. We need to devise a new dashboard of indicators to measure the real value added that tourism contributes to other sectors of the economy, including wholesale and retail and other tourist related services like transport and entertainment.

We also need to undertake an honest gap analysis to understand how we measure up to the expectations of those who visit us and with the facilities offered by our competitors. Operators who invested their money in this industry also need other indicators to judge whether their capital is giving them the kind of return that will encourage further investment for the future. There is a limit as to how much one can reduce prices of accommodation and air travel without eroding the rate of return one expects from the investment made.

This clinical and scientific exercise will be incomplete unless it is matched by a more creative approach on how we can make our islands more attractive to prospective visitors. Competition from both Mediterranean competitors and others farther away is getting more intense. Some countries like Greece have learned some tough lessons through mistakes they made in the past and are working hard to reinvent themselves as desirable tourism destinations.

One cannot but feel that we are often complacent on the quality of the package we offer to visitors. One area that worries me is the state of neglect of parts of our countryside and historical places. For instance, I see traditional rubble walls that collapsed during last October’s thunderstorms still not repaired and obviously neglected. Tourists who visit us during the winter invariably spend time walking in the outskirts of our villages and are definitely not impressed by the way we treat the little rural environment that we have.

There is also much that can be done to make our restaurants more attractive to visitors. Many tourists still find that our restaurants continue to charge excessive prices for the value they offer to their clients. A restaurant owner recently argued with me that the rent he pays for his prime location was fixed some years ago when the economy and tourism in particular was achieving much higher returns. But passing on these unrealistic costs to clients is a sure way of stifling growth in this sector.

The risk that we take after this spell of good performance is that once again we start to milk this industry in a way that is not sustainable. Adding more taxes, raising hotel rates, and passing on unrealisticly high operational costs to those who visit us will not help to maintain this revival in tourism.

The glass that represents our performance in tourism may be half full and we should rejoice at this success. But we need to work hard to ensure that is filled to the brim with strategies that promote long-term growth and job creation for our young and not so young workers.

jcassarwhite@yahoo.com