A national strategy that supports growth in tourism will lead to national economic growth that is critical for a sustainable future, the Malta Hotels and Restaurants Association said in its budget proposals.
MHRA said it recognised that despite the international economic and political turmoil that characterised this year, the tourism industry in Malta performed well when compared to other EU member states.
Such achievement, however, should not be viewed as an end in itself.
These positive results clearly demonstrated that the local tourism industry was probably best intertwined into the economic and social fabric to ensure a rapid restoration of pre-recession economic growth rates.
"Therefore, it is important that government better gauges the performance of the industry by establishing well defined targets at various levels, starting with setting a target for tourist arrivals for the coming year.
"This will allow for a more comprehensive assessment on the effectiveness of government policies on what remain as critical for the success of the industry: accessibility and competiveness."
MHRA urged the government to address the Air Malta issue with a sense of urgency and from a macro-economic level rather from the perspective of another public company in need to embrace a more commercial practice.
It reiterated that Air Malta had to retain its role in the economy and a 50 per cent + share of the tourism market. The restructuring process also had to happen in tandem with initiatives that supported low cost carriers.
MHRA proposed that the Malta Tourism Authority was sufficiently empowered to increase seat capacity from underserved markets by providing it with additional funding to make up for the projected shortfall in seat capacity next year, whilst continuing to support Air Malta.
"Additional funds afforded to MTA, should be considered as an investment which is immediately paid back in the form of public earnings and multiplier economic benefits, and not as an expense," MHRA president George Micallef said.
Referring to the overall profitability for hotels, the MHRA said that this was mainly driven by improvements in the number of nights and less by an increase in room rates.
Furthermore, the increase in VAT on accommodation imposed at the beginning of this year had to be mainly absorbed by the hotels, and it was very unlikely that hotels would manage to increase prices next year.
Similarly, profits had continued to decline for the restaurants sector.
The MHRA appealed to the government to ensure that no form of additional taxes was imposed on hotels or restaurants.
"Government needs to renew its efforts to counter inflation as this will otherwise render the hotels and restaurants sector less competitive. Failure to do so will only aggravate the operations of business and possibly endanger jobs," Mr Micallef said.
MHRA urged the government to seek increased public revenues by addressing issues such as unlicensed tourist accommodation. The MHRA said this accounted to around €24 million in revenue per annum, implying a loss of €1.7 million through VAT, in addition to other taxes and fees.
It urged the government to eliminate administrative red tape and duplication of mandatory requirements which stifled business development.
"MHRA, therefore, appeals for more efficient and effective management of available EU funding and the elimination of non productive public expenditure."
MHRA also proposed that the budget line allocated under environmental tourism fund should go to specific tourism zones projects.
It said that in view of the upcoming difficulties associated with the economic uncertainties affecting 2012, it was imperative that the government drew a contingency plan that could serve as a fallback position in case Europe were to experience another recession.
MHRA warned that any substantial drops in tourist arrivals next year would have devastating effects, worse than those registered in 2009 in view of the substantial increases in operating costs since.
The opposite was, however, also true, as positive results in tourist arrivals would emerge as the unique solution available today as an economic tool to steer the national economy away from future "economic storms".