Should we be worried that as much as 10 per cent of all the guest nights spent in Malta are in unlicensed accommodation?

The answer to that depends on a number of factors. First of all, how accurate is that estimate, which was calculated by consultant George Micallef for the Tourism Ministry’s recent report?

Any figures about illegal activity can only be based on assumptions, in this case correlating the amount of overall growth since 2007 with the growth in stays in licensed establishments.

But Mr Micallef made another calculation: he also factored in the number of licensed beds and the overall guest nights and came up with a figure that is perhaps easier to relate to.

Whereas occupancy was around 40 per cent in 2007, it went up to 68 per cent in 2012. Just as we have seasonality in collective accommodation, we have seasonality in rented accommodation, so you would expect the occupancy in winter to be much lower than the annual percentage, with peaks in summer.

What does this mean? It means that if all those who said that they stayed in private accommodation (in other words, not hotels, guesthouses etc) were in licensed beds, every single bed in Malta would be occupied – and more – in the summer months.

Since we can safely assume that we do not have people actually sharing beds at the same time, the implication is clear: many of those who claim to be staying in rented accommodation are in fact accommodated in unlicensed places.

The ministry consultant extrapolated his findings to put forward the figure of 5,500 unlicensed beds – representing over 800,000 nights.

The Malta Tourism Authority did not put a cost on this but the practice clearly represents millions of euros going into pockets without any licence fees, VAT, income tax etc being paid.

However, the report makes it clear that lost government revenue is not the only concern. There is also unfair competition because these owners can afford to charge far less than those who pay all they are obliged to.

The Malta Hotels and Restaurants Association has been repeatedly warning that the National Statistics Office figures show an unprecedented increase in stays in private accommodation to the detriment of stays in hotels, which are also repeatedly trying to convince the powers-that-be, with little success, that their profits are not adequate to merit further investment for the future.

It is also unfair to the guests (both tourists and Maltese) who may not be aware that they are not just getting a bargain but that they may be staying in sub-standard accommodation, without the protection of the rights they would have in a licensed flat, villa or farmhouse. Owners must bear in mind that they are possibly infringing rules relating to bank loans and insurance.

It is essential to understand why this situation is so rampant. It started to flourish at a time when the licensing fees were too complicated and onerous but these were changed in 2013, creating a lower tariff structure, advantages for Gozo, group licences and so on. One can only hope that these changes will eventually encourage owners to regularise their position, however, the carrot alone will not work.

But not all the owners were motivated by tax evasion. Some would have preferred to be on the right side of the law but simply give up because of the red tape, especially when it comes to Mepa, according to the report.

Mepa is a convenient punching bag and it would be helpful to identify how many applications there are which are truly pending and to analyse the bottlenecks that are preventing Mepa from issuing a compliance certificate.