A report compiled by consultant George Micallef for the Tourism Ministry has warned that as much as 10 per cent of all guest nights spent in Malta could be in unlicensed accommodation.
This category covers hotels, aparthotels, guest houses, hostels, self-catering and host families.
When collective accommod-ation is factored out, the report indicates that 6.5 per cent of all guest nights are spent in unlicensed rented accommodation – self-catering and host families.
“This figure can translate to 5,500 unlicensed beds in self-catering and host families,” Mr Micallef has calculated.
His workings are based on a detailed analysis of the growth in nights spent, crossed against the licensed bedstock and how that growth was far higher in rented accommodation than it was in collective accommodation.
“Unlicensed accommodation is not only unfairly competing with legitimate business and getting away with not paying VAT and other taxes, but it is also not subject to any form of quality control, at risk to the end users, i.e. tourists.
“In the process, this situation is contributing to a distortion in the price structures and to incorrect market statistics, while the product offer may not be fully compliant at law. On top of this, the government is also forfeiting substantial revenue as a direct result,” the report warns.
The Malta Hotels and Restaurants Association has long been expressing concern about the dramatic rise in nights spent in rented accommodation, which it has always said was much higher than it should be and indicated unlicensed activity.
Spent nights in private accommodation increased 76 per cent, from 1.38 million in 2007 to 2.4 million in 2012. But the number of licensed beds rose only marginally, from 9,449 in 2007 to 9,810 in 2012.
“One needs to consider that in their vast majority, these operate in the summer only and consequently, the registered gains are considered to be more significant if these were mainly taken up in summer months. In fact, if one were to calculate the spent nights against the licensed beds in rented accommodation over the summer, the occupancy rate exceeds the 100 per cent mark!” the report explains.
Mr Micallef also analysed the licensed bedstock to point out where the unlicensed beds are most likely to be.
Gozo/Comino accounts for 41 per cent of the licensed beds, followed by 30 per cent in Sliema/Gżira/St Julian’s and 13 per cent in St Paul’s Bay.
This figure can translate to 5,500 unlicensed beds in self-catering and host families
“The 30 per cent share of the bed supply in St Julian’s is evidently on the low side when one compares it to 41 per cent in Gozo, more so when one considers that the industry representatives in Gozo state that unlicensed accommodation there remains high.
“The issue of licensed self-catering for domestic use could be one of the problems, particularly in Gozo where these amount to circa 2,000 beds. The 13 per cent figure for St Paul’s Bay is also considered as very low. This problem needs to be dealt with without further delay, before it becomes too big to handle,” the report said.
The government has not been ignoring the warnings and the Malta Tourism Authority has been discussing the issue with the industry.
One of the factors contributing to the problem was the prohibitive licence fees charged in some cases. This situation has now been addressed and it is now easier and cheaper for owners to license their properties, especially those who have more than one property, even when these are located in different areas. Rates are now also more advantageous in Gozo.
Through amendments of the tourism regulation published in 2013, a new licence fee structure was introduced. In addition the former licence for self-catering to local residents was abolished. The concept of a group licence was introduced, whereby licensees having more than two, six or 12 self-catering licences of the same kind will now benefit from further reductions.
“This should encourage those who are currently operating without a licence to regularise their position,” Mr Micallef said.
Looking ahead, the report also made a number of recommend-ations, starting with a stern warning that unlicensed activity should not be tolerated.
“MTA should work with the authorities to carry out a one-off exercise during a peak month of the year, say August, when all forms of accommodation are most likely to be in use. This exercise should be carried out with departing tourists at the airport, who should be asked to provide details of their place of stay,” it recommended.
It also said that the authority should work with Mepa to address pending compliance certificates which could be precluding operators from regularising their position.