We don’t have a planning authority. We have a ‘Permitting Authority’ | Tony Zahra

TONY ZAHRA, President of the Malta Hotels and Restaurants Association, warns that a recent carrying-capacity report, commissioned by the MHRA, should serve as a wake-up call: to both government, and the tourism industry alike

Tony Zahra. Photo: James Bianchi/MaltaToday
Tony Zahra. Photo: James Bianchi/MaltaToday

Last Thursday, the MHRA published a survey projecting that the country would need to attract almost 5 million tourists, in the coming years, in order to replicate the occupancy rate of 2019. The same report also warns that: “without action, significant risks of oversupply exist over the next 5 years”; and – more ominously – that the numbers we are now looking at, may even place undue strain on the country’s infrastructure. So… what sort of ‘action’ does the MHRA have in mind, exactly?

First of all, it is important to clarify this is not an ‘MHRA report’. It is a report that was commissioned by MHRA, but carried out by Deloitte. Here, I would like to take the opportunity to thank the European Union – which provided a lot of the funding, through its ‘EU Funds For Malta’ programme – and also, the Malta Business Bureau, which likewise supported the initiative. Because this report wasn’t cheap to produce; it was a six-figure report, so I’d like to publicly thank all the entities involved.

But the survey itself was conducted by Deloitte: which spoke to all the stake-holders, to get a clear picture of the situation on the ground. It started off from the point of view of ‘how many rooms do we have available today’; and also ‘how many rooms have been applied for, by various entrepreneurs’, which have either been already approved; or which are already in the process of being approved.

What we’ve done, then, is take a snapshot of the availability of hotel-accommodation, going forward, if all the approved or pending applications were to come onstream. And it emerges that – always assuming that all the pending applications will be approved; and that the developments themselves will actually be finalized – we will have more or less double the number of rooms, that we had in 2019.

Now: in 2019, we had just over 80% occupancy of the rooms that were available at the time. So if we take that 80% as our objective; and we then look at the room-availability that is projected for the coming years… the conclusion is that we would need 4.7 million tourists, to achieve the same 80% occupancy.

It’s a simple mathematical calculation, at the end of the day.

Perhaps, but the implications are quite ‘complicated’. The report also identifies numerous pitfalls: including over-development the overcrowding of sensitive sites (eg, The Blue Lagoon); and the impact on utilities such as energy-provision, and sewage. In brief, it seems as though Malta cannot even cope with today’s tourism figures… still less, with the 4.7 million we would need to attract in future. So how can we possibly sustain that sort of influx, without also destroying the national tourism product in the process?

That was, in fact, the whole objective of conducting a carrying-capacity report in the first place: so that we understand, going forward, where the pressure points would actually be, if we were to carry on at the current pace.

As an example, I always bring up the Hypogeum at Hal Tarxien.  When I was young – and that was a long time ago – ‘going to the Hypogeum’ meant simply showing up at the front door; paying for your ticket; and… that was it, really. You simply went in, without any form of controls whatsoever… and I even remember that there were parts of that site where there were still lots of bones lying around…

But then, around 15 or 20 years ago, it was finally realized that unless something was done, there wouldn’t be much left of the site at all. We would have lost the Hypogeum completely, if measures weren’t taken to preserve it; so a lot of work was done – including the setting of a limit to how many visitors may enter at the same time – and as a result, we are going to have the Hypogeum forever…

If I’m understanding correctly, you’re using the Hypogeum as a metaphor for Malta’s entire tourism product. Are you suggesting, then, that – unless ’something is done’ – there will be nothing left of the tourism sector, either?

No, no, what I’m saying is that: the objective of the carrying-capacity exercise was to find out whether the island can actually cater for 4.7 million tourists – in which case, we wouldn’t have a problem – or whether there are certain ‘pressure points’ that need to addressed, from now.

And yes: the report did identify a number of pressure points; it even went into considerable detail, regarding what would be needed to address them.

Now: as MHRA, what we are saying to government is, ‘This is the situation: it is up to you decide what action to take’. Because the decisions that need to be taken, moving forward, are political decisions. These are not decisions that ‘we’ – as MHRA – ‘want to take’. They are decisions that ‘you’ – as government – ‘need to take’.

On our part, we have done our bit. We have produced this report; now, government can read it – or give it to its people, to be analysed – and if there are any queries, they can be discussed with Deloitte; but then, the government must take the political decisions that it feels to has to take.

But we are not going to tell government: ‘Do this, do that, or do the other’…

Nonetheless, you are implying that ‘something needs to be done’. So let me put the question to you directly: do you yourself feel that there is a maximum limit, to the number of tourists that Malta can realistically accommodate? Not just because of the limitations of our infrastructure… but also, because of the risk of ruining the entire tourism experience, due to overcrowding?

Actually, the report does delve into the possibility that the population, in Malta, will reach a point where numbers may start negatively affecting the attitudes of residents [towards tourists]. This point has already been reached in other tourism destinations: in Barcelona, for instance, or Venice…

Now: is this happening in Malta? I wouldn’t want to speculate; because when you speculate, you are no longer basing your decisions on empirical evidence; and at MHRA, we prefer a research-based approach.

Nonetheless, the report does identify a number of key problem areas. For example, it talks about certain beaches, where we already have a problem today – because let’s face it: Malta’s beaches are the size they are; they can only accommodate so many people, etc. But while the report points towards where these problems really lie: it stops short of telling government what to actually do about them.

We could, for instance, try to create ‘new beaches’, to ensure that we have enough beach-space for all the projected 4.7 million tourists… or we could try another solution. Ultimately, however, it is the government that has to decide.

Alternatively, we could also stop issuing so many permits, for hotels which will only attract more tourists than the country can sustain. You said it yourself: the 4.7 million estimate is partly based on the number of new hotels that have either ‘already been approved’, or are ‘in the process of being approved’. So isn’t the Planning Authority simply approving too many tourism-related permits, in a market that is already over-saturated?

Let me put it this way: we don’t have a ‘Planning Authority’. We have a ‘Permitting Authority’. Because it’s never about ‘planning’; it always just about issuing permits.

The last place that was planned before it was built, in Malta, was Valletta.  That is why, for instance, its streets are all straight: they were designed that way, for two reasons. One, for military purposes; and two, as a form of natural ‘air-conditioning’… because the sea-air could freely circulate among the streets, making them cooler.

But the point is: the city was built to a plan; and the plan itself was designed to address the problems that existed, at the time. Now: can we say the same thing about what we are building today?

To give you an example: I was talking recently to someone at Enemalta – occupying quite a senior position - who told me: “You know something, Tony? Today, we have all these huge buildings going up… and after they are built, the developers come to us for power. We tell them: ‘You need to build a substation’. They tell us: ‘We don’t have room for a substation’. We tell them: ‘How can we power up your building, without a substation?” And they answer: ‘Well, that’s your problem, not mine…’”

Now: if things were done properly, the Planning Authority would have factored in the building’s power-requirements before it actually issued the permit…

… and even before that, these issues could easily be pre-empted just by having a proper Energy Policy in place…

Exactly. And it’s the same with waste-disposal, too. All large developments are supposed to, by law, have an area where trucks can drive in collect garbage. In many cases, however, that area will have been turned into a garage.  As a result, the residents don’t have anywhere to put their waste… so it all ends up on the street instead…

All the same: while we can all agree on the need for better planning, it remains a fact that the tourism sector is one of the driving forces behind over-development – identified as a key concern, by the same report. Wouldn’t you agree, then, that the tourism sector is also endangering its own future survival, by contributing to making Malta a less attractive destination for tourists?

This is a ‘chicken-and-egg’ situation, at the end of the day. Because you will only ever get the tourists, for the product that you have. And if you don’t have a quality product… you’re not going to get ‘quality tourists’. Simple as that, really…

Having said this, though: you cannot expect to get from level, to another, in a matter of a few days. It takes time; but above all, it takes vision. In other words: you have to first have an idea of your destination, before deciding on how to actually get there.

And even then: once you’ve decided what your destination is… then every single decision that you ever take, from that point on, has to be measured by a very simple question: “does it take me closer, and farther away, from where I want to go?”

Now: if it takes us closer, by all means let us do it. But if it takes us farther… then no, we shouldn’t do it…

I see your point: but surely, any such ‘vision’ cannot come only from the government. What about the industry itself? Isn’t it also sending out mixed messages: by first claiming that it wants a ‘quality tourism product’… but then, catering mostly for the ‘conveyor-belt’/‘bucket-and-spade’ type of tourism, that is measured only in ‘quantity’: and not in ‘quality’ at all?

Well… if it’s a national vision we are talking about, then it can only come from government, really. It can only be government – and certainly not the MHRA – to ensure that the country has the infrastructure it needs, to cater for its requirements on a national level.

But as for the industry itself… yes, the need for a quality product is certainly a concern for us. That is why we place so much emphasis on innovation; and try, wherever possible, to provide training, and educational courses. If someone is choosing to go into the tourist-accommodation business, for instance: the first question I would ask is… what’s your competitive edge? What’s your innovation? How can you do it better?

And this, too is another reason why we commissioned that carrying-capacity report. It’s not just the government that needs to know what the potential problems are, before taking any decisions. If I were an investor, looking to invest in Malta’s tourism sector right now: I would be looking VERY closely, at that report.

Because if, for argument’s sake, we don’t get those 4.7 million tourists – let’s say we get 2.7 million instead – on that basis, I would have only 40% occupancy. So the question becomes: does my business make money, at 40% occupancy?

Is that the only question, though? What if, conversely, those 4.7 million tourists DO materialise: only for us to belatedly discover that our infrastructure couldn’t actually handle them, after all?

Once again, that is why we commissioned this report: to identify the problem-areas; and to provide government with all the information it needs, to come up with a vision for how to address those problems, before they arise.

But it has to be the government to come up with that vision. Because that is, after all, why we even have a government in the first place...