Off the back of record tourism numbers in 2023, Tony Zahra, President of the Malta Hotels and Restaurants Association (MHRA) was full of praise for last year's performance, but urged Government to take action against an oversupply of accommodation that could have adverse impacts on the wider tourism industry. 

His comments to WhosWho.mt were made following the publication of the MHRA’s fourth quarter (Q4) hotels survey for 2023, carried out by Deloitte Malta. The report highlighted that tourist arrivals for Q4 reached 762,000, surpassing the figure registered in 2019 by around 218,000 arrivals. Tourism expenditure during the quarter stood at €597 million, 28 per cent higher than in the same period in 2019, and much higher than the years in between.

In his comments to WhosWho.mt, Mr Zahra stated that the tourism sector’s situation in 2023 was “better than anticipated.” He explained that initially, the MHRA had aimed to reach 2019 levels, yet tourism arrivals were higher than expected and the spend was “quite good”.

“Generally, I’d think that 2023 was a very successful year,” he said.

In terms of guest nights, Malta’s hospitality industry experienced an increase of 389,000 nights in Q4 2023 when compared to the same quarter in 2019.

Average daily rates (ADR), the average revenue generated from rooms, increased on a year-to-date (YTD) level for five- and four-star accommodation in Q4 2023, while that of three-star hotels remained relatively similar to Q4 2019 levels.

Responding to this, Mr Zahra said that he thinks hotel profitability was at a “good level for 2023.”

“Could it have been better? Well, if the spend per arrival were higher, then it would have been better. Clearly, there is pressure on rates because of excess capacity and therefore yes, we did well, but we could have done better,” he explained.

Malta’s rapidly growing hospitality industry has made headlines over recent years, particularly following the COVID-19 pandemic, for the ever-increasing number of hotels being opened.

In September 2022, the MHRA, in collaboration with Deloitte Malta, had conducted a Carrying Capacity Study for the tourism industry in Malta. In the report, it was highlighted that the country would have to attract 4.7 million tourists by 2027, each staying around a week in order to prevent oversupply. This is particularly pertinent as a number of accommodation projects have opened since then, with many others in the pipeline as well.

The report had stressed that sustaining the expected growth in accommodation supply requires extensive tourist arrival growth and thus raises financial, social and environmental sustainability concerns.

Mr Zahra remarked that it is “clear that the island cannot handle 4.7 million tourists,” before urging Government to take action to control this oversupply, as at the end of the day, it is in charge of “laying the policy and vision.”

“We might make suggestions, recommendations, and studies, but eventually it is the Government that has to produce a vision for the future,” he continued.

“This is why we elect Government at the end of the day. We [the MHRA] are a lobby group, we aren’t the decision makers,” Mr Zahra affirmed.