Number Of New Hotel Beds Could Reach Up To 20,000 In Next Few Years

Vanessa Conneely - 25th April 2019

MHRA President Tony Zahra said that the vast majority of applications had the potential of coming on stream in the next two or three years.

The number of new hotel beds in Malta could reach up to 20,000 in the next two to three years, a situation which could create unnecessary challenges for the local tourism industry, according to the President of the Malta Hotels and Restaurants Association (MHRA), Tony Zahra.

According to figures released by the National Statistics Office (NSO), total guests in collective accommodation establishments in Malta reached almost two million, an increase of 8.4 per cent over 2017. Total nights spent went up by 5.6 per cent, surpassing 10.1 million, while the net use of bed-places advanced by two percentage points to 67.6 per cent – a figure that is set to keep on growing.

Mr Zahra said he was aware that a lot of applications for the development of new hotels as well as extensions of existing ones had been submitted to the Planning Authority, and that the vast majority had the potential of coming on stream in the next two or three years. “We calculate that the number of new hotel beds could reach up to 20,000 beds, if not more. These hotel beds must be added to the substantial number of beds we have in other accommodation types, as well as to unlicensed accommodation, and the possibility of further growth in these types of accommodation,” he told this newspaper.

Indeed, another situation which is highly troubling is the fact that there are almost half as many unlicensed, unregulated beds in Malta as there are regulated ones. Besides around 40,000 licensed beds on the islands, Mr Zahra believes there are an additional 20,000 beds in unlicensed accommodations.

“The problem lies with the very high number of unlicensed accommodations offered in what is referred to as private rented accommodation, which is mainly made of apartments, entire bed-and-breakfast residences and accommodation in private homes,” he said. “Traditionally these used to operate in the peak months to meet the extra demand for beds, but nowadays they operate on a year-round basis.”

While traditional hospitality operators may blame sharing websites such as Airbnb –which features about 7,000 listings in Malta and Gozo – for the boom in unregulated accommodation, Mr Zahra insisted that Airbnb is helping to support the hotel industry and is not taking profits directly from it. “It’s not a matter of feeling the pinch. The hotel sector in Malta, as in other countries, is not against accommodation offered through Airbnb platforms and the like. What we are against is the unlevel playing field we are faced with, as authorities allow accommodation providers to compete and operate in the market without the necessary licences and permits and without paying due statutory taxes. Furthermore, this accommodation is not subject to any quality or safety controls,” he said – emphasising that this could end up being highly damaging to Malta’s reputation as a tourist destination, especially if tourists end up lodging in sub-optimal conditions.

“This rate of growth in the accommodation supply is unsustainable. This kind of development has other implications that go beyond infrastructure development,” Mr Zahra said. “We have other challenges such as space limitations and the labour supply. We also need to consider the impact on the quality of life for the local community as well as the tourist experience. Hotels have to look at long-term sustainability and beyond short-term gains.”

“There is no doubt that Valletta 2018 helped to boost Malta’s image overseas and was beneficial in many ways. But tourism is very volatile, and we need to be prepared to face the challenges prevalent in any business cycle. We need to work harder to increase the value-added of tourism and maximise on the socio-economic benefits of the sector. This is certainly not achieved by an oversupply of beds on the market.”

This article originally appeared in the Malta Business Observer


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