ADDRESS BY HON. MICHAEL REFALO, MINISTER FOR TOURISM, AT THE MALTA TOURISM AUTHORITY ANNUAL CONFERENCE "AIMING FOR THE STARS WITH FEET PLANTED FIRMLY ON THE GROUND" - MEDITERRANEAN CONFERENCE CENTRE - THURSDAY 30TH NOVEMBER 2000

By bringing together so large a number of the industry's stakeholders to listen, to deliberate and discuss the wide variety of issues which the day's programme has offered, the Authority has given more life and fleshed out the dry bones of the rolling three year plan which kicked off in this Millennium Year.

We look to the past for inspiration, for comfort as well as for lessons learned. The past is our gauge. Our major concern however, is not about today, but about tomorrow and beyond. Our vision is the future.

What future ? A small, fragile country like Malta, with a small economy such as ours can never aspire to become a leading player. One strong enough to exercise a determining influence on world and Mediterranean tourism.

Does this therefore mean that we should, or must, leave it to others to decide our future for us ?

Certainly not ! The future is in our hands. We can make of it what we will and what we can.

This is precisely the reason why, encouraged by the industry's past achievements, byits proven abilities and resilience, and fully aware of our strengths as well as of our constraints, that in the light of tomorrow's scenarios, the strategy which we have drawn up for the industry is designed to maximise on Malta's potential and aims to satisfy the increased demands of a more experienced and discerning travelling public.

The topics assigned to our guest speakers have focussed on the four cornerstones of the policies and strategy which Malta's tourism must follow to survive, to succeed and to prosper.

Dr. Busuttil spoke about the challenges of EU accession; Professor Stevens on heritage and cultural tourism as a strategic choice; Alex Grech on the window of opportunity opened by information technology; while David Rowson gave us valuable advice about how best to package our many assets.

Tourism policy and strategy has been set on a number of known factors.

For the last six or seven years guest nights have hovered between eleven and twelve million. We have arrived at a plateau and, under present circumstances, my reading is that we have reached the upper limits of our potential.

Simply put, we are in a rut. We may do well, less well and possibly slightly better, but the truth of the matter is, that if we remain in that rut, and continue to dig in that trench, we will end up by digging our own grave.

Change, radical change, is of the essence. Many fear change. But I invite you all to recognise and accept that change is vital and necessary.

What are our options ? What avenues do we have ahead of us ? We have two options. Either continue to exist as we have done for the last five to six years or grasp the only rational alternative on offer.

Volume, occupancy levels, and tourism's progress depend solely on the extent of air seat capacity floated for Malta. Obviously, foreign national carriers and tour operator airlines primarily look at their own commercial interest.

We must therefore see that our national airline is freed from the shackles of outdated Air Service Agreements and make sure that, at least in Europe, origin of our main source markets, Air Malta enjoys the freedoms and opportunities on a par with its competitors.

To capture the additional volume that we need, to ensure that Air Malta benefits from the opportunities and flexibility that a level playing field accords, we in tourism, must make sure that Malta accedes to the European Union at its next enlargement so that Air Malta will enjoy the ultimate benefits of the Third Package.

In this context I feel it my duty to acknowledge the role that Air Malta has played and plays in the development of our tourist industry. That a small airline has achieved so much sometimes borders on the miraculous.

It is in the national interest that we should all endeavour to ensure Air Malta'scontinued success. Perhaps the powers that be should, at this stage, consider the removal or reduction of the penalising transit taxes which limit Air Malta's chances of expansion in the Eastern Mediterranean, destinations where MTA plans to strengthen publicity, promotion and marketing during 2001 and beyond.

I will not go any further into the many advantages which tourism stands to gain from EU accession, but will only underline two main advantages: better access to our offer and an increased potential to make Malta better known to a wider, more diverse audience.

Some of you may be surprised to learn that when EU tourism ministers and we, their colleagues from candidate countries, met in Lille last week, one area of general consensus was the acknowledgement of a Union-wide dearth of available manpower willing to join the industry's ranks. Maltese who fear the arrival of floods of Europeans to take over waitering jobs should realise not only that their fears are unfounded, but also that in member states their positions carry a premium.

We are not taking the impact of EU membership lightly. So much so that we have, with the Union's own money, commissioned studies to report on the impact of EU membership on tourism's SME's, for that read all hotels, restaurants and travel agencies, as well as on the guiding profession.

Here again we are in line with EU policy as the Lille communique enjoins member states, and I quote, "to research the problems encountered by tourism SMEs so that they may have better access than in the past to assistance and support within the European Union".

During the last four to five year years the large tour operators have become larger. They have crossed international boundaries, acquired former rivals, and are now even larger. A couple of years ago one could safely forecast and speak of four to five mega operators ruling the industry and practically dictating terms. Today we speak of two, maximum three.

We cannot therefore continue to pin our hopes and rely on traditional supplystreams. We must diversify our product, work more closely with the smaller, specialist niche operators and at the same time retain the majors' custom and interest.

While it is important to retain the majors' custom and support, it is equally important to see that the cost of that support is effective as much as it is affordable. With the euro depreciating against sterling and thedollar,while other sun currencies wither, MTA would have had to utilise its total budget even to achieve near price competitivity in 2001 and beyond. The truth of the matter is that we cannot afford the TOSS subsidy element any longer.

During the last triennium Government has increased tourism's budget by 48%. Government is committed to endow MTA with LM34 million over four years. To maintain TOSS at a competitive level and do nothing else, MTA would need even more than that. Hence also the raison d'etre of the decision to phase out and terminate the scheme's subsidy element. MTA will instead channel all available resources towards performance based tour operator support and into more publicity and promotion for Malta and Gozo.

Those of us who were around and lived through the development of mass tourism understand more than others that today's "mass" is better educated, more widely travelled and environmentally conscious, harbours higher expectations, looks for quality, value for money, and often adds a short, special interest break to the traditional high season vacation. This is a lesson which major tour operators have learned.

Spurred by a more discerning client base tour operators have diversified portfolios and, in turn, push destinations and suppliers to upgrade services, provide alternative products, activities, and entertainment.

Differentiation is the name of the game.

I am firmly convinced that Malta and Gozo have the potential and possess all the ingredients to become meccas of culture, cultural events, sport and entertainment : a destination where local customs, colour, history and traditions blend to distinguish Malta and Gozo from equally attractive but diverse competitors.

We must therefore, at all costs,translate and realise that potential, and move away further, even if gradually, from the more price sensitive end of the market. We must always be on the look out for willing and able partners with matching interests equally keen to create more motivations, especially in the low season, to attract a new breed of visitor.

Hence the urgent need to invest more in our museums, in our cultural sites and in their management. To encourage and invest in top quality entertainment. To offer more winter attractions and add golf and other sports venues to

Malta's leisure offer. One way towards solving our still biting seasonality problem is to attract just a small fraction of the tens of thousands of golfing enthusiasts who travel to the Mediterranean when North European courses become unplayable.

In late 1997 the Ministry commissioned a Carrying Capacity Assessment study to measure our Islands' potential. Findings were made public in June 2000. They were the subject of public discussion following which a preferred development scenario was chosen.

This scenario, planned to achieve controlled limited growth, has focussed our thinking and influenced decisions such as, for example, what incentives to offer and how best way to halt, correct and possibly roll back environmental degradation. We are now committed to a strategy of sustainable tourism.

Consequently when the Investment Promotion Act becomes law we will not be proposing incentives designed to generate new bed stock. We will instead opt for incentives to support refurbishment, the creation of new cultural and sport attractions, energy saving, Maltese traditions and ethnic cuisine, green initiatives and environmental enhancement. Curable lame ducks may get one last chance but one-legged ducks are destined for the stock pot.

The selective hotel development freeze, in force until mid '94, was inexplicably thawed. Now that the horse has run away from the stable, bolting the door serves no purpose. We already have a surfeit of beds. Malta's carrying potential is finite. Those who have as yet not placed stone upon stone would be well advised to review their investment plans.

There will not however be a freeze on hotel development. In partnership with the Planning Authority and in line with agreed development parameters Tourism will filter applications and allow investors who meet land-use and tourism design requirements to proceed with their plans.

I trust that this conveys a very clear message to investors as well as to their financiers and bankers that the coming on stream of new bed stock only serves to further dilute occupancy levels.Tourism offers alternative investment possibilities, such as new facilities, amenities, as well as public sector development under public/private partnership schemes for the enhancement of beaches and public areas. It is therefore my intention, once the Planning Authority decides on the EIA which the Ministry has submitted for the extension of the St. George's Bay beach, to

launch the project as a Private Finance Initiative. Feedback from a number of key players with an interest in the area has been extremely positive.

2002 is the International Year of Ecotourism. In January 2001 I will be submitting a proposal to Cabinet with a general plan for each and every area of the administration, government agencies and parastatal bodies to participate in initiatives and take measures in favour of eco-tourism. It is my hope that the private sector, tourism oriented or otherwise, will drive and promote similar activities.

MTA nears its first full year of operations. John Grech, Alfred Cassar Reynaud and I have intentionally slowed down the pace of transition. We did this to allow the Authority every opportunity to settle in nicely. 2001 will see the establishment of the Enforcement Directorate. Let us be honest among ourselves. Self regulation is a myth. It had as much chance of success as a snowball's chance of survival in hell!

MTA's initial thrust will not be punitive. It is designed to educate and improve. Resistance to education, to product and service improvement, are however potential red card offences. I must however remind the media that MTA's enforcement arm can only stretch as far as tourism laws allow. We must therefore rely on parallel enforcement by the forces of law and order, by the Transport and other Authorities, to ensure that Malta's overall product meets the justified expectations of Maltese and visitors alike.

Finally a deserved word of praise to MTA staff for their efforts in Malta and overseas, to the trade's and my representatives on MTA Boards and Directorates for their expertise and advice; to all our partners in the private sector and their staff; and all those others, in tourism or otherwise, who have played even a small part to make 2000 another good year for Malta's tourist industry.

Year 2001 will be more difficult. While rate cutting will not reverse tour operator decisions to reduce programmes, more product improvement, better human resource development, more concern and attention to the environment, to our national identity and to all things that make Malta unique and different from other destinations, will.

I have made it my mission today to apply a strong dose of realism to the national debate on tourism's future. I have placed before you the challenges ahead as well as tomorrow's targets and exciting prospects.

With our feet firmly planted on the ground let us, together, as one people, aim for the stars.