THE HON. MICHAEL REFALO, MINISTER FOR TOURISM, ADDRESSES PRESS CONFERENCE ON ‘REVIEW OF TOURISM DEVELOPMENT POLICIES'

Following the completion of a study commissioned by my Ministry to assess the tourism carrying capacity potential of the Maltese Islands, the Ministry and the Malta Tourism Authority have jointly undertaken a policy review to bring tourism development into line with the preferred controlled growth scenario identified by the study, and to reflect the basic findings established by the study.

Now that the preferred development scenario has been selected, policy will follow a set strategy and will be managed and directed to optimise tourism activity primarily by increasing benefits and minimising adverse impacts. The study identifies the main factors limiting tourism growth as being:-

1. The economy's dependence on the foreign exchange earning potential of the tourism sector.

2. The prevailing excess supply of bed stock in relation to existing and projected visitor arrival patterns and the consequent occupancy and price levels achieved particularly by the middle to lower end of the accommodation sector.

3. The tolerance threshold of Maltese society in relation to visitor numbers.

4. Visitor saturation levels achieved during peak periods and which may adversely impact on visitors' satisfaction and their rapport with the host community.

5. Limited spatial resources.

Given this mix of quantifiable and intangible factors an accurate assessment of Malta's carrying capacity potential is fraught with complexity. The proposed policy changes stem from the study's conclusions and are based on the findings of the Ministry's Economic Impact of Tourism study completed in 1999. The policies are designed as guidelines to be followed within a coherently planned tourism strategy. Their main aim is to ensure that tourism and tourism related projects and activities fit into a predetermined sustainable development framework. They also aim to establish optimum levels of tourism activity for this decade (2001 – 2010). Furthermore the strategy presupposes linkages with parallel policies in sectors closely allied to and which influence tourism.

The policies will serve as a guide to both the private and the public sectors and assist in the complementary formulation of plans and strategies relative to all areas impacting on the tourism industry. Moreover the guidelines will be integrated into the Malta Tourism Authority's strategic programmes and will be driven by the relative MTA Directorates.

The policies rationale rests on a number of major factors identified as having a strong bearing on Malta's tourism industry, namely,

1. the industry's strong contribution to the national economy currently estimated at 25% of GNP.

2. Price competitivity in value for money terms vis-'?-vis the overall tourism offer.

3. Ideal occupancy levels for the industry's accommodation sector in relation to current and projected bed stock.

4. The seasonality spread of tourism demand to Malta.

5. Changes in Malta's demographic profile and the ensuing social consequences.

6. The local community's perception of the industry and the relative expectations.

7. The impact of tourism flows on utilities, attractions, facilities, heritage sites, and environmental resources.

8. Visitor satisfaction levels relative to particular areas and periods.

The headings under which policies determined by the Ministry can be grouped are as follows:-

Economic considerations.

Accommodation and market considerations.

Social considerations and visitor satisfaction.

The Carrying Capacity Study identifies other resources and services, such as air and land transport, general infrastructure, water and energy, land and human resources all of which necessarily provide support and underpin the orderly and planned development of the industry throughout the decade. Indeed, the absence or reduction of any of these resources and services may in itself pose and prove to be an additional limiting factor.

The Carrying Capacity Study assumes that those responsible for such services and resources have not made provision for such additional requirements as may be needed up to 2010. However, following the publication of the Study it is of the essence that all relevant Government Agencies as well as the private sector should initiate the necessary measures and ensure their provision in support of the industry's planned development.

More often than not the main challenge faced by those guiding tourism development in this direction is to ensure the efficient management of available and often limited resources. This also implies the efficient management of visitor flows and tourism development in general.

The CCA sees the controlled growth development scenario as being more conducive to a higher level of visitor satisfaction, to meeting the local community's expectations and to the economic viability of Malta's tourism.

The policies, proposed under three specific headings, will serve as the industry's guide for the next ten years. They are set within a framework that will neither inhibit growth nor constrain the natural and gradual expansion and performance of Malta's tourism product. It is however essential that one must closely monitor the policies' effectiveness and impact throughout.

Tourism strategy will therefore support the following policies and targets:-

Economic Considerations

• To maintain tourism's contribution to GNP at a level of 25%

• To aim at an increase of total foreign exchange earnings and per capita tourist expenditure of 6% per annum which, assuming a rate of inflation of 2%, will in real terms, average out at 4%

• Improve existing cost structures in all sectors of the industry and efficiency across the board.

• Direct investment and support towards the more economically efficient segments of the industry.

• Identify and assess segments with greater investment potential to ensure that social and private gain exceeds social and private cost.

• Allocate resources to achieve increased employment and better value added.

• Facilitate and create opportunities for tourist expenditure as identified by visitors themselves i.e. shopping, leisure and culture. Promotion and publicity campaigns to chosen target audiences and higher socio-economic groupings to match an improved product and service offer.

Accommodation and Market considerations:

• Stabilise bed stock at below 2002 projected levels and possibly reduce number of existing beds. Work towards a situation where at any given time available bed stock operates in viable market conditions and satisfies market demands. New accommodation development solely designed to attract traditional peak business will not be encouraged.

• Assist owners of properties who opt for changes of use within the industry or to exit from the industry.

• Ensure that new development applications comply to more stringent processing guidelines which take density levels into consideration.

• Improve the quality of service in existing accommodation and catering establishments, particularly in the lower categories without an increase in the number of beds and establishments.

• Work towards increasing occupancy levels to an annual average of 65% and therefore achieve a relative increase in room rates.

• Develop and assist owners of existing bed stock to adapt to specific accommodation components that cater for specialised tourism.

• Target market segments with a higher potential to match components within the accommodation sector, help them achieve improved viability as well as identify others where Malta may have a competitive edge and channel investment accordingly.

• Develop ancillary facilities in the leisure, cultural and sports sector in support of the accommodation component and in particular segments as well as support events with a potential to attract winter and off peak business.

Social Considerations and Visitor satisfactions:

• Stabilise summer volume to ensure no excess of saturation levels. Keep within the tolerance and visitor satisfaction threshold by capping tourism volume at a maximum of 1,600,000 bed nights per month.

• Promote growth in the off peak period.

• Continue to target and develop different markets and interests in support of the desired improved seasonality pattern.

• Plan for and ensure an adequate supply of labour to service the industry's requirements as well as those of ancillary industries.

• Assist in improving the presentation, facilitate access to and intensify the marketing of Malta's unique heritage offer.

• Channel investment towards less resource costly activities which in environmental, social and economic terms ensure that the best use is made of the limited resources available.