The budget proposals presented by the Malta Hotels and Restaurants Association (MHRA) to Government “revolve around the assertion that a national strategy that supports growth in tourism will lead to national economic growth that is critical for a sustainable future.” MHRA said that it “recognises that despite the international economic and political turmoil that has characterised 2011, the tourism industry in Malta performed well when compared to other EU member states. Such achievement however must not be viewed as an end in itself.” “Accessibility & competitiveness remain the key to success,” this is the theme of the Pre-Budget proposals from MHRA.

“Indeed,” MHRA continued, that it “is arguing that these positive results clearly demonstrate that the local tourism industry is probably best intertwined into the economic and social fabric to ensure a rapid restoration of pre-recession economic growth rates. Therefore, it is important that Government better gauges the performance of the industry by establishing well defined targets at various levels, starting with setting a target for tourist arrivals for the coming year. This will allow for a more comprehensive assessment on the effectiveness of Government policies on what remain as critical for the success of the industry: accessibility and competiveness.”

MHRA said that it is “urging Government to address the Air Malta issue with a sense of urgency and from a macro economic level rather from the perspective of yet another public company in need to embrace a more commercial practice. Concretely, MHRA reiterates that Air Malta must retain its role in the economy and a 50%+ share of the tourism market. The restructuiring process however must also happen in tandem with initiatives that support Low Cost Carriers (LCCs). Indeed, the positive results achieved this year are also a confirmation of MHRA’s assertions that LCCs increase the potential for more visitors to our islands.”

MHRA said that it “is therefore proposing that the Malta Tourism Authority is sufficiently empowered to increase seat capacity from underserved markets by providing it with additional funding to make up for the projected shortfall in seat capacity next year, whislt continuing to support Air Malta.” MHRA President George Micallef said that, “as has been unequivocally proven, any additional funds afforded to MHRA, should be considered as an investment which is immediately paid back in the form of public earnings and multiplier economic benefits, and not as an expense. A hundred thousand tourist arrivals next year can make us or break us!”

Referring to the overall profitability for hotels, the MHRA said that “this was mainly driven by improvements in the number of nights and less by an increase in room rates. Furthermore the increase in VAT on accommodation imposed at the beginning of this year had to be mainly absorbed by the hotels, and it is very unlikely that hotels will manage to increase prices next year.”

“Similarly, despite that the restaurants sector is increasingly becoming an important tourism component and a main source of leisure and entertainment for the Maltese, profits have continued to decline. According to NSO data, restaurants contribute handsomely to the economy and therefore the MHRA appeals to Government to ensure that no form of additional taxes is imposed on hotels or restaurants. Government needs to renew its efforts to counter inflation as this will otherwise render the hotels and restaurants sector less competitive. Failure to do so will only aggravate the operations of business and possibly endanger jobs.” Mr. Micallef said.

“As an alternative to taxes MHRA said that it “is urging Government to seek increased public revenues by addressing issues like unlincensed tourist accommodation.” According to MHRA, “unlincensed tourist accommodation accounts to circa €24,000,000 in revenue per annum, implying a loss of €1,700,000 through VAT, in addition to other taxes, license fees, etc.” MHRA said that it is also urging Government to eliminate administrative red tape and duplication of mandatory requirements which is stifling business development. MHRA therefore appeals for more efficient and effective management of available EU funding and the elimination of non productive public expenditure.”

In addition, the MHRA proposed that “the budget line allocated under ennvironmental tourism fund should go to specific tourism zones projects. Identified examples include the upgrading of specific infrastructures across the key tourism zones, such as Bugibba square, access roads to the Three Cities, inner core areas of Paceville and other areas.”

“Finally,” MHRA said, “in view of the upcoming difficulties associated with the economic uncertainties affecting 2012, the MHRA stresses that it is imperative that Government draws a contingency plan that can serve as a fallback position in case Europe were to experience another recession. MHRA warns that any substantial drops in tourist arrivals next year will have devastating affects, worse than those registered in 2009 in view of the substantial increases in operating costs since. The opposite is however also true, as positive results in tourist arrivals will emerge as the unique solution available today as an economic tool to steer the national economy away from tomorrow’s economic storms.”

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