The MHRA said in a statement today that it notes that the budget and the re-action to the proposals were positive when viewed from the national perspective over the next 12 months but less positive when viewed from the hotel investor perspective especially spanning a period of time.

MHRA President Tony Zahra explained that “MHRA were indeed pleased to see an increase in the budget for MTA of 1 million euros specifically aimed at increasing arrivals in the shoulder and low period. MHRA is also pleased to note a number of measures which are all in the right direction including; investment in product, in particular in relation to heritage sites; tax credit incentives and the development of Boutique hotels in Valletta, Mdina and the three cities. MHRA is also encouraged that Government recognises the need to assist the 3 and 4 stars Hotels but more details are required to understand how this will be achieved.”

The Association said it notes with satisfaction the increases registered in arrivals over the past three years and the increase in tourist spent which in 2012 amounted to over a €100 million resulting in an increase of over €30 million in Government revenue.

MHRA is “less enthusiastic about the budget as the request made by MHRA to ‘leave something in the hoteliers’ tills’ has not been heeded by the Finance Minister.”

Mr. Zahra explained that Malta’s economy had grown in 2012 due mainly to the great performance of the tourism industry. The 1.6% GDP growth for 2013 is also projected to come mainly from the tourism industry. The backbone of the industry is the hotels and restaurants which need regular investment to keep them up to date if not improved. “We have been asking government for a return to the 5% VAT rate on accommodation and a drop in electricity rates by 4c a kilowatt. These two measures would have been important for the hoteliers to be able to fund the much needed refurbishment and re- investment which needs to be done regularly.”

MHRA concluded by saying that it “regrets that neither this measure nor any other measure which will have a similar effect has been taken and consequently Malta is running the risk of its accommodation and catering sector slowly deteriorating. The consequences now will be hard on the hotels and restaurants, but much harder on Government since a drop of income from the hotels and restaurants will result in a substantial drop of income to Government. “We are risking that the hotel sector produces much less revenue and pays much less in VAT and other contributions to Government. This is a lose – lose situation, something which should and could be avoided.”

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