Germany’s ‘Die Welt’ recently described Malta as ‘the island of culture’. Listed second in the newspaper’s top places to visit in 2017, Malta is becoming an increasingly popular tourist hotspot. Moving beyond its traditional image as a sun and sea destination, Malta has successfully repositioned its tourism sector by offering a broader range of tourism products, including cultural tourism, English-language training and conference and incentive travel. A significant expansion of flight connections combined with efforts to develop Malta as a city-break destination and investment in all year-round leisure facilities are complementing this strategy and have helped in attracting nearly two million tourists in 2016 – a record-high for the seventh consecutive year.
Initiatives to further brand Malta as a holistic destination will drive developments in the tourism sector in 2017 and beyond. The industry is upbeat on prospects for the sector in areas such as medical and sports tourism, while plans have been announced for the development of the first six-star establishments. A stronger focus on the promotion of Malta’s smaller sister island, Gozo, means the mix is getting even better. These initiatives will surely help the country to attract a diverse range of visitors – from backpackers and honeymooners to travellers seeking the most luxurious experience.
Building up an Industry
While tourism has grown into one of the country’s most sustainable economic generators, Malta first recognised the potential of a tourism industry in the 1960s. Following independence from the UK, the country was faced with the challenge of creating a new revenue source for an economy that long relied on servicing British military needs. Soon after the first investments in infrastructure had been made, tourism became the fastest-growing industry. As one of the first destinations to offer low-cost package holidays, the island attracted almost exclusively British visitors. Serious efforts to upgrade and diversify Malta’s tourism product began around the turn of the millennium as part of a long-term strategy to switch the focus from lower-priced summer package holidays to higher revenue year-round tourism. Low-end accommodation was subsequently converted into high-quality hotels, with new niche sectors introduced.
Tourism is still Malta’s most important single industry, both in terms of revenue and employment. The sector employs around 20,000 people and accounts for some 25% of Malta’s GDP. Visitor figures started going through the roof some ten years ago, and the sector has enjoyed phenomenal growth in recent years – while in 2005 Malta recorded 808,000 tourist arrivals, in 2016 the island counted 1.99 million guests. Given the close relationship between Malta and Britain over the past 200 years, the UK is the island’s most important market, but Italy, Germany and France are also key markets. Additionally, Malta has made significant progress in opening new markets. Visitors from the US and Asia are becoming increasingly more common these days. Tourism expenditure is also on the up, reaching €1.71 billion- 4.3% more than in 2015. Per capita expenditure however decreased to €869 in 2016 from €918 in 2015.
Comprehensive Travel Destination
While Malta is said to have felt a small tourist spill-over effect due to the unstable political and security situation in North African destinations, the higher arrival and expenditure figures mainly reflect the success that Malta has had in marketing its increasingly diversified product and expanding portfolio of attractions. Malta prides itself on being all things to all people. The island offers a plethora of cultural, leisure, sporting and lifestyle activities that are fast making it a leading destination for both leisure and business visitors. For visitors interested in sports, it offers practically any activity, from golf and tennis, to horse riding or hiking through Malta’s rural landscape. The seas around Malta and Gozo are clean and clear and offer an unlimited variety of water sports. Sailing, snorkelling and windsurfing are superb, and as a scuba diving location Malta ranks among the best in the world. Yachting and sailing holidays are also on offer.
Additionally, Malta has developed unique strengths in the special interest travel segment. Meetings, Incentives, Conferences and Events (MICE) tourism has been on a steady growth path in recent years due to the many suitable facilities that are widely available. With some of Malta’s temples being over 7,000 years old and 365 churches – one for each day of the year – the island is equally tapping into the growing market for cultural and religious travel. Easter processions and Christmas festivities, as well as the traditional Maltese ‘festas’ complete with fireworks and band marches are a spectacular sight for foreigners to enjoy and participate in. The island is also becoming a popular wedding destination, with many couples opting for open-air ceremonies against stunning backdrops. Another successful niche is English-language training, and Malta attracts on average 75,000 students per year. Furthermore, the island promotes itself as a destination for LGBT tourism (a special form of niche tourism marketed to gay, lesbian, bisexual and transgender people), who are mainly concerned with cultural and safety issues.
The tourism sector relies to a large extent on small enterprises, especially in the restaurant and tour operator segment. Larger players are found in the hotel industry. In total, the island has an accommodation capacity of some 50,000 beds, but there are plans to build additional hotels in various locations, including the south of Malta, where bed stock is low. Malta’s move into the up-market segment has also encouraged the arrival of international hotel chains. Global brands such as Hilton, Intercontinental, Radisson and Kempinski all have a presence, operating as franchises with local partners. In the coming months, Le Meridien will be rebranding to Mariott Hotel and Spa following the acquisition of its parent company, Starwood Hotels & Resorts, by international chain Mariott. Further complimenting the accommodation offerings are a number of family-run Maltese and boutique hotels. The most successful local company is the Corinthia Group. The first Corinthia Hotel was opened in Malta in 1962. Today, the group owns and operates a number of upmarket hotels and resorts in Europe and Africa. In 2015, the Corinthia Group also took over the Island Hotels Group, which previously operated two Radisson Blu hotels in Malta. Malta’s hotels and restaurants expect the positive trends of the past to continue and are on an expansion course, with some hotels adding additional floor space and others undergoing refurbishments. Although the average length of a tourist’s stay has decreased in recent years and stood at 7.6 nights in 2016, this merely serves as a testament to Malta’s ability to reap benefits from travel trends in favour of shorter breaks. The best occupancy rates can be found in five and four-star hotels, the lowest rates these days are in guesthouses, two-star hotels and hostels.
It is not just Malta’s hotels that are seeking to expand. Malta’s only airport, Malta International Airport (MIA), has seen huge investments over the past decades. 2016 ended on an exceptional note for the airport, with a record 5 million passenger movements registered. The airport has just unveiled a €78 million investment, including a €28 million terminal expansion, which will ensure that the airport’s capacity adequately matches the increasing number of passengers. Growing demand has also lead to an increase in carriers seeking to serve the Maltese Islands. Currently, more than 35 airlines connect the Maltese Islands to 95 airports in 86 cities. Legacy carriers such as Air Malta, Lufthansa, Turkish Airlines, Emirates and British Airways, as well as various low-cost carriers such as RyanAir, EasyJet, Wizz Air and Vueling are among the airport’s main users.
The cruise tourism segment is showing itself to be increasingly capable of boosting Malta’s status as a must-visit destination. In 2016, more than 682,000 cruise passengers were recorded, representing a rise of 2% compared to 2015. For 2017, the Valletta Cruise Port forecasts over 700,000 passenger movements and 330 port calls. Valletta Cruise Port has a long list of clients, including AIDA Cruises, Royal Caribbean Cruise Lines and MSC Crociere to name but a few. The port has also built up a strong relationship with TUI Cruises, which has made Malta its homeport for its Mediterranean cruises. Further improvements to the quay infrastructure, as well as a proposed extension of the cruise port, are seen as critical for the continued growth of this segment. Expansion plans are also in the pipeline for Gozo, which seeks to develop amenities to facilitate cruise liners to include the island in their Central Mediterranean routes. While Gozo’s harbour currently does not offer berthing facilities for cruise ships, works are underway on a new buoy that would allow boutique cruise liners of the smaller and medium sizes to anchor off the island. The construction of a dedicated cruise liner terminal is not being excluded for the future.
Due to the sector’s importance to Malta’s economic wellbeing, the government accords tourism a high priority. Tourism policy is drawn up by the Ministry of Tourism and the sector is overseen by the Malta Tourism Authority (MTA). The MTA remains focused on positioning Malta not only as a summer destination with fabulous weather, but also as an exciting year-round destination for events, entertainment, the arts, culture and sports. In reducing the effects of seasonality, Malta’s tourism sector has already achieved some remarkable results. Last year was the first year that hotels have reported profits in the first quarter of the year, which has traditionally been a loss-making period. While independent travel is growing in Malta, package deals remain important for the sector, in particular in the off-peak season when cheaper offers make Malta an attractive travel option. The MTA is also putting increased emphasis on ensuring that services of restaurants and hotels are up to standard. The authority is incentivising hotels to upgrade and is working to ensure that all establishments remain top quality.
Longer Term Goals
Malta’s tourism industry also has exciting plans for the future. A €220 million-investment in health infrastructure in the form of a public-private partnership is set to transform Malta into a major health tourism hub, with specialisations in oncology, aged care, rehabilitation and the treatment of trauma; adding much needed extra capacity for patients seeking high-quality medical care and health facilities. To unlock the sector’s full economic potential, the first six-star developments are also on the drawing board. They promise to help Malta to truly break into the upmarket segment and attract a new class of high spending tourists. In addition, Gozo strongly features as an attraction in the future of the sector, and Malta’s smaller island seeks to reinforce its traditional strength as a holiday hotspot by boosting tourist arrivals in the winter months. Preserving the aura of an idyllic island in the Mediterranean, Gozo is embracing niche segments such as sports tourism, religious tourism and in particular ecotourism.
A Focus on HR
As in many sectors of Malta’s economy, investment in human resources must be given priority if growth is to be sustained. Traditionally many Maltese have chosen a career in the sector. They are often an integral part of hotel management teams in local and foreign-owned hotels, unlike the case in many other tourism destinations where a high percentage of staff, especially in management, is foreign. However, despite the availability of graduates from the Institute of Tourism Studies and the University of Malta, hotels and restaurants report problems with recruitment and retention of employees, with the younger generation often preferring to work in other sectors of the economy. Employee turnover also tends to be high because of the need to hire students and other part-time staff during the summer months. Hence, initiatives to attract more people into the industry are high on the agenda. While Malta’s tourism school will be given a new campus in Smart City Malta, the island is also entering into partnerships with reputable hospitality schools to bring first-class expertise and knowledge to the country.
Despite all its strengths, Malta’s tourism sector also faces some challenges. If all hotels were to be fully booked all year round, Malta’s maximum annual capacity would be 2.8 million tourists, government officials point out. While this indicates room for growth, many in Malta say that this would require further investment as such an influx of tourists would put a strain on the island’s infrastructure, including its road network. Increased competition from neighbouring markets will also become an issue in the coming years. Many of Malta’s main competitors have seen visitor numbers decrease sharply as a result of the challenging political situation they are facing at the moment. However, all are keen to regain a foothold in the Mediterranean tourism market once the security situation improves. In addition, the Malta Hotels & Restaurants Association (MHRA), which is the main industry body, comments that operators are currently facing unfair competition from unlicensed private accommodation listed on websites such as Airbnb. They argue that these accommodation providers should be fully licensed, where this is not the case, so as to present a level playing field and fair competition with the legacy hoteliers.
Mapping the Future
Malta’s tourism industry expects 2017 to be another record-breaking year. Growth is expected to increase from Turkey and Eastern Europe thanks in large part to increasing airline capacity. The cruise segment is also on course to increase the number of Malta-bound passengers. The task at hand for the island’s tourism industry is to encourage repeat visits from cruise travellers who only had ‘a taste’ of Malta as part of their Mediterranean itinerary. With an increasing selection of cultural, sporting and entertainment attractions, Malta has shown itself fully capable of drawing in large numbers of visitors. The island is also looking further afield to attract new customers in a bid to reduce its dependence on the European market and stave off competition from other Mediterranean players. Malta sees opportunities in America, India and China, however, the main problems to date have been issues with visas for travellers coming from Asia.
Looking ahead, it will be crucial for the sector to identify and adapt to rising trends and capture the opportunities they bring, such as ecotourism and adventure tourism. Malta’s tourism sector offers a wealth of advantages to investors. Potential for investment ranges from medical, agri- and sports tourism initiatives, upscale entertainment facilities and gourmet restaurants to capital-intensive infrastructure projects such as the construction of a large-scale conference and exhibition centre.
Capital of Culture
In addition, Valletta’s successful bid for the European Capital of Culture in 2018 means that it will enjoy significant investment in the run-up to that year. The government is committed towards the regeneration of the capital in terms of its cultural, social and economic life. To mark its status as European Capital of Culture, numerous projects, activities and events are inviting visitors to explore the island and its cultural gem, Valletta. While Malta has put Valletta forward as the capital of culture, the organisers are committed to making the project a success for all of Malta, and the renovation of cultural heritage buildings in all parts of the island has become an investment niche worth exploring.
To reach its target of more than two million tourists by the end of 2017, the country will continue to upgrade product Malta in terms of quality and standards. There is a strong focus on creating a cleaner Malta, which will benefit both tourists and locals alike. In many ways, Malta has already succeeded in future-proofing its strong tourism sector. Once a hidden gem in the Mediterranean, Malta is now the word on everybody’s lips. The tourism industry is confident that Malta’s appeal will remain strong, while new investment will help the island maintain its status as a must-visit destination in the Mediterranean.