Strategy 15.

Accommodation sector imbalances to be addressed through a more selective development policy focusing on a healthier balance of quality versus quantity, strict enforcement against unlicenced accommodation, policy guidelines for private rented accommodation, enforcement action against under-delivering licenced establishments and more stringent, quality-based licencing guidelines for new development which adds value to the Maltese tourism offer. Incorporating international best-practice on how private, peer-to-peer accommodation can operate, including limited timeframes during the year.

 

Rationale

Accommodation is recognized as one of the major components influencing a destination’s receptive capacity. Without accommodation a destination simply cannot host and receive overnighting guests. Thus, in itself, the number of beds in a destination represents the natural receptive limits of the destination and on such a number depends the maximum number of tourists which can be hosted at any one time.

Over the years, accommodation as an offer has featured huge changes in terms of type, category, and facilities offered. It is broadly subdivided into collective and non-collective or private, with collective comprising units offering common facilities in establishments such as hotels and guesthouses and noncollective being made up of independent residential and self-catering units.

In terms of evolution, over the years, a number of hybrid types of accommodation have come into being in response to evolving consumer preferences. These have included aparthotels featuring a mix of hotel type and self-catering units within a collective establishment and host-families in which guests are accommodated within a family environment and join the household in meals and other social activities. The Maltese accommodation sector has passed through various phases of evolution. Initially a hotels only destination in the 1960s, Malta witnessed a surge in basic holiday apartment units in the 1970s which eventually declined and were grouped and reclassified into self-catering aparthotels during the 1980s. 

During the 1990s there was a conscious effort at channeling investment into higher category collective
accommodation establishments in a perhaps simplistic effort aimed at changing the Maltese accommodation offer into a “quality tourism” one.

Following the revolution in aviation services triggered by the arrival of the low-cost airline model and the
commencement of operations by such airlines to Malta in the second decade of the new millennium, the
most recent evolutionary stage of the Maltese accommodation sector took place: leading to an upsurge in the supply of private accommodation.

During this period, private accommodation development was heavily influenced by the rapid, and
generally unregulated, peer to peer booking platforms, the ease of online bookings and the change of
consumer travel behaviour which saw the previously rigid one- and two-week holiday patterns change
into year-round, impulsive, frequent short breaks induced by more flexible airline offers and operations
and the adoption of tourism as a mainstream leisure activity for the masses.

Accommodation development in Malta towards the second half of the second decade was also heavily
influenced by a number of other factors including but not limited to:

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• The number of expatriates working in sectors as diverse as financial services, online gaming and service/construction who were instrumental in attracting increased numbers of VFR (Visiting Friends and Relatives) tourism traffic.

• The number of foreign owners of property willing to rent out their properties when not using it themselves.

• The increase in the number of available apartments resulting from the construction boom and the conversion of lower density terraced housing into apartment blocks.

• The increase of available bed supply in residential units.

• The surplus demand arising from ten solid years of record tourism volume growth as a result of which collective establishments generated high occupancy which overflowed into non-collective units. All of this was abruptly interrupted with the advent of the COVID-19 pandemic in early 2020.

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Quantifying Volumes and Evolution
Total licenced bedstock has increased by 13,600 beds or 30% during the period under review. However, it
is very relevant to note that during this period the number of beds in serviced (collective) accommodation has only increased slightly from around 39,000 beds in 2010 to 41,300 in 2021, while the number of licenced beds in Holiday Furnished Premises (self-catering) has trebled from 5,513 beds in 2010 to almost 17,000 beds in 2021.

It is also important to note that, within collective accommodation, whereas the number of beds in 5 star,
4 star and 3 star hotels has remained relatively constant over a twelve year period, the major increases in collective bedstock have been in:

 

• 2 Star (+975 beds or +145%)

• Guest Houses (+1,628 beds or + 189%), and,

• Hostels (+1,199 beds or + 101%)

In 2010, 5 Star, 4 Star and 3 Star hotels represented 70% of total licenced beds in the Maltese Islands. By 2021 this share has declined to 58%. Whereas in 2010, 5 Star hotel beds accounted for 15.6% or one in every six beds of total available licenced bed stock, in 2021 this share had dwindled to 13% or one in every eight beds.

The number of licenced beds in self-catering Holiday Furnished Premises has more than trebled over the
twelve year period from 5,513 in 2010 to 16,947 in 2021: an increase of more than 11,400 beds extending this category of accommodation’s share of total bed-stock from 12% in 2010 to 29% in 2021. In addition, the supply of beds in residential units, mostly unlicenced has increased exponentially.

Malta is thus facing a situation where increased tourism volumes and extended seasons have led to a
dilution of its accommodation service offer rather than an improvement or consolidation of those elements which attract higher levels of expenditure.

There is also the issue of unlicenced accommodation. The only way possible to estimate a quantification
of such unlicenced accommodation is to use National Statistics Office (NSO) data for a peak month like
August to compare officially recorded tourist/overnights numbers staying in such accommodation with
officially licenced bedstock.

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Using August 2019 as a benchmark the following indications emerge from NSO:
• Number of tourists in private accommodation: 111,033 tourists
• Number of nights stayed in private accommodation: 1,094,808 nights
• Number of licenced beds in private accommodation: 14,109 beds
• Number of available bed nights in licenced private accommodation: 437,379 bed nights

 

1,094,808 overnights generated by 111,033 tourists result in an average length of stay of 9.86 nights amongst August tourists staying in private rented accommodation.

 

An average length of stay of 9.86 nights means that during the 31 days of August each bed in private
rented accommodation can host 3.14 tourists.

As a result, the 111,033 tourists staying in private rented accommodation during August 2019 required
35,360 beds at any one time to host them all.

In 2019, there were a total of 14,109 licenced beds in private rented accommodation implying that the
difference between 35,360 utilised beds and 14,109 licenced beds comprises unlicenced private rented
accommodation: a total of 21,251 unlicenced beds.

This figure does not include the additional 38,349 tourists/467,066 nights categorized by NSO as staying in non-rented accommodation for which no licence is required.

An additional 21,251 unlicenced beds in private rented accommodation further tips the balance in favour
of a destination profile which is increasingly reliant on lower category, possibly unlicenced, un-serviced
accommodation at the expense of higher yielding collective accommodation which tends to be more
labour intensive and attracts higher rates, besides contributing more to Government revenues through
direct and indirect taxation.

The Issue of “Beds in the Pipeline”: In 2021, licenced Maltese tourism accommodation comprised 58,298
beds to which one must add an estimated additional reserve of 21,000 unlicenced beds which are also on the market, totalling up to 79,298 beds.

There are also a further 26,600 beds in the pipeline already in possession of MTA and PA permits and
around a further 10,000 more beds in incomplete stages of their application process with either MTA or
PA. This signifies a potential 36,000 additional beds in the pipeline, which, added to the current estimated stock of 79,298 licenced and unlicenced beds suggests a potential maximum of 115,298 tourism beds within a few years.

Naturally, not all of the beds “in the pipeline” will come to fruition but even if a fraction of them were to do so, the destination will face, great, if not insurmountable, challenges to generate enough business for them.

Furthermore, the dilution that will result will not only deprive Malta from maximizing accommodation
related rates and returns but will likely lead to price wars due to sheer over-supply.

The international tourism market is set to face an uphill struggle to revive numbers to pre-COVID-19 levels in the coming years and there are strong indications that there will be a substantial paradigm shift from the previous model of low-price travel underwritten by airlines whose business model is under threat due not only to current economic woes but also due to pressures relating to international actions to combat carbon emissions contributing to global warming and climate change.

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Objective

This Strategy gives direction to developers, investors and operators to acquire a deeper understanding of evolving tourism trends and the challenges to be faced over the coming years, in lieu of simply continuing to look at tourism as a perpetually expanding source of business generating profitable long term returns for their investments. Tourism accommodation is a variable which needs to respond to the country’s socio-economic and sustainability-driven needs rather than set the agenda for them. Malta needs the right accommodation for its tourism needs and not to simply attract tourism for all the accommodation made available. Existing accommodation shall need to satisfy its continued suitability, unlicenced accommodation shall either comply or be driven out of the market and incremental development will only be permitted if it is perceived to deliver added quality and value. In response to the delayed recovery of global tourism and until the Accommodation Development Plan emerging from Goal 4 of Strategy 22 is finalised, a more stringent system for evaluating applications for new or incremental accommodation development will be introduced.

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Goals and Actions

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GOAL 1
A strong drive will be made to identify illegally operating, unlicenced accommodation by applying tools used by other jurisdictions in addressing the problem and by working with online and traditional operators to eliminate the prevalence of such accommodation from their platforms.

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Actions

 

Action 1.  Research and familiarisation with international best practice in addressing this issue.

Action 2.  Explore legal avenues to combat the problem.​

Action 3.  Engage extensively with international operators to eliminate unlicenced properties from their listings.

 

GOAL 2

In 2021, licenced private rented accommodation contributed 3 out of every 10 licenced beds
in total tourism accommodation. This figure rises to a much higher share when including unlicenced beds and owner occupied/private beds used for VFR purposes. Private rental accommodation shall be subjected to a greater level of scrutiny and regulation with a view to ensuring its fitness to and compliance with Malta’s tourism brand promise. Entry level requirements for this category of accommodation shall be raised with a view to ensuring the delivery of an improved level of product and service quality.

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Actions

 

Action 1.  Introduce steps to tighten the regulatory aspects of non-collective accommodation by raising entry level bars in line with higher quality standards.

Action 2.  Combine higher quality control with regard to licenced establishments with a stricter approachtowards unlicenced operations.

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GOAL 3

All applications for new or incremental tourism accommodation shall be subject to a more stringent system including design guidelines that go beyond merely satisfying a checklist of requirements.

 

Actions

 

Action 1.  Projects proposing incremental bedstock shall be considered on the basis of the incremental value added they bring to the Maltese tourism experience.

Action 2.  A new, more stringent system shall be devised and introduced for the consideration of projects for the issuing of a Tourism Policy Compliance Certificate by the Malta Tourism Authority.

GOAL 4

In recognition of the current available and approved tourism accommodation bed-stock and the focus placed by this strategy on a more selective approach to the development of tourism to Malta based on the principles of higher quality delivery, sustainable development, enhanced tourist satisfaction and minimised host population impacts, there shall be a comprehensive review of the Development Guidelines for Tourism Accommodation as part of Goal 4 of Strategy 22.

 

Actions

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Action 1.  Conclusion of Accommodation Development Plan as per Goal 4 of Strategy 22.

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GOAL 5

Engage in discussions with the Planning Authority to review and align Development Policies in line with the Strategic Targets.

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Actions

 

Action 1.  Establish a discission with the Planning Authority with a view to reaching this Goal.

 

GOAL 6

Investigate ways of managing tourism accommodation through a lower focus on incrementalbed stock coupled with improvement and adaptation of existing accommodation in line with the destination’s carrying capacity constraints.

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Actions

 

Action 1.  Use the exercise emanating as per Goal 4 of Strategy 22 to provide guidance for the execution of this Goal.
 

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