18 - 24 January 2001

Adding value to tourism

ANTHONY CHIRCOP, hotelier and President of the Malta Hotels and Restaurants Association (MHRA), spoke to Franco Aloisio about the recent controversy on the private sector contributions to the Malta Tourism Authority (MTA)

Over the past few weeks, various bodies representing the tourism sector protested against the hefty increases in the contributions due to the Malta Tourism Authority by the private sector. In some cases contributions have doubled, while some are about to experience increases up to 12 times what they are already paying.
Earlier this week, all tourism industry bodies – except for the MHRA – signed a statement
condemning these increases. Earlier on, the Federation of Associations of Travel and Tourism Agents (FATTA) withdrew its nominees on the MTA board as a sign of protest.
Asked by The Malta Business Weekly why the MHRA did not oppose this measure, the association’s President Anthony Chircop said the MTA needs more funding for its marketing campaigns.
“Ever since NTOM was set up, certain campaigns were not possible due to lack of funds. The MHRA believes that the proper financing should be in place to fund such activities. Unless your product is marketed well, the consequence is that fewer tourists will visit the island,” Mr Chircop said.
He explained that the whole issue started at MTA executive board level. The majority of bodies have their representatives on the board, while other smaller associations elected two members to represent them.
“When the revision of the contributions was mentioned last year, the intention was to double the amount from the Lm300,000 being collected from the private sector.
“Through our representative, we put forward our own ideas, in the sense that we believed that doubling the contribution for all hotel categories would have had a negative effect. MHRA believes that such a measure could not be applied to all sectors of the hotel industry. For this reason, we commissioned Deloitte and Touche to carry out a study and propose alternative ideas on how to increase the contributions, without constituting a burden on the lower categories of the industry,” Mr Chircop said.
He added that during the discussion, it was proposed that other beneficiaries from the tourism industry, such as the banks and Maltacom, should also contribute. This proposal was accepted in part. “MHRA put forward its ideas, many of which were accepted. The increases varied according to the class of the hotel, with the three-star owners paying the lowest increases. Another proposal was to phase out the increases over a three-year period, but this was not accepted by the MTA.
“We are prepared to contribute to the MTA’s marketing efforts, provided that these contributions are channelled in the right direction and we see a return on our investment. We see such contributions as an investment.”
Mr Chircop admitted that the increases for
certain operators are exorbitant. However he clarified that in actual fact, an operator will be benefiting from a 50 per cent reduction if the payment is effected in time. He said that night club owners, represented by the GRTU, did not have a say on this issue as the GRTU is not represented on the MTA.
On VAT imposed on travel agents, Mr Chircop said this was announced out of the budget
context. “The legal notice does not affect hotel operations. MHRA is represented on the Malta Council for Economic Development (MCED), and prior to the budget, Minister Dalli conducted talks with the respective constituted bodies. It was suggested that if the amount of VAT was increased, it would have worked negatively for the government’s revenue.
“Hence it was decided to maintain the present VAT structure, that is, a five per cent on all hotel accommodation and package holidays, apart from a 15 per cent VAT rate payable on all other services offered by the hotel,” Mr Chircop said. The MHRA President added: “Unfortunately the travel agents were the adversely hit by the new measure. The present scenario is not a healthy one, and the quicker a solution is found, the better it is for the tourism industry.”
Asked what are his views on the findings published by the British magazine Holiday Which that Malta is the most expensive destination for eating out in the Mediterranean, Mr Chircop said the major reason why the costs of restaurants is high is because high-quality food is very expensive, when compared to mainland Europe.
“This is mainly due to the economies of scale situation prevailing in Malta. Offering value-for-money to the tourists should be the main priority of every operator.”
On the Sunday trading controversy, Mr Chircop said the MHRA believes that such an issue does not fall within its jurisdiction. Mr Chircop said his personal view on the matter is that there is scope for Sunday shopping, especially from the tourism point of view.
“On average, a tourist spends 10 days in Malta, which means a possibility of two Sundays during his or her vacation on the island. Certain places would look better, especially in winter, if shops were to remain open after certain hours and on Sundays. This should not apply only for Bay Street but also for all establishments,” Mr Chircop said.
Speaking about the enforcement of standards of hotels and restaurants, Mr Chircop said the MTA’s Directorate of Enforcement, together with the Spanish consultants, has been to all hotels and completed their first inspection. A second inspection will take place to view the changes which had to be done in certain establishments.
“In the case of certain hotels which are not up to their grade, a long-term plan of action will have to be drawn up on how certain problems can be addressed. In general, the hotels are up to standard and compare favourably. Those hotels that were not up to their grade were few. The MTA’s approach is to help the hotels improve,” he said.
He said that the MHRA has already approached MTA with a proposal on how the authority can help three-star hotels to restructure.