Tourism results in 2024

This column has been providing various periodic analysis on tourism results. Now that we have all the data for 2024, I believe that this is the right time to take stock of the situation, with a real objective data analysis.

It is obvious that tourist arrival numbers have increased heavily in recent years. As shown below the amount of tourists coming to Malta increased by around 30% from the tourist arrival levels in 2019. Approximately two-thirds of this 30% increase occurred within a single year, specifically in 2024.

When the press reports on tourist expenditure, it keeps reporting nominal figures. It is quite obvious that such nominal expenditure figures would increase especially in periods of inflation, since tourists would need to spend more for any service. However, it would be best to eliminate the inflationary effect by rebasing the revenues to a period before an inflationary period. This is why I constantly report real revenues based on the 2019 levels. As shown below, real expenditure increased by around 28% by end 2024 from the levels registered in 2019. This means that while tourist arrivals increased by around 30% from the levels registered in 2019, real expenditure increased by 28% for the same period. If the rise in expenditure is lower than the increase in tourist arrivals, the average expenditure per tourist is likely to decline rather than grow.

In fact as shown below, the average real expenditure per tourist has been below the 2019 level for both 2023 and 2024. Having said so, the average expenditure per tourist has shown some marginal improvement in 2024 over 2023.

One must remember that the Malta’s National Tourism Strategy for 2021-2030 emphasised the importance of attracting high-value tourists by enhancing the quality of the tourism product and focusing on sustainability. So far it seems that this has not been achieved. We have attracted more tourists, but not necessarily higher value tourists. It is important to remember a point that is often overlooked – tourism comes with its own costs. These costs include:

• An overdevelopment and infrastructure strain evidenced by traffic congestion, waste management and overdevelopment, leading to increased public expenditure on infrastructure and environmental degradation;
• Labour force limitations as between 2010 and 2019, the number of Maltese nationals employed in the tourism sector declined from 7,974 to 5,964. This reduction necessitates hiring more foreign workers, which can increase operational costs for businesses due to recruitment, training and potential housing expenses, besides yet again adding further strain on the country’s infrastructure. By 2019, approximately 60% of the tourism workforce in Malta comprised foreign nationals; and
• Environmental, urban challenges effecting the overall tourism quality product. A heavy increase in tourist arrivals tend to diminish the quality of life for residents but also deter high-value tourists, which is opposite to what we are trying to achieve.

In conclusion, the need to effectively build and implement a tourism strategy that effectively gives more importance to real tourism expenditure as a key KPI, rather than tourist arrivals, would be a first step that we really intend to measure quality over quantity. Through its Rediscover document that the Malta Chamber published in 2021, it had articulated a comprehensive tourism strategy aimed at attracting higher-value tourists based on sustainability, quality enhancement and a holistic approach to tourism development. This document outlines the need to build a tourism offering based on authentic experiences and unique cultural assets that distinguish Malta from other destinations, encourage tourism operators to adopt digital technologies and innovative practices and strengthening the regulatory framework of the tourism industry, among other proposals.

Way back in 2021 when this document was published, the tourism industry was scrambling to get out of the Covid crisis. Had we, as a country, adopted a quality-first mindset then, we would have spared ourselves a lot of undesirable outcomes related to infrastructural shortfalls. Now that we are more aware of the consequences of over-tourism, and not under pressure to bring back tourists as we were then, we should be able to appreciate better the substance of that document and to implement its recommendations.