In its short- to medium-term recovery prospects section, the tourism strategy for the Maltese islands covering the period 2021 to 2024 stated that “there is currently widespread agreement that tourism volumes will probably have to wait until 2024 to approach the record levels of 2019”.
There were many dissenting voices at the time the document was launched, in 2021. For instance, in its annual assessment of the Maltese economy, the International Monetary Fund (IMF) had argued that “there remains uncertainty about long-term scaring in the tourism sector”. The prime worry was that a combination of slow recovery in airline connectivity and the impact of the energy price shock on European prospective tourists would hurt the tourist sector.
This uncertainty was well-grounded. Flight connectivity in most of 2023 was either slightly below pre-pandemic levels or just above, while household consumption in Europe is very weak, with consumer confidence at very low levels.
Yet, since January 2023, every single month the number of tourist arrivals has exceeded the 2019 pre-pandemic records. The relatively strongest result was that observed in October, when arrivals were 11% above those of 2019. In itself, the percentage improvement shows that this is also not the weak recovery that authorities had been expecting. This is a double-digit recovery that means that the tourism industry is fast recovering the ground lost since 2020.
Looking beyond arrival numbers, tourist revenue in October 2023 was €301 million, or nearly a third of a billion euro. In the same month before the pandemic, revenue was just €231 million, or just above a quarter of a billion euro. In revenue terms in October, the industry was 30% above its pre-pandemic levels. This is not a one-off result. Last July tourist expenditure was €335 million, compared to €285 million in July 2019. Revenue in that peak month was close to 20% above the pre-pandemic figure.
If anything, looking at monthly arrivals is downplaying the extent of the recovery. While the first time that arrivals exceeded those of 2019 was in January 2023, the first time that earnings exceeded the 2019 levels was November 2022, or two months earlier. More importantly, the earnings figures are now far higher in relative terms than arrivals are. For instance, while tourist arrivals in October 2023 were 11% higher than in October 2019, earnings were 30% higher.
The improvement in earnings per tourist are exceeding by far the improvement in tourist numbers. This implies that tourists are spending more than they used to. Part of it is undoubtedly the effect of inflation, as prices have gone up. However, a considerable proportion appears to be an improvement in the underlying purchasing capacity of tourists or, in simpler terms, an improvement in the quality of tourists. To give a concrete example: while in the first nine months of 2019 there were less than 290,000 guests who stayed in 5-star hotels, this year there were nearly 322,000, or 11% more.
Thus, this is not just a story of a tourism recovery that came at least a year earlier than predicted. What we have here is a recovery that is in line with the tourism strategy to attract better quality tourists that generate more revenue for the Maltese economy. These results need to be built upon and improved even further.
Photo: Efrem Efre