The Contribution of the Tourism Industry to the
Maltese Economy in 2014
Report Prepared for the
Ministry for Tourism
April 2015
Dr Gordon Cordina
The Maltese Economy in 2014
Agriculture2%
Manufacturing11%
Construction5%
Whole and Retail15%
Transport5%
Accom and Food8%
ICT3%Financial Services
5%Professional Services
12%
Public Admin, Educ & Health
26%
Recreation incl. gaming
3%
Other5%
189,000 Full-Time Equivalent JobsSectors with a major direct impact from Tourism Expenditure account
for 31% of total employment
Tourism expenditure has
minor (as measured
statistically) direct impacts on other sectors such as
education, health and real estate
Tourism74%
Other26%
Accom and Food Sector Turnover: €0.9bn
Tourism23%
Other77%
Transport Sector Turnover: €1.3bn
Direct Effects of €1.5bn Tourism Expenditure
Tourism25%
Other75%
Wholesale and Retail Sector Turnover: €1.2bn
Tourism5%
Other95%
Recreation incl. Gaming Sector Turnover: €2.2bn
Direct Effects of €1.5bn Tourism Expenditure
Whole and Retail
Transport Accom and Food
Recreation incl. gaming
-
2,000
4,000
6,000
8,000
10,000
12,000
6,963
2,366
10,895
333
FTE Jobs Directly Created by Tourism Expenditure
Tourism (Direct); 11%
Other; 89%
Contribution to Job Creation
Every €10m tourism expenditure sustains 137 jobs
Every 10,000 tourists sustain 121 jobs
Total: 20,500 jobs
Potential of further job creation through input-output effects
An illustration of Potential Input-Output Effects with other economic sectors
Sectors with important Tourism
contribution
Intermediate Consumption (Purchases of
goods and services from
other firms, net of utilities)* (€m)
Estimated Intermediate Net
Consumption Attributable to Tourism* (€m)
Estimated Job Creation*
Accommodation and Food 550 410 4,200
Transport 800 180 1,900
Wholesale and Retail 450 110 1,200
Total 1,800 700 7,300
*author’s estimates
An estimated 7,300 jobs are created by tourism expenditure through
purchases of operators, in addition to the 20,500 estimated direct jobs
This can be extrapolated through further expenditure rounds
Further detailed data is required for more precise estimates
2013 20141,000,000
1,100,000
1,200,000
1,300,000
1,400,000
1,500,000
1,600,000
1,700,000
1,800,000 International Tourist Arrivals
Pers
ons
Growth in International Tourists in 2014
International tourist arrivals increased by 107,656 (7%)
Expenditure by international tourists rose by €88.4 million
(6.1%)
2013 2014 1,000,000,000
1,100,000,000
1,200,000,000
1,300,000,000
1,400,000,000
1,500,000,000
1,600,000,000
Expenditure by International TouristsEu
ro (€
)
This was the main driver for growth of the industry in 2014
Effects of 6.1% growth in Tourist Expenditure in 2014
Total: 500 jobs
Potential of further job creation through multiplier effects0
100
200
300
400
500
600
185
261
Additional Job Creation in 2014
Whole and Retail
Transport
Accom & Food
Recreation
Around 10% of growth in private sector jobs
Every €10m increase in tourism expenditure
created 67 additional jobs
Every 10,000 extra tourists created 57 additional jobs
Summary Benchmark Indicators over the
Medium Term
A Medium Term Perspective of Growth
2010 2011 2012 2013 2014100
105
110
115
120
125
130
135
140
Headline Indicators(2010=100)
Expenditure
Arrivals
Nights
Real GDP
Employment
Indicators of activity show sustained growth in excess of that of the overall economy
Employment growth staged a recovery in 2014
Headline Performance Benchmark Against Other Mediterranean Destinations
Malta
Other Med Desti
nations
All Spain
Balearic Is
lands
Canary Isl
ands
Andalucia
Portugal
Cyprus
Turkey
Slove
nia
Croatia
Morocco
Bulgaria0.0%2.0%4.0%6.0%8.0%
Growth in Tourist Arrivals (2014)
Peak Growth Off-Peak Growth
Malta gained market share in 2014 relative to other Med destinations in peak and off-peak business
Headline Benchmarks of Share in Source Markets
UK DE IT AU IE Average-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
Developments in Shares in Selected Main Source Markets (2014)
Outbound Tourism Growth Growth in Malta Arrivals
Outbound tourism in major selected source markets was on average flat in 2014…
…but arrivals to Malta from these markets rose by an average of 6%
A Snapshot of Nights and Expenditure by Market
USA
Austria
Libya
Belgium
Irelan
d
Switz
erlan
dSp
ain
Netherl
ands
Russia
Scan
dinavia
France
German
yIta
lyOther
United Kingd
om0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
100
110
120
130
140
150
160
170
Analysis of Nights and Expenditure per Night
Nig
hts
Expe
nditu
re p
er n
ight
(€)
Expenditure per night
Number of Nights
USA
Austria
Libya
Belgium
Irelan
d
Switz
erlan
dSp
ain
Netherl
ands
Russia
Scan
dinavia
France
German
yIta
lyOther
United Kingd
om0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
Analysis of Nights and Growth in Number of NightsN
ight
s
Grow
th in
Num
ber o
f Nig
hts
Number of nights
Growth in Number of nights (2014)
Expenditure per night tends to be lower for the larger tourism markets…
…while growth potential is concentrated in the smallest and largest source markets
Drivers of Tourism Activity in Malta in 2014
Definitions Inbound Tourism: Activities of non-resident visitors within the country of reference on inbound tourism trips
Visitors: tourist or same day visitor, on a trip to a place other than the usual environment, thus including cruise line passengers and crew
Domestic tourism: particularly with respect to stays by Maltese residents in collective or private rented accommodation, especially in Gozo
Tourism
International
Domestic
Cruise Passengers
Performance Indicators – Nights and Expenditure 2014
2013 201410,000,000
10,500,000
11,000,000
11,500,000
12,000,000
12,500,000
13,000,000
13,500,000
14,000,000
Total nights
Total nights spent by international tourists increased by 5%
The average length of stay remained stable at around 8 days
Per capita expenditure dropped marginally to €904
Expenditure per night increased by 1.2% to €113
Composition of Expenditure - 2014
Package expenditure
maintained its share within
total activity in 2014
Total Package37%
Flight13%
Accommodation15%
Food and drink18%
Transport4%
Recreation5%
Shopping5%
Other2%
Total Expenditure by Tourists in 2014
January
Febru
ary
Marc
hApril
May
June
July
August
September
October
November
December
-
50,000
100,000
150,000
200,000
250,000
300,000
Total Expenditure by International Tourists
2013 2014
€'00
0
Seasonality of Tourism Activity - 2014
Hotel Occupancy
2013 2014
82.8% 87.2%
52.3% 55.5%
2013 2014Peak 981.50 969.78
Off-peak 762.65 769.78
Per Capita ExpenditureSeason
2.4% reduction in length of stay
Better room rates/spending
Seasonality of Tourism Activity - 2014
2013 2014 -
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
32.5%32.5%
Tourist Arrivals
Peak Off-peak
Pers
ons
The share of off-peak arrivals was unchanged in 2014
2013 2014 -
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
30.1% 30.6%
Total Nights
Peak Off-peak
Num
ber
2013 2014 -
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
27.2%27.7%
Tourist Expenditure
Peak Off-peak
€'00
0
But the share of nights and spend increased in the off-peak season
indicating progress in overcoming seasonality
Drivers of tourism activity in 2014 – the Med context
Cypru
s
Bulgaria
Baleari
c Isla
nds
Moro
cco
Turkey
Slove
nia
Croati
aM
alta
All Spain
Andalucia
Canary
Islan
ds
Portuga
l0%
2%
4%
6%
8%
10%
12%
14%Growth in Mediterranean Destinations 2014
Malta performed well in a Mediterranean context…
Spain
Germany
Ireland
Belgium
Switzerland
Scandinavia
Italy
Other
-20,000 -10,000 0 10,000 20,000 30,000 40,000 50,000
Changes in Tourist Arrivals (2014)
…compensated by growth in traditional markets
…and a significant diversification into other markets (longer haul/stay/expenditure)
…but was affected by shocks to Libyan, Russian and specific EU markets
Top 5 Next 5 Next 5 All Others0
10000
20000
30000
40000
50000
60000
Distribution of 2014 Increase in Tourists by Airport
27%
13%
9%
46%
5%
Distribution of Arrivals by Airport
Top 5Next 5Next 5 Next 60Others
Drivers of tourism activity in 2014 – Connectivity
GatwickFrankfurtFiumicinoHeathrow
Manchester
15 airports account for 50% of passenger
movements
and for 80% of the increase in 2014
As top airports approach flight capacity limits, further diversification
could be needed
Cruise Visitors
2014 2013 Change 2014 2013 2014 2013France 2.94 1.95 0.99 80,815 48,485 36.33 40.19 Germany 4.36 5.11 (0.75) 123,916 96,971 35.19 52.66 Italy 2.73 3.26 (0.53) 80,815 77,577 33.82 42.06 Spain 0.36 0.82 (0.46) 10,775 24,243 33.26 33.91 United Kingdom 2.33 2.46 (0.13) 75,427 96,971 30.95 25.40 Australia 0.84 0.62 0.22 16,163 9,697 51.82 63.89 Canada 0.79 0.56 0.23 16,163 14,546 48.87 38.78 Japan 0.10 0.13 (0.03) 5,388 4,849 18.81 27.50 United States 3.00 2.83 0.17 48,489 48,485 61.88 58.44 Other 4.22 3.41 0.82 80,815 72,728 52.25 46.84 Total/Average 21.67 21.16 0.51 538,766 494,551 40.23 43.64
Country Total Spend (€m) Visitors Per capita Spend (€m)
Visitors include an estimate for crew membersSource: Valletta Cruise Port
It is estimated that cruise line
operators in addition spend
between €40m and €60m on
supplies and services
Potential for home-porting and overnight stays by cruise
passengers can be further
exploited
(€)
944,290
479,600
520,000
377,630
2.3 million Passengers on Ferry Crossings (2014)
International tourists/visitors Gozitans (Work)Gozitans (Other) Maltese tourists/visitors
Domestic Tourism: Maltese Tourists and Visitors to Gozo
The expenditure by 377,630 Maltese
tourists and visitors in Gozo is estimated at €28 million in 2014
As passengers increased by 124,000 of which one half were international,
domestic tourism is estimated to have grown by around 5% in 2014
Domestic tourism has other facets which may
further develop in future
Outbound (Maltese) tourists /visitors
amounted to 430,000 in 2014- up by 5% over 2013
The Regional Perspective: The Contribution of Tourism Industry to the Economy of Gozo
International Day Trippers
International One Night Stay
International Longer Stay
Domestic
Tourism industry expenditure is estimated to amount to just
under 50% of Gozo GDP
-
20
40
60
80
100
120
140
160
180
200
33.28
122.22
27.94
Estimated Expenditure in Gozo (2014)
€mill
ion
The tourism industry is estimated to generate 30% of
private sector employment
6,900 Private Sector Jobs in Gozo
Other private sectorWhole and RetailTransportFood & AccomReal EstateRecreation
This is close to 20% of total employment in Gozo
Selected Aspects of the Contribution of Tourism to the Maltese Economy in
2014
5 star 4 star 3 star0
500
1000
1500
2000
2500
Change in Gross operating profit per available room (2014)
Euro
(€)
W&R, Tranport, Accom & Food
Agriculture
Other services
Construction
Manufacturing
Professional activities
Public administration, education and health
Information and communication
Financial and insurance activities
0 5000 10000 15000 20000 25000
Average Annual Salary by Economic Sector (2014)
Accommodation Sector Profitability and Wages
+17% +17% +47%
Improved profitability permeated the entire sector, including lower categories, indicating better quality tourism
Source: MHRA and author estimates
Average wages in the industry are among lowest in
economy…
…but they increased by 3.4% in 2014 compared
to 2.3% overall
Relatively high number of
expatriates in lower-skilled jobs
Accom &
Food
Real esta
te activities
Agri & fish
ing
Professi
onal
Other service
s
W &
R & Transp
ort
Public Admin
Information and co
mmunication
Constructi
on
Manufacturin
g
Financial a
nd insu
rance acti
vities0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Proportion of Full-time to Full-time equivalent employees
Enhancing Human CapitalA large
proportion of part-time workers within the sector in comparison to the other sectors of the economy
Source: Gainfully Occupied Population
More males at vocational level – trend reversed for
higher level courses
Only 27% of students at MQF level 5 or higher
The majority of students are less
than 20 years of age
Source: Education Statistics, NSO
Source: National Statistics Office
Number of Tourism Studies students is low compared to
workforce
Economy (Total) Accommodation and Food0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Student enrolled as % of FTE
Hotel Bedstock and Non-Collective Accommodation
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec30000
32000
34000
36000
38000
40000
42000
44000
Bed Places
2013 2014
The availability of hotel bed-stock
followed seasonal patterns for
refurbishment and reinvestment
2013 2014 -
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
6,972 6,786
17,034 16,410
10,936 11,092
4,347 4,408
Average Bed Places
Other3 star4 star5 star
2014 saw consolidation in lower categories of bedstock with restructuring and
investment potential in the
upper categories
2013 20140
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
33.1% 34.4%
Nights Spent by Type of Accom-modation
Private accommodationCollective accommodation
Occupancy Rates
59.6%62.8%
Growth of private
accommodation is creating
opportunities for better
regulation and compliance
EU Funds 2007-2013Operational Objectives – OP 1 PA 2
Support the upgrading of the tourism product
Promote the Maltese Islands as a prime and diverse tourist destination
Improve the competitiveness of tourism and culture operators
Initiatives
Product Development
Niche Market Development and Branding
Aid Schemes to Tourism / Cultural Undertakings
97% of funds allocated have been committed, for a total of €116.4m
Other Various € 43,702,949
€ 116,433,075Total Various
Tourism Zone Upgrade Malta Tourism Authority € 14,004,463
Grant Scheme for Sustainable Tourism
Projects by EnterprisesVarious € 8,945,209
€ 15,345,000
Restoration & Rehab of Historical Fortifications
Restoration Department € 34,435,454
PA 2 Projects
Fort St. Elmo Heritage Experience
Grand Harbour Regeneration Corporation
Financial allocation: €120 m of which €102 m are Community FundingBeneficiary € Committed
PA 2 is absorbing 14% of OP1 fundsNew opportunities need to be reaped (Blue Economy, Social Funds, etc)
Tourist Arrivals in 2015 and 2016: Indications of
Demand Potential
Main Determinants of International Tourist ArrivalsEconomic Growth/Spending Power in Source Countries
Price Competitiveness/Exchange Rates
Connectivity: availability of flights
Market specific conditions/actions of tour operators
International marketing/promotional efforts by Malta
Political developments in source countries
Perceptions regarding security in Mediterranean
Scenario Analyses
This factor is less relevant in the context of the weak euro
Arrivals from UK, FR, BE,NL and CH have a strong positive
correlation with economic growth
The Importance of Economic Growth in the Short Run
IT, ES, IE, AU, DE and Scandinavian arrivals show little or no correlation with
economic growthCorrelations show balance of probabilities regarding effects relevant in the short term
Weak correlations to economic growth indicate other more relevant factors in the short term
29%
12%
2%10%
20%
6%
4%
17%
Tourist Arrivals (2014)
UKFR, BE, NLSwitzAU, DEIT, ES, IEScandLB, RUOthers
2010 2011 2012 2013 20140
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Libya, Russia and Other Markets
Libya Russia Others
Tourist Arrivals and Economic Growth
Arrivals from Libya, Russia and other markets cannot be correlated to economic growth in the short run
43% of arrivals have strong positive correlation with economic growth
Tourism from Libya and Russia is expected to be affected by political developments
Strong growth in other markets can continue due to economic, market and connectivity factors
36% are of arrivals are more strongly influenced by other factors in the short term
Outlook for Tourist Arrivals – 2015 and 2016Arrivals from UK, FR, BE, NL, CH are modelled on basis of economic growth forecasts
UK FR,BE,NL SWITZ0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
Projections for Economic Growth
2015 2016
Source: EU Commission
UK FR,BE,NL SWITZ0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Projections for Growth in Tourist Arrivals
2015 2016
Arrivals from IT, ES, IE, DE, AU are prudently expected to remain at 2014 levels
2010 2011 2012 2013 2014 2015* 2016*0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000Tourist Arrivals
AU, DE IT ES IE
Arrivals from Libya and Russia are assumed at 5-year historic low of 29,000
Arrivals from Scandinavia and Other Markets are expected to maintain historic trend growth
2010 2011 2012 2013 2014 2015* 2016*0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Arrivals from Scandinavia, Other Markets
Other Markets Scandinavia
11%p.a.
4%p.a.
Bases of outlook are generally conservative but will require efforts to:• sustain expected growth in
Other Markets • consolidate growth in
shoulder months
2010 2011 2012 2013 2014 2015* 2016*0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Tourist Arrivals
Others
LB, RU
Scand
IT, ES, IE
AU, DE
Switz
FR, BE, NL
UK
Outlook for Potential Tourist Arrivals – 2015 and 2016
+70,000(4.1%)
+135,000(7.5%)
2010 2011 2012 2013 2014 2015* 2016*0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Tourist Arrivals
Others
LB, RU
Scand
IT, ES, IE
AU, DE
Switz
FR, BE, NL
UK
2013 2014 2015* 2016*0.0
2.0
4.0
6.0
8.0
10.0
12.0
International Tourism Growth Forecast
Southern/ Mediterranean
Malta
Perc
enta
ge (%
)
* Forecast
Oxford Tourism Economics estimate Mediterranean tourism to increase by 3.8% and 3.3% in 2015 and 2016
UNWTO estimates European tourism increase between 3% and 4% in 2015
Outlook for Potential Tourist Arrivals – 2015 and 2016
The outlook Malta for 2015 is comparable to these forecasts…the potential for demand may be even higher for 2016, everything else remaining unchanged
Risks to the OutlookUpside Risks Downside Risks
Increase in collective and other forms of good quality accommodation
Improvements in connectivity from established and new sources
Marketing activities by foreign tour operators
Perceived international security risks
Specific events in source markets and competitor destinations
Improved marketing and competiveness of competitors
Slowdown in growth of “Other Markets”Enhanced exposure on social media
Specific niches/events (business, gaming, medical, cruise, culture, etc..)
Short term disruption due to investment/refurbishment
Conclusions
Some Key Facts and Figures
27,800 jobs = 1 in every 7 in MALTA, 1 in every 5 in Gozo €1.5bn expenditure = €3,750 for every person in the Maltese population every year
Economic Importance
Nights up by 5% Total Expenditure up by 6%€88 million increase in expenditure generated 500 new jobs
PerformanceIn 2014
Arrivals up by 7% reaching 1.7 millionArrivals in Med Destinations up by 5.5% Departures from major source countries: flat
Gains in Market Share
UK/Italy (€750/person): 50% of growth Non-traditional markets (€1,030/person): 40%Top 15 airports account for 50% of all arrivals and 80% of 2014 increase
MarketDiversification
Some Key Facts and Figures
540,000 visitors in 2014 (+9%) 303 ship callsTotal spending at around €80 million
Cruise Visitors
944,000 international visitors, spending €158 million 377,000 Maltese visitors, spending €28 million
GozoTourism
Tourism sector absorbed for €120 million of 2007-2013 EU fundsInvestment largely used in product improvement
EU funding
Expenditure in off-peak season rose from 27.2% to 27.7% of year totalPer capita expenditure in off-peak season rose from €762 to €769
Tourism Sesonality
Maximising Economic Potential and ContributionIncreasing Arrivals (2015/16: +4%/+7.5%) Improving Expenditure per Arrival
Invest in quality and diversified collective and other accommodation
Increase Malta’s connectivity from established and new destinations
Focus growth on off-peak tourism based on niches/events
Invest in skilling, multi-skilling and re-skilling
Focus on markets with higher potentials and spending power (DE, Asia, etc)
Identify alternative methods of investment financing
Carefully diversify away from lower yielding activities
Sustain 3-star category as a quality product offering
Invest in distinct destinations to diversify product offer
Develop the potential of domestic tourism
Final Thoughts…
There is a tide in the affairs of men.Which, taken at the flood, leads on to fortune;
Shakespeare, Julius Caesar
An investment in knowledge pays the best interest.
Benjamin Franklin
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