Culture and Tourism
Mini Case Study MALTA: Grant Scheme for Sustainable Tourism Projects by Enterprises
Work Package 9
Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and the Cohesion Fund (CF)
October 2015October 2015 1 Authors: David Bradley Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and Cohesion Fund (CF) – Work Package nine: Culture and Tourism
EUROPEAN COMMISSION Directorate-General for Regional and Urban Policy Directorate B - Policy Unit B.2 Evaluation and European Semester Contact: Violeta Piculescu E-mail: [email protected] European Commission B-1049 Brussels
October 2015 2 Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and Cohesion Fund (CF) – Work Package nine: Culture and Tourism
Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and the Cohesion Fund (CF)
Work Package 9: Culture and Tourism - Case Study Malta
Mini Case Study Grant Scheme for Sustainable Tourism Projects by Enterprises
Contract: 2014CE16BAT034
October 2015 3 Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and Cohesion Fund (CF) – Work Package nine: Culture and Tourism
Work Package 9: - Case Study Malta
Mini Case Study Grant Scheme for Sustainable Tourism Projects by Enterprises
This report is part of the Malta Case Study carried out within the Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and the Cohesion Fund (CF).
Author: David Bradley
Date: 15th October 2015
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October 2015 4 Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and Cohesion Fund (CF) – Work Package nine: Culture and Tourism
Table of Contents
1. FORWARD...... 7
2. SYNTHESIS...... 9
3. BACKGROUND INFORMATION ...... 9
4. PROJECT DESCRIPTION...... 10
5. POLITICAL AND STRATEGIC CONTEXT...... 12
6. IMPLEMENTATION...... 13
6.1 The process of project design and planning...... 13 6.2 Management, monitoring and evaluation system of the project ...... 13 6.3 Governance arrangements of the project ...... 15 6.4 Innovative elements and novel approaches to implementation...... 16 6.5 Key implementation obstacles and problem-solving practices ...... 16 7. KEY RESULTS...... 17
8. SUSTAINABILITY AND TRANSFERABILITY ...... 21
8.1 Sustainability ...... 21 8.2 Transferability ...... 21 9. LESSONS LEARNT ...... 23
REFERENCES ...... 24
ANNEX: ERDF 135 PROJECT SELECTION CRITERIA ...... 25
October 2015 5
Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and Cohesion Fund (CF) – Work Package nine: Culture and Tourism
1. Forward
The European Commission, Directorate-General for Regional and Urban Policy (DG REGIO) is undertaking an ex post evaluation of Cohesion Policy programmes financed by the European Regional Development Fund (ERDF) and the Cohesion Fund (CF) during the period 2007-2013 in regions covered by the Convergence, Regional Competitiveness & Employment and European Territorial Cooperation objectives in the 28 member states.
The Consortium IRS-CSIL-CISET-BOP has been selected to undertake the ex post evaluation on ‘Culture and Tourism’ (Work Package 9). An important element within the exercise is a series of case study analyses of NUTS2 regions covering interventions co-financed by ERDF during the 2007-13 programming period.
In addition to the full case studies (at a region’s programme level), the evaluation also includes two mini case studies (focused on individual projects) for each programme case study. As with the programme case studies, mini case studies are based on desk research and semi-structured face-to-face interviews with the main participants involved in the chosen projects.
This report presents the results of the mini case study Grant Scheme for Sustainable Tourism Projects by Enterprises. This is the second of two mini case studies selected from among the many projects funded by Malta’s Operational Programme I (OPI) – Investing in Competitiveness for a Better Quality of Life.
The report begins with a brief synthesis of the Grant Scheme for Sustainable Tourism Projects by Enterprises project, before moving on to a fuller description and the presentation of the results of the analysis undertaken. The report ends with a review of the main conclusions of the study, together with a series of lessons learnt for future policymaking.
The mini case study was based on desk research and on a programme of 15 semi- structured interviews. Of these, 12 interviews were with beneficiary enterprises. The remainder were with key actors in the design and delivery of the project. Those interviewed were:
October 2015 7 Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and Cohesion Fund (CF) – Work Package nine: Culture and Tourism
Table 1.1 – Persons interviewed
Name Role Contacts Director-General, Planning and 00356 2200 1140 Mr Jonathan Vassallo Priorities Coordination Division, [email protected] MALTA Head Operational Programme I, 00356 2200 1173 Dr Georgina Scicluna Planning and Priorities Bajada [email protected] Coordination Division Director Policy and Programme 00356 2291 5035 Ms Moira Pisani Implementation, Ministry for [email protected] Tourism 00356 2291 5200 Mr Leslie Vella Director, Malta Tourism Authority [email protected] Projects Manager ERDF 135 (Aid 00356 2200 1867 Mr Mark Camilleri Schemes), Planning and Priorities [email protected] Coordination Division Project Leader ERDF 135, Ministry 00356 2291 5059 Mr Oliver Farrugia for Tourism [email protected] 00356 2291 5052 Ms Cora Vella Laurenti Senior Executive ERDF 135 [email protected] Implementation Executive ERDF 00356 2291 5076 Ms Catherine Xuereb 135 [email protected] Supported business / voluntary sector interviewees Name Role Contacts Dive Systems(W.S.) Ltd +356 276 58035 "Improvement in facilities and Mr Claude Sciberras services at Divesystems for an [email protected] exceptional diving experience" Garden View Complex / Club +356 237 72408 Class " Enhancing the student Mr Joe Aqullina experience and language learning [email protected] offer" Supreme Travel Ltd " upgrade of +356 797 890890 Ms Amanda Abela open top buses audio system" [email protected] Melita AFC "Upgrade of Melita FCs +356 214 90700 5 a-side pitches and marketing Mr Andrew Naudi initiatives"; "Embellishment of [email protected] Melita AFC grounds to enhance sports tourism in Malta" Sunsights Ltd (Pergola Hotel) +356 2289 4458 Ms Elaine Cutajar Debono "getting connected through [email protected] conferences" All Seasons Holidays Ltd obo +356 215 53719 Ms Charmaine Pace Axaiq Hotel Xiendi Resort and Spa [email protected] "Stepping steady HXSS" Villa Arrigo Ltd " attracting niche +356 994 93306 Ms Veronica Zammit tourism to imposing villa in the Tabona [email protected] middle of Malta" Atlantis Diving Centre "New dive +356 2229 0000 Mr Brian Azzopardi centre" [email protected] Cyberspace Ltd "a +356 214 24657 Mr Tony Cassar gastronomic tourism portal for [email protected] Malta and Gozo" Malta Sunripe Co Ltd " the Mgarr +356 790 60759 Mr Joseph Muscat Agritourism experience project" [email protected] Luna Holiday Complex +356 795 94104 Mr Chris Brincat "Improving tourists perception of [email protected] accommodation quality in Malta" Baron Group Ltd "Exclusive +356 994 87060 Gozo farmhouse accomodation for Mr Brian Meilak upmarket niche tourism [email protected] segments" Source: the author
October 2015 8 Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and Cohesion Fund (CF) – Work Package nine: Culture and Tourism
2. Synthesis
Grant Scheme for Sustainable Tourism Projects by Enterprises project was selected as a mini case study, as the largest project providing direct support to businesses, aiming to support the adaptation of the tourism industry to capitalise on strategic sector opportunities. The project demonstrates the challenge for a Member State keen to demonstrate robust systems of financial management, whilst securing significant investment by private sector operators in new markets.
We found evidence of assisted projects having achieved strong growth in turnover post project implementation. Part of this growth may be attributable to an increase in overall tourist numbers over the 2007-2013 programe period.
The availability of ERDF funding was essential for the achievement of some of the results. ERDF has, in some cases, addressed specific market failures mainly connected to the small size and fragmentation of niche tourism markets. A strong argument could be made that ERDF support helped to increase standards faster and to a higher level than would otherwise have been achieved by the private sector.
3. Background information
Country: Malta Region: Malta Full project title: Grant Scheme for Sustainable Tourism Projects by Enterprises ERDF 135
Duration of project: 2009 and 2015 Key words: tourism, international tourism, reduced seasonality Funding: Total budget € 15,751,376.7 ERDF contribution €6,694,335.1 National budget €1,181,353.3 Regional budget - Private contribution €7,875,688.4 ERDF Objective: 9 Convergence Competitiveness Territorial cooperation
October 2015 9 Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and Cohesion Fund (CF) – Work Package nine: Culture and Tourism
Motivation for selection
The project is interesting in that it involves significant private secor investment. The private sector investment levered by the project exceeded the amount of ERDF support.
The project is the largest project within Axis 2, which has provided direct support to businesses to secure the adaptation of the tourism industry towards expanding market niches. In addition, the project demonstrates the challenge of a public sector keen to demonstrate robust systems of financial management, whilst securing significant investment by private sector operators in new markets.
4. Project description
Overall objectives and purpose
The Grant Scheme for Sustainable Tourism Projects by Enterprises is a Maltese Ministry for Tourism-managed project. The Scheme directed public financing to licensed enterprises implementing sustainable tourism projects to strengthen their competitiveness. It aimed at financing “holistic projects” so as to have a stronger impact on the sector. Five intervention areas were identified:
The promotion of Research & Innovation through the intervention of Product Upgrade and Investment in Equipment; The adoption of new technologies through the intervention in Information and Communication Technology; Undertaking environmental practices through interventions relating to investment in Environmentally Friendly Measures; Investment in entrepreneurship; Investment in marketing.
Project Activities The scheme has supported direct and indirect tourism service providers and SMEs.
The aim was to assist the growth and development of beneficiary tourism and cultural operators and to increase the impetus for the continuous growth of sustainable tourism.
The Grant Scheme for Sustainable Tourism Projects by Enterprises programme was initiated in February 2009 with the first call for project applications from businesses.
A total of 110 investment projects have been supported, across a total of 92 organisations, the overwhelming majority of which were SMEs. A minority were either larger businesses such as the Island Hotel Group, or non-business organisations such as Zejtun Parish or Melita Football Club.
The majority of supported businesses were accommodation providers. The project was largely focussed on action category 57 “Other assistance to improve tourism services”, however through its supported investments, it also contributed to all three categories of Cultural Action (58, 59 and 60). Examples of supported cultural actions are set out below in Table 4.1.
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Table 4.1. Illustrative supported actions
Centru Animazzjoni u The Shipwreck film production Kommunikazzjoni (CAK) Leone Philharmonic Society Staging of quality operas in the island of Gozo Zejtun Parish Zejtun Parish Religious Heritage Route Further Enchantment of certain areas and services forming Zejtun Parish part of the Zejtun Parish Religious Heritage Route Centre for the Development of Creativity and Life Skills Masqerade Theatre Company Ltd through the Theatrical Arts and English Language Learning Assocjazzjoni Sportiva Hibernians The Corradino Prison Museum & Interpretation centre Source: Ministry for Tourism ERDF 135 Supported Projects database
Supported investment projects have varied substanially in size. The smallest awared was EUR 7,600 in co-financed support for a destination management company to translate its website into six languages. The largest single award was for EUR 195,000 to support a package of measures to assist a hotel in Gozo to broaden its client base and extend its season. The main focus of this project was an upgrade of its hotel rooms.
The median project award was EUR 57,000 (the mean award was EUR 72,000).
Beneficiaries
The programme supported a range of different types of SMEs and a small number of voluntary sector bodies, including website designers, diving companies, accommodation providers, a football club, an agri food business and a parish council. The majority of supported businesses were accommodation providers.
Most beneficiaries were in receipt of just one award; just 16 received more than one award. Only two businesses, The Limestone Heritage Park and Gardens and the Easy School of Langauages, received three awards. The Limestone Heritage Park for example received some 270,000 Euros of support for separate but complementary investment projects from across three of the calls.
The Main Outputs and Results
The project was co-financed with national funds and ERDF, matching the applicants’ funds. Supported businesses and other activities were not ‘gap’ funded – the requirement was simply for them to provide 50% of the overall cost of the proposed investment.
The total ERDF expenditure by the Grant Scheme for Sustainable Tourism Projects by Enterprises programme was EUR 6,694,000. About a quarter of the funds allocated were to projects located in Gozo1.
This ERDF expenditure by the programme represents some 6.6% of the overall actual Axis 2 expenditure.
1 1,550,482 Euros
October 2015 11 Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and Cohesion Fund (CF) – Work Package nine: Culture and Tourism
Table 4.2. Financial resources (Euros) for Grant Scheme for Sustainable Tourism Projects by Enterprises, 2010-2015
Year Programmed Actual* ERDF National Private Total ERDF National Private Total 2008 2009 2010 €838,356.7 €147,945.3 €986,302.0 €1,972,604.0 €470,852.7 €83,091.6 €553,944.3 €1,107,888.7 2011 €2,314,214.3 €408,390.8 €2,722,605.0 €5,445,210.0 €1,729,140.7 €305,142.5 €2,034,283.2 €4,068,566.3 2012 €2,538,356.7 €447,945.3 €2,986,302.0 €5,972,604.0 €2,447,429.9 €431,899.4 €2,879,329.4 €5,758,658.7
€1,593,750.0 €281,250.0 €1,875,000.0 €3,750,000.0 €1,375,524.5 €242,739.6 €1,618,264.2 €3,236,528.3 2013 2014 €318,750.0 €56,250.0 €375,000.0 €750,000.0 €407,974.1 €71,995.4 €479,969.5 €959,939.0 2015 €0.0 €0.0 €263,413.2 €46,484.7 €309,897.9 €619,795.7
Total €7,603,427.7 €1,341,781.4 €8,945,209.0 €17,890,418.0 €6,694,335.1 €1,181,353.3 €7,875,688.4 €15,751,376.7 * anticipated for 2015
Source: MEAIM, June 2015
5. Political and strategic context
The Ministry for Tourism’s role has been to co-ordinate the joint efforts of government, national agencies and the private sector at all levels of tourisms’ broad- based structure. The Ministry encourages and supports operators in the areas in which it handles funds. As well as a Ministry for Tourism, there is the Malta Tourism Authority which has responsibility for branding and marketing Malta and developing the tourism product.
The introduction of a separate Priority Axis (Axis 2: Promoting sustainable tourism) led to a more than ten-fold increase in the ERDF spend on tourism or culture.
The potential interventions identified in the OP were: Investment in the upgrading of the Maltese (and Gozitian) tourism product across all identified niches and segments including o Upgrading of coastal areas o Enhancement of tourism zones o Restoration and revalorisation of cultural sites o Nature protection interventions that impact on the tourism industry Marketing of diverse tourism segments. Aid schemes to tourism and cultural undertakings and non- undertakings.
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6. Implementation
6.1 The process of project design and planning
The project originated in an analysis of the tourism sector conducted at the beginning of the programming period 2007-2013. Tourism Policy for the Maltese Islands, 2007- 2011 was a key policy document used to define the project and selection criteria. The Tourism Policy for the Maltese Islands 2007-2011 highlighted the need for “an urgent upgrading” of Malta’s product offer.
At a strategic level, the Maltese Government was committed to delivering the programme as planned and absorb all available funds. The size of this project was governed by a combination of an assessment of the capacity of the private sector to come up with projects that strongly supported the objectives of the programme; the resources available to the Ministry of Tourism for match-funding; and significant demands on the available funds from other ministries.
During the 2004-2006 period, EUR 1.5 million were invested in supporting tourism industry projects. This experience helped to give an indication of levels of latent demand for funding support. The amount committed under the Aid Scheme amounted to EUR 7,942,000.
6.2 Management, monitoring and evaluation system of the project
The scheme was advertised, and information sessions for prospective applicants were organised by the Ministry for Tourism. Applications of around 20 pages in length were prepared. Applicants were given 8 weeks between the call date and the submission deadline to prepare applications for funding.
The 1st call was in February 2009 and resulted in 91 applications. Of these, 30 projects were successful (61 unsuccessful). Out of the 30, 29 signed the Grant Agreement during 2009; one of the successful applicants opted out of the scheme.
The 2nd call was in October 2009 and the 3rd call in October 2010. A 4th call was then issued in January 2013 to fill underspend resulting from the first three calls.
Prior to these subsequent calls, several events were held to explain the objectives of the scheme, the criteria for selection and the demands on beneficiaries. Those with current responsibility for managing the project considered that the quality of applications improved, with more innovative projects included in the groups of projects supported that responded to calls 2, 3 and 4. It was considered that a combination of applicants being better informed, greater use of external consultants and stronger economic conditions all contributed to the perceived improvement in the quality of applications.
An evaluation committee made up of a Chairman and a representative of the Ministry for Tourism and a representative of the Malta Tourism Authority carried out an initial eligibility assessment with ineligible applicants informed at this stage. A preliminary assessment of the projects was then carried out with projects scored using the scoring matrix specifically designed for the project. The Financial Controller was used to provide expert advice on the financial capacity of applicants. A more detailed assessment of the higher scoring projects was then carried out by an external committee of experts, with expertise in specialist areas including:
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environmental standards equal opportunities ICTs employment National Tourism Policy
In most cases, the time taken between submission and approval was between six and eight months. In a minority of cases the process lasted over a year.
In addition to the project manager, a team of four were employed on contracts for the duration of the scheme (2009-2015). As a result of rentention difficulties, a total of ten different people have been ivolved in the administration of the team. The main reason for staff turnover is understood to stem from team members leaving to take up different job opportunities.
Expenditure was closely monitored with several stages of checking before payments were released in the case of private sector beneficiaries (see Figure 6.1 below).
The Project Manager is starting to discuss with the Evaluation Unit how the project should be evaluated. An external evaluation of the project is planned for later in the year.
The monitoring of the scheme started during the fourth quarter of 2013 and is currently ongoing. Information is being collated and this shall provide a clear picture of the positive effects the scheme had on the sector.
October 2015 14 Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and Cohesion Fund (CF) – Work Package nine: Culture and Tourism
Figure 6.1. Financial Flow Chart – Private Sector Beneficiaries
Source: Operational Programme 1 Cohesion Policy 2007-2013 Investing in competitiveness for a better quality of life, Malta March 2014 p.178
6.3 Governance arrangements of the project
The project was managed by the Tourism Sustainable Development Unit (TDSU) within the Ministry for Tourism (the Intermediate Body). The partners involved in the design of the project and initial project assessment were the Malta Tourism Authority and the Ministry for Tourism.
Invoice validation and endorsement was made by the Tourism Sustainable Development Unit within the Ministry for Tourism and then re-validated and endorsed by others within the Ministry for Tourism, before payment was released by the Treasury.
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6.4 Innovative elements and novel approaches to implementation
An ERDF supported project of this scale and complexity involving the private sector was novel in the context of Malta. Even though the intervention approach is already in use at the European level, the project – particularly by seeking to support beneficiary businesses with an integrated package of support – seems rather innovative for the Maltese context.
A preliminary assessment of the projects was carried out with projects scored by the selection committee using the scoring matrix designed for the project. The criteria are presented in the Annex ERDF 135 Selection Criteria. The criteria demonstrate an exceptionally averse attitude to risk, with applicants scoring worse on the preliminary assessment if they have been established for less than five years or if the project represents more than a 5% of net assets.
6.5 Key implementation obstacles and problem-solving practices
Implementing a project of this scale and complexity involving the private sector proved challenging. The skills and experience gained from administering the scheme have proved to be in high demand and as a result, staff retention has been an issue.
The first call for projects resulted in the majority of applications either scoring poorly against the appraisal criteria, or being ineligible. Prior to subsequent calls potential applicants were given more detailed advice notes and several workshops were held which businesses and business support advisers could attend. This additional advice and support helped to increase the ratio of high scoring applications and reduce the number of rejected applications.
The preliminary appraisal scoring matrix (see Annex) included a “commitment” category. Applicants scored higher if they appointed a project manager and accountant and more marks still if “further additional resources were appointed on the project”. One of the successful applicants we interviewed submitted two unsuccessful applications before employing a specialist adviser to write up their application for support.
Several of the beneficiaries experienced delays of several months between them paying contractors and suppliers, and receiving payments from the Treasury. Several referred to cash flow difficulties before being reimbursed.
The advice and support was consistent for all 4 stages. Despite significant levels of ineligible spend resulting from calls 1 to 3, the decision was taken by the TDSU that the measures that were in place to provide information to beneficiaries were both robust and sufficient, claiming that:
consistant advice was communicated to the beneficiaries by the TDSU in relation to the queries raised about eligible/non-eligible activity areas. the information seminars delivered prior to the launch of each call by the TDSU explained in detail the eligible activity areas and the methods that were to be adopted prior to the adoption of changes. apart from information seminars, the TDSU also communicated these methods to applicants during the initial site visit conducted by the TDSU, as well as during the signing of the Grant Agreement. the TDSU conducted frequent meetings with beneficiaries whenever requests were put forward.
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The Ministry for Tourism judged that when beneficiaries “decided not to adhere to the procedures set out in the guidance notes”, for example claiming for expenditure for an item of equipment different to that specified in the application for support, then they had no other option but to “implement the necessary rectifications”. Several of the supported businesses judged that the cost to their business of delaying construction/ refurbishments and risking completion after the start of the summer tourism season left them with no alternative but to press ahead with works according to the planned timetable.
The incorporation of “information and communication technology” was among the selection criteria. Many of the supported projects involved purchasing digital or other technical equipment. The period between applications being submitted and the purchase of the equipment was typically over a year. In the case of several of those we interviewed, the model or version of such equipment changed over this period. Several projects purchased equipment which they assumed had been agreed.
However, because a different model or version had been purchased and the change had not been notified, this expenditure was deemed ineligible. In some cases, significant amounts of expenditure were deemed ineligible. Moreover, delays in implementation led to late submission of claims. Where the beneficiary had not informed the TDSU of delays and thus not received acceptance of change to the submission date, again this expenditure was judged ineligible. Overall around EUR 1 million of underspend resulted. Underspend led to an additional 4th call for applications.
Had more projects actually needed the full amount of public sector grant award, then the consequences for supported businesses could have been much more negative, with potentially some businesses facing financial difficulty or even being forced into liquidation.
7. Key results
Table 7.1. Results achieved by the Grant Scheme for Sustainable Tourism Projects by Enterprises
No of projects implemented by No of enterprises adopting new Year enterprises products and processes Programmed Achieved Programmed Achieved Total 110 115 90 68 Source: Managing Authority (Breakdown by year not available)
The results achieved by the Grant Scheme for Sustainable Tourism Projects by Enterprises appear to have been generally positive.
In order to gain some insights into how successful the project has been, we interviewed a random stratified sample of 12 beneficiaries of the grant scheme. We stratified the sample by the type of activity of the beneficiary. The following types activities were interviewed2: • Agri-tourism • Coach operator • Dive school
2 Data derived from MTA database of ERDF 135 supported investments
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• Dive school • Events venues (conferences, weddings, etc) • Farmhouse accommodation • Football club • Hotel • Hotel • Hotel • Language school and accommodation • Web designer.
Our interviews with project beneficiaries found that the grant assistance provided a valuable boost to supported businesses and other (supported organisations), with each of those receiving capital grant support experiencing a growth in turnover following implementation of the investment. The businesses supported were all well established businesses and mostly over 10 years old.
Each of the twelve projects we looked at appear to have increased the competiveness of their business3. In most cases, beneficiaries felt that the investment has helped to increase their potential to extend the tourism season. This finding suggests that the overall project (ERDF 135) will have made a contribution towards a less seasonal, higher value added, more sustainable tourism industry; replacing seasonal jobs with full-time year-round jobs.
The modest reduction in seasonality that has been achieved by the programme overall (see Malta case study report) reflects a much weaker emphasis across the remainder of projects supported by Priority Axis 2 to specifically aim to reduce seasonality and achieve growth of winter and shoulder season activities and markets.
33 Or the potential to attract tourists to use the supported facility/ attraction in the case of non-commercial organisations supported
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Melita AFC, with the activities rendered possible through the grant supplied thanks to the ERDF scheme, has managed to attract a number of foreign teams to use their premises for training camps/ tournaments, as well as to host various tournaments, including foreign teams:
Tournament / Team Country of Origin Dates Travel Agent or Broker US Virtus Badolato Switzerland February 2013 Henry Bray FC Burgdorf Germany March 2013 Vacations Malta Ltd KC Kolliken Switzerland March 2013 Vacations Malta Ltd FC Klus Balsthal Switzerland March 2013 Vacations Malta Ltd FC Rothorn Switzerland March 2013 Vacations Malta Ltd FC Scandinavia Scandinavia (Sweden, April 2013 Johann Nyberg Norway, Finland, Denmark) St Andrew School United Kingdom April 2013 Mary Grace Lynch Groups Atalanta Calcio (Former Italy June 2013 Lavinia Boroni Players) Mansfield Town United Kingdom July 2013 ProSports Travel AC Milan Junior Camp Italy July 2013 ESE Education FC Parkside United Kingdom April 2014 Sim Corporation FC Zuzwil Switzerland March 2014 Groups Ltd. FC Gontenschwil Switzerland March 2014 P&A Sullivan AC Milan Junior Camp Italy July 2014 ESE Education Rugby League European Europe July 2014 Malta Rugby League Federation (RLEF) UEFA U17 Holland July 2014 UEFA Championships (Holland) FC Embrach Switzerland July 2014 Mice Services FC Tafers Switzerland March 2015 EIBTM Eurolawyers Europe July 2015 (scheduled) Mice Services Chamionships 2015 Source: Melita AFC
The effectiveness of supported schemes will be influenced by the ability of the public sector to co-ordinate actions. The example below highlights the need for a coordinated stategy for business support:
The Atlantis Diving Centre has with ERDF support invested heavily in Technical Diving. The business saw a great potential for year-round diving. The main diving season in Malta has typically started with Easter and finished by the end of October. Between November and March, most dive centres have tended to close doors. Atlantis Diving made this investment on the assumption that facilities provided by the local authories including cliff ladders to access the dive sites would remain in place throughout the year. “The first winter 2013/2014 worked pretty well and more or less we always had some sort of access to the sea”. In January, February and March 2015 Atlantis however claimed that there was “not a single ladder providing access dive sites around Gozo”. The business is now considering closing for 3 or 4 months in 2015/2016 due to the uncertainty as to whether access to the dive sites will be provided next winter.
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Figure 7.1. Malta Sunripe’s ERDF 135 supported audio visual presentation facilities
The high ratio of grant support (intervention rate of 50%) has enabled some projects (4 out of the 12 we looked at) to go ahead with investments, which they would not have been able to do without grant support. One such project was Malta Sunripe Co Ltd’s investment in new facilities to enable agri-tourism tours. The project appears to have the potential to improve tourist experience with a new niche tourism product/ facility/ service with potential to stimulate repeat visits and recommendations to visit Malta in winter. The project is understood to be regarded by the Managing Authority as being among the more successful projects. The overriding business aim of the investment was to generate sufficient revenue to enable the farm to continue to support two families and for their farming way of life to remain as unaffected as possible. In this respect, the project has been a spectacular success, more than doubling the turnover of their business with around two agri-tours per week or 80 tours per year.
Half of the respondents considered that their investment would have been delayed and the scale or quality of the investment would have been affected without grant support. The remaining two felt that that the investment would just have been delayed. None of the supported businesses felt the project would have gone ahead exactly as planned without ERDF support.
The majority of assisted projects focussed on room or facility refurbishments and equipment upgrades. Such investments can be expected to have increased the competiveness of supported businesses and may have had a demonstration effect, helping to stimulate a change in the quality of visitor offer that is currently occurring. Only a minority of supported projects look likely to have the potential to directly lead to a net additional increase in the overall number of tourists visiting Malta outside of the peak holiday season.
Several projects were implemented which appear to have increased the competiveness of Malta in niche tourism market areas, and which offer the potential to extend the tourism season and attract net additional visitors to Malta.
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8. Sustainability and transferability
8.1 Sustainability
Long-term funding for investments has historically been made difficult by the limited level of tourism demand between September and April. In funding “sustainable” tourism projects initiated by enterprises and voluntary sector bodies, it could be argued that ERDF has intervened to help correct some important market failures, mainly related to the highly seasonal nature of tourism in Malta and Gozo.
Helped by a combination of ERDF support and strong growth in tourist numbers over recent years, most of those assisted have experienced strong growth since the implementation of the ERDF supported investment. The ERDF support has strengthened competitive position and viability.
Supported investments have also helped to broaden the visitor offer – adding to the range and quality of facilities and attractions.
The project complements the integrated package of measures which have drawn on the advice of different segments of Malta’s tourist industry and then been closely co- ordinated by the Maltese Government. It remains too early to tell whether the very significant investments in cultural heritage sites will help to stimulate investments which will in turn lead to a longer-term reduction in seasonality.
Although there has been a strong growth in visitor numbers across the whole year for many businesses, tourism demand remains heavily skewed towards the summer months, and levels of demand remain relatively week in the winter months.
Should any of the supported investments fail to achieve economic levels of use or utlilisation throughout most of the year, this could be expected to limit the ability of the supported enterprise to reinvest in their repair, maintenance and necessary upgrading – and in turn the long-term sustainability of the investment. Our finding that in most cases beneficiaries felt the investment has helped to increase their potential to extend the tourism season is nevertheless encouraging. It suggests that the overall project (ERDF 135) will have made a contribution towards a less seasonal, higher value added, more sustainable tourism industry; replacing seasonal jobs with full-time year-round jobs.
The Ministry of Tourism initiated discussions with the Managing Authority in order to “capitalise on the good aspects of the scheme in discussion and to improve on areas which proved less positive”. The Ministry is still in a very early stage of assessment, and further discussions with the MA shall materialise in this regard.
8.2 Transferability
Mechanisms that could be expected to favour a smoother implementation of the project would be:
To ensure the remuneration level is sufficient to attract and retain an appropriately skilled team with the experience to cope with the demands of the role. Schemes of this nature are expensive to manage. Better initial communication of the aims of the project and the demands on applicants.
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Very clear ongoing guidance – written and verbal – which reminds businesses of what project expenditure will be ineligible. Employment of an outward facing manager to communicate with beneficiaries and provide a hand-holding role through from pre-application to project completion. Such support could be expected to have helped to alleviate some of the problems faced by businesses and the problems faced in retaining project staff. A two-stage application process with a short pre-application to avoid businesses incurring the cost of expensive full applications. More internal or external support to assist with the appraisal of projects and reduce the time between application and approval would have speeded up the implementation of projects.
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9. Lessons learnt
The lessons learnt can be divided into those which are positive and those where problems remain:
Positive lessons Clear advice and guidance can raise the quality of applications particularly in contexts where private sector businesses have no prior experience of ERDF support A strong argument could be made that ERDF support helped to “raise the bar” sooner and to a “higher standard” than would otherwise have been achieved by the private sector without pump-priming support. The quality of individual business websites is improving, many accommodation providers have upgraded the quality of their accommodation, and new entrants have entered the market without grant support, which are contributing to a higher quality and more diverse tourist offer. Strong growth in tourism demand then created the conditions by which others were able to follow suit. The extent to which the raising of the bar contributed to the overall growth in tourism demand and created a demonstration effect which then stimulated local competitors to respond is difficult to establish.
Other lessons
The appraisal process may have been overly mechanistic – projects achieved a high score if they combined the five areas of intervention. Insufficient priority may have been afforded to projects that had the direct potential to attract net additional visitors to Malta. The scheme attracted a broad range of types of projects. Thematic calls, for example “Investment in diving infrastructure to enable all year round diving”, with appropriately tailored selection criteria and adjusted intervention rates, may have stimulated stronger applications and achieved better value for money. More needs to be done to reduce the administrative burden on assisted businesses. Several interviewees were unsure whether they could cope again with the bureaucracy associated with applying for ERDF support. For several, the recruitment of an outward-facing business support manager to provide initial advice and guidance and ongoing support to make sure expenditure was not being made that would be deemed ineligible was necessary. Greater hand- holding to facilitate stronger applications for support, reduce ineligible spend and in turn reduce underspend, would be beneficial. There is a need for continued efforts to ensure the effective coordination of strategies and investments.
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References
• Malta’s National Strategic Reference Framework (NSRF). • Thematic Evaluation: An Evaluation of the Contribution of Operational Programme I: Initiatives to Competitiveness and Improvement of Quality of Life (Competitiveness Report) Monitoring Committee 4th November 2014 London Economics. • Tourism industry sub-sectors COUNTRY REPORT MALTA March 2014 European Commission. • Tourism Policy for the Maltese Islands, 2006-2010. • Tourism Policy for the Maltese Islands, 2007-2011. • Tourism Policy for the Maltese Islands, 2012-2015.
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Annex: ERDF 135 Project selection Criteria
Preliminary Risk Appraisal Time - 3.3 and 3.8 Commitment - Holistic Nature of Total (15 Age (from app date to Investment 3.6.1, 3.7.6 and Need for Support Project pass)
last date in 3.8) 3.9 Turnover 5 (%) 5 (%) 5 (%) 5 (%) 10 (%) 5 (%) %age of project Time Critical / Project Commitment and No. of Intervention Age of organisation investment costs vis-à- Need for Support Duration capacity to implement Areas vis net assets Award 3 to large Award 0 if no Award 1 - One Action Award 1 if Establshed Award 1 if project Award 1 if more than enterprises (based on preparatory studies in Line with the 0-2 years duration over 24 mth 11% the Enterprise Size presented Incentive Guidelines Declaration) Award 5 to medium Award 2 - Two Actions Award 3 if Established Award 3 if project Award 3 if 6%-10% Award 2 if preparatory enterprises (based on in Line with the 3 - 5 years duration 13 - 24 mth inclusive studies presented the Enterprise Size Incentive Guidelines Declaration)
Award 7 to micro and Add 1 if project small enterprises & to Award 3 - Three Award 5 if Established Award 5 if project Award 5 if Less than manager and self-employed (based Actions in Line with the for over 5 years duration 0 - 12 mth 5% accountant appointed. on the Enterprise Size Incentive Guidelines Declaration)
Add an additional 2 Add 3 if the enterpise points if additional forms part of a network Award 4 - Four Actions See Column S for resources beyond the or is a start up (i.e. in Line with the ratio... project manager and establihsed less than 5 Incentive Guidelines accountant are years) appointed on project.
Employment levels to Award 5 - Five Actions be verified with ETC in Line with the Source: Project documents records. Incentive Guidelines
Project interventions include: Product October 2015 25 upgrade, Environmentally friendly measures, ICT, Entrepreneurship, Marketing Ex post evaluation of Cohesion Policy programmes 2007-2013, focusing on the European Regional Development Fund (ERDF) and Cohesion Fund (CF) – Work Package nine: Culture and Tourism Strategic
Horizontal Total MA Score Scoring 3.7.2 annd 4.1 Innovation and Information and Employment 4.2 competitiveness 4.2 Equal Opportunities - 4.1 - Opportunities Equal Compliance with with national Compliance Compliance with with national Compliance Communication Tech. 4.2 Tech. Communication Environment Sustainability - - Sustainability Environment tourism policy and seasonality tourism policy and seasonality
555101020 (2) (2) (2) 10 Malta (2) Malta Imported (2) Competitiveness Competitiveness Sustainability (2) Sustainability Project in(3) itself Competitiveness For Competitiveness Product authencticity Distribution of income Product enhancement Structural Reforms (2) Structural Reforms Earnings/V. Added (3) 100 (%) 100 (%) Source: Project documents
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