EU structural funding for the Maltese tourism industry and its financial implications

Abstract

Purpose: With Malta's entry in the EU tourism industry enterprises can benefit from a grant scheme that falls under the EU Structural Funds Programme 2004-2006, which entices them to invest in particular areas. This study will analyse the effects and financial implications that EU Structural Funds bring about on the tourism enterprises which have benefited from them. Design: The objective of this study was achieved through a structured mail questionnaire answered by 27 Maltese tourism enterprises whose project was approved for funding, which was backed up by face-to-face interviews carried out with the first ten respondents of the mailed questionnaire. Findings: Most respondents did carry out feasibility studies or any other kind of planning, however only a small number of these made use of any capital investment appraisal techniques. Financial advisers were consulted to the highest extent amongst the other specialist who were consulted. Respondents expected the funded projects to produce a small increase on short-term profitability and a high increase on medium to long-term profitability. Value: Considering the high response to this first Structural Funds allocation to the Maltese tourism industry, this study concludes that this industry is highly in need of financial aid, thus increasing the importance of Structural Funds. Such funds may provide this financial aid if used effectively for projects which are financially feasible and not merely if they are utilised by the beneficiaries just because they are available.