Operating results for the last quarter of 2003 were very weak and in the five-star sector during that quarter, the gross operating profit margin of just five per cent was similar to that seen immediately following the September 11 terrorist attacks in New York, an MHRA hotel survey for the fourth quarter of 2003 shows.
According to the National Statistics Office, tourist arrivals in 2003 amounted to 1.13 million, down by 0.6 per cent over the previous year.
The MHRA survey, carried out by Deloitte, confirmed the Malta Hotels and Restaurants Association's predictions of a poor end to the year, with October and November being particularly weak months for hotels, which experienced sharp falls in occupancy and strong downward pressure on room rates.
MHRA president Winston Zahra said that if this trend continued, there could be a significant amount of downsizing of the tourism sector as a whole.
Speaking during the presentation of the survey report to hoteliers at the Radisson SAS Baypoint yesterday, Mr Zahra said that flash figures for the first quarter this year indicated a similar trend compared to the same quarter last year.
He said the second quarter might show a slight pickup while, although it was still early to say, summer bookings were so far encouraging.
The key findings of the survey showed that over the period October to December 2003, five-star occupancy was 12 per cent lower than last year at just 48 per cent, while room rates were five per cent lower at Lm31.73.
In the four-star category, the fall in occupancy rate was less, but the fall in room rates was greater.
Four-star occupancy was two per cent lower than the corresponding period in the previous year at 55 per cent but room rates were 15 per cent lower at Lm11.74.
The survey showed that the three-star sector also saw a decline in both occupancy and room rates - this category was six per cent lower in occupancy at 52 per cent and seven per cent in room rates at Lm6.95.
Another issue highlighted in the survey report was the decline in the UK market to Malta which until now had remained a key source of growth.
"2003 seems to be a year that hotel owners would probably prefer to forget," the report states, remarking that five-star occupancy during that year overall was six per cent down on the previous year and rates were four per cent down, leading to a 12 per cent fall in revenue per available room.
Four-star occupancy was one per cent up on the previous year but rates were 11 per cent down, leading to a four per cent fall in revenue per available room.
Similarly, in the three-star sector revenue fell by over six per cent.
Commenting on the performance during the fourth quarter last year, Nick Captur, partner at Deloitte, said the industry during 2003 had a lot to contend with in terms of tensions and struggling economies among others, but although a number of resorts suffered from declining demand levels, resorts in the Caribbean, Middle East and the Pacific managed some impressive growth.
"We can see that hotel owners (in Malta) are starting to question the reasonability of the returns they are getting on their investment.
"Several properties have closed their doors already and more closures seem to be in the pipeline. If this trend escalates, it could be unhealthy for our national economic growth and employment in the sector," Mr Captur said.
Mr Captur said that comments by hoteliers taking part in the survey included claims that Malta was a neglected destination, that it had excess room stock and that it had lost its competitive edge.
On his part Mr Zahra told hoteliers that the MHRA last June had seen the "writing on the wall" about what was going to happen and gave its warnings, but these had remained unheeded.
Mr Zahra said the MHRA wished to see more commitment to the industry from the government, the Malta Tourism Authority and the tourism sector itself.
"The tourism industry has to be taken more seriously, because it could kick start the economy... but nothing is going to fall in our laps.
"It will happen if we make it happen," he said as he stressed the need of a determined and focused drive to make it happen. Malta needed some 400,000 more visitors each year, he said.
Mr Zahra spoke about "some opportunities on the horizon" - EU funding was one and additional flight capacity to Malta this summer another.
But, he stressed, Malta must improve its product, build on it by marketing unique selling points and tapping new markets: "action is needed now more than ever before."
A fall of between three and six per cent in average return on investment during 2003 would not attract investment and did not augur well for the quality of the overall product in future, he said.