Bed stock expected to drop

The number of hotel beds in Malta is expected to drop by around four to five per cent by 2006, according to research conducted by the Malta Hotels and Restaurants Association.

MHRA president Winston J. Zahra said yesterday that the decrease would result from the closure of some hotels, in spite of the opening of others.

"In all, the net effect will be 2,000 fewer beds," Mr Zahra said. A number of hotels have already announced that they will close down due to lack of profit while another handful are under construction.

An MHRA survey published yesterday showed that four- and five-star hotels in Malta charge among the lowest room rates when compared to similar resorts in tourist meccas like the Balearics, Costa del Sol and the Canary Islands.

The survey, drawn up by Deloitte, compared local data for April, May and June with foreign trends obtained from Deloitte's international Hotelbenchmark.com survey.

The MHRA survey for hotel results in the second quarter of 2004 revealed that five-star occupancy was five percentage points lower than last year, at just 69 per cent. In 2003, five-star hotel occupancy had reached 74 per cent in the second quarter, improving by just two per cent over 2002.

Occupancy in the four-star sector reached 72 per cent, increasing by two per cent over the same quarter last year. Four-star occupancy in 2002 stood at 66 per cent. Concurrently three-star hotel occupancy grew by eight percentage points from 63 per cent last year to 71 per cent this year.

On the other hand, the average room rates in five-star properties went up by 11 per cent in the second quarter. In sharp contrast to this, four-star and three-star hotel rates declined by six per cent and eight per cent respectively and are at historically low levels.

Mr Zahra said the morale in the hotel industry was low. "Hoteliers are currently not confident with what our destination has to offer and therefore succumb to pressure made by operators to put down their rates," he said, giving reasons for some of the negative trends highlighted in the survey.

"The survey, as predicted, shows a general improvement on the second quarter last year, however we are still far below the levels reached by our international counterparts. We definitely cannot blame the international situation any longer and have to do some serious work on our product. We have to re-discover our sense of national pride in offering an overall product which is clean, organised and unique in as many ways as possible. We have to rediscover the genuine hospitality that we were famous for offering to our visitors," Mr Zahra said.

The number of bed-nights sold was two per cent down while tourism expenditure was six per cent down, despite an increase of two per cent in the number of tourists, according to the survey.

Mr Zahra said the industry was still lagging behind the figures of previous years.

"The state of our product, from the lack of cleanliness to the lack of care for our heritage, is definitely a primary factor contributing to the less than satisfactory results. The decline in service standards and levels of hospitality that go unchecked are other reasons," he said.

Mr Zahra said the lack of action from government entities and the slow speed at which decisions were implemented, along with a lack of creativity, innovation and funding that go into marketing the product were also partly to blame.

The MHRA pointed out that three-star results in the second quarter were difficult to quantify. The association said a number of operators who were negatively affected by construction works going on as part of the Paceville embellishment project refused to take part in the survey and this reduced the survey base for the three-star market to a level lower that that of previous surveys.

Mr Zahra said the results of a telephone survey carried out by the MHRA for the third quarter this year showed that hotel occupancies were expected to continue on a positive trend with an expected growth of between four and five per cent.

He also stated that some of this growth has been achieved at the expense of industry discounting which could imply that revenues and profitability would not necessarily grow in the same proportions.