Hotels face 'wash-out' in first quarter

The former president of the Malta Hotels and Restaurants Association, Winston J. Zahra, yesterday described hotel business in the first three months of this year as "a wash-out", lambasting the manner in which the government and the Malta Tourism Authority are handling tourism.

Mr Zahra said certain tourist operators were considering diverting as much as 10 to 20 per cent of their markets elsewhere, before adding that big names are "considering pulling out of Malta altogether".

He made this strong intervention during a conference organised by the MHRA yesterday and it was met with resounding applause from participants.

He put forward a motion, supported by the association's president Justin Zammit Tabona, calling for an extraordinary general meeting to be held as soon as possible.

A survey by Deloitte and Touche, commissioned by the MHRA, was presented during the conference. Although it reports an overall increase of 14,500 tourists (35,500 fewer than the government had targeted) it also highlights the fact that the extra revenue - considered as too little by hoteliers - was being eroded by increased costs, particularly energy bills.

But what is of greater concern is that hoteliers say the prospects for this year are not good either. "People in the business say it clearly: Business in the first months of 2006 is a wash-out," Mr Zahra insisted.

He referred to an emergency meeting the MTA held with one "big name" operator that was considering pulling out and asked: "Did it have to come to this?" Although he did not mention any names, sources told The Times the operator in question was First Choice - a key player for Malta in the UK market.

Both Tourism Minister Francis Zammit Dimech and MTA chairman Romwald Lungaro-Mifsud were not at the conference.

When contacted, Dr Zammit Dimech, who is abroad, said the MTA was going through a restructuring process and he described 2005 as "a transitional year".

When asked why the government had introduced a target for arrivals when it knew the authority would be in transition, he said the target was there to give the authority direction.

The projected tourists who did not arrive last year will be accrued over this year and the next, which means that the optimum target for the next two years will be some 70,000 extra tourists.

However, the minister said the MTA had an optimum target and a "more realistic target" - which he said was about half the optimum target. Dr Zammit Dimech said the industry was aware that the target was on two levels.

Mr Zahra, however, said he knew nothing about a "more realistic target", adding: "The official target set by the Prime Minister in the budget for 2005 was clearly 50,000 with absolutely no mention ever being made of half that amount".

Mr Zammit Tabona was not available for comment on this point.

At the conference, Mr Zahra said he had started last year quite upbeat about the prospects for the sector. "I was one of the first people to congratulate the government for taking tourism seriously in the budget... but where are we now?

"The closure of offices overseas and transferring their representation to agencies which also sell other destinations was not part of the plan. The plan was to close the offices to save all the wasted administrative costs and employ an aggressive Maltese sales force to go out to the market and constantly sell the destination. This has not been done and we are currently very weakly represented in our feeder markets," he insisted.

In the report, the MHRA laments that the 14,500 extra tourists that came to Malta was a far cry from the targeted 50,000 and lower than average for the Mediterranean area. "Ultimately, even though we grew the volume by 14,700 people, revenues fell by Lm5 million, so how can anyone say that tourism grew in 2005 given such a result? Who are we trying to fool?" Mr Zahra asked.

Overall, the occupancy level improved slightly in the five-star and four-star categories while figures fell for star-star hotels. Taking the fourth quarter alone, occupancy levels for five-star hotels remained unchanged despite last November's Commonwealth Heads of Government Meeting, while four-star and three-star hotels saw drops of eight and 11 per cent respectively in that same quarter.

Mr Zahra said: "We represent over half a billion liri of investment and employ thousands of people. We have an obligation and a duty to protect our investments and the jobs of the thousands of people we employ and we will do whatever is necessary to ensure the situation is turned around".