Tourist arrivals, occupancy levels down in all categories

Tourist arrivals between July and September slipped by 6.6 per cent compared to the same period last year but flash occupancy results for the October to December period showed more positive results, according to the findings of a Bank of Valletta/Malta Hotels and Restaurants Association study.

Conducted by Deloitte, the survey shows that total arrivals for this year to date were the lowest for the past six years.

MHRA president Josef Formosa Gauci said the drop in arrivals so far this year hit 4.4 per cent.

However, a lengthening of the average stay partially mitigated the negative impact of the lower number of tourist arrivals, bringing the number of guest nights down by 2.1 per cent for the quarter and 2.9 per cent on a year-to-date basis.

Presenting the results to the industry, Deloitte partner Raphael Aloisio said occupancy levels were down in all categories - by 7.7 per cent in five-star hotels, 2.8 per cent in four-star, and 11.2 per cent in three-star.

The three-star sector was, once again, the biggest loser with such properties finding it difficult to hold their market share.

Achieved occupancy levels in four- and three-star hotels were, however, boosted by a sharp increase in the number of students opting for hotel accommodation, which represented 10 per cent and 12 per cent of total summer business respectively.

Room rates continued to increase in all categories and the achieved room rate was up both on a quarterly and year-to-date basis. In the four-star category, the 9.5 per cent increase in the achieved room rate more than made up for the drop in occupancy and enabled the category to register an improvement in achieved gross operating profit.

In the five-star category, the drop in occupancy was greater than the 4.9 per cent improvement in achieved room rate, resulting in a decline in group operation profit of 4.6 per cent.

The 2.4 per cent rate improvement in the three-star category was a far cry from what was needed to make up for the sharp decline in arrivals and guest night generation in this category, where profitability fell by just under 20 per cent for the quarter and 35.5 per cent on a year-to-date basis.

The performance of three-star hotels has reached a most precarious situation and unless these hotels registered a significant turnaround, the country would have to face up to the challenging prospect of an increasing number of hotel closures in this category, Mr Formosa Gauci noted.

Mr Aloisio pointed out that a decrease in aircraft movement led to a drop in tourist arrivals. But was lower demand giving rise to lower aircraft movement or was it the other way round?

He underlined the fact that arrivals from the British market were 20 per cent down on the previous period; 15.7 per cent down from Germany; and 19.4 per cent down from France.

On the other hand, arrivals from Italy rose by 21.3 per cent, from the Benelux countries by 5.3 per cent, from Scandinavia by 17 .6 per cent and by 58.2 per cent from Russia. The increases were, however, not enough to make up for the dips in the core markets.

Asked whether the MHRA believed the advent of low-cost airlines would make a difference, Mr Formosa Gauci said that although the introduction of low-cost carriers were a help, they were not a solution to all problems.

Arrivals from Italy had increased substantially with the operations of the low-cost airline Meridiana, which increased flight capacity, and an improvement could be seen in the fourth quarter's flash figures for the industry.

The MHRA, he said, would like to see more routes operating from destinations that were underserved including from the German market.

Although the German low-cost carrier Germanwings was to start operations next summer, the association would also like to see one of the major European low-cost carriers operating from Germany to Malta.

Other survey findings include increased energy costs of 11.4 per cent for the five-star category, 5.8 per cent for the four-star category and a massive 36.7 per cent for the three-star sector.

Main survey findings

• Decreasing tourist arrivals.

• Lower flight capacity especially from core markets.

• Poor performance by the core UK, German and French markets.

• Strong performance from Italy, which benefited from increased flight capacity.

• Longer average stays.

• Improved room rates.

• More students opting for hotel accommodation.