Three months without a salary

A few days ago I met a young woman who works in a three-star hotel in the Sliema/St Julian's area. Like her other colleagues, she has not been paid for the last three months. At least she lives with her parents and so she can cope somehow although she is very worried about her future. Other workers at the same hotel are the sole income earners of their families and so their plight is much worse.

The hotel owner explains that he has financial problems as costs for running his hotel are rising while business revenue is down. Some months ago I was talking to a three-star hotel general manager in the Bugibba area. He was very worried about the prospects and was going through the painful process of sacking people who had worked loyally for him for the last 20 years.

The number of five-star hotels that are closing down continues to increase. In what should have been their best three months of the year, hotels in the three-star categories performed really badly between July and September 2006. The hotel survey carried out by Deloitte for the Malta Hotels & Restaurants Association (MHRA) and funded by the Bank of Valletta concludes: "The combined negative impact of lower occupancy and increasing costs meant that the three-star category registered declines in profitability of 19.8%".

As 50,000 fewer tourists came to Malta compared to summer 2005 all hotels registered declining occupancies "with the three-star hotels clearly achieving the poorest results." The survey also notes: "Volume losses in the three-star category would have been significantly worse had it not been for the substantial increase in the number of students opting for hotel accommodation." Seventy per cent of the three-star hotels participating in the survey feel that occupancy levels will continue to deteriorate.

Three-star hotels make up one third of our industry. They are suffering badly and struggling to make ends meet. More of them are going out of business while in the rest of the world three-star hotels are doing well and their prospects look even better. More of them run the risk of going out of business, as they are not viable any more. Their costs continue to rise and their revenues keep falling. The Deloitte Survey published in December 2006 shows that three-star hotels have registered an increase of 58% in energy costs per room over 2005. "Lower revenue and increasing costs actually skyrocketed direct expenses as a percentage of total revenue by 38.2%."

In the rest of the world including Europe, three-star hotels continue to outperform four- and five-star properties. Combined with low-cost airlines three-star hotels are driving tourism growth around the world as they are more in line with the requirements of today's travellers who are taking shorter and more frequent holidays so they want to spread their budget for travelling and cover at least three or four trips whereas before they travelled once a year. In terms of actual room nights booked by clients and the rates paid by clients, three-star hotel room rates in the rest of the world grew by 8.8% in 2005, higher than four- and five-star properties.

Our three-star hotel owners feel ignored by Government and the Malta Tourism Authority (MTA). They also feel that they have been treated with contempt as if they are inferior beings and an embarrassment to our country and tourism industry.

Rather than being encouraged and helped financially to upgrade their standards, they were told to move up to the four- and five-star category as if that alone would ensure their viability and guarantee Malta becoming an up market destination when the country remains so shabby and its environment so degraded!

All tourism destinations that are doing well in the world today have a good mix of three-, four- and five-star properties so that they can cater for a wide range of travellers.

Reviving this sector

These hoteliers have grown tired of voicing their concerns over the same issues time and time again. They want action before it is too late. They want Government and MTA to help them market this sector. They need help to train and improve the skill level of their employees, including at management level.

They also need to be educated to make better use of the Internet and search engine marketing. They need assistance to improve their product and their services. They cannot afford the high taxes, water and electricity surcharge and a host of other costs to comply with a lot of new regulations that have been brought in too quickly. They want the authorities to clamp down on unlicensed beds and illegal operations.

They need MTA to create the demand for more people to want to visit Malta and Gozo. They need government to take the necessary steps to make air links to Malta more affordable and accessible. Three-star hotels based in the Bugibba/Qawra area continue to complain of aggressive timeshare touts pestering their tourists. They complain of the shabbiness and lack of cleanliness of this important tourism area which looked like an extensive dark cemetery during the recent festive season.

In Sliema they point to the parking problem, the timeshare touts and the overflowing sewage on The Strand. Hoteliers want proper enforcement of safety and health regulations in the construction industry and would like not to have tourism areas remain building sites all the year round with a lot of dust and noise pollution disturbing their clients.

In its policy to rejuvenate our tourism industry, the Labour Party is paying particular attention to the plight three-star hotels are in. The Labour proposals include a strong marketing and promotion campaign for this sector, incentives to improve their facilities, funds to innovate their product and services, the creation of schemes to help upgrade their management and train their staff.

Three-star hotels would also benefit greatly from Labour's decision to draw up a national strategic plan in tourism where three-star hotels play a prominent role along with four- and five-star properties. Another important Labour proposal from which three-star hotels would benefit would be the reduction of taxes and the creation of a more business-friendly economic environment in the country.

Labour believes that three-star hotels are indispensable for the country, as we need the necessary volumes of tourists in Malta and Gozo to have more people in jobs and to ensure that our islands regain their viability as a tourist destination and enough traditional and low-cost airlines and tour operators want to bring people to Malta and Gozo.

evaristbartolo@hotmail.com