The cost of procrastination

Malta Hotels and Restaurants Association president Josef Formosa Gauci believes the Tourism Minister is getting flak because we live in a country synonymous with bad planning and procrastination. Tourism might be recovering but the MHRA president tells Herman Grech he is not convinced that bold decisions will be taken in the coming year.

When the typically outspoken Vince Farrugia, director general of the Association of Chamber for Small and Medium Enterprises, recently urged the Prime Minister to sack the Tourism Minister and take over his portfolio, it was the MHRA president who instantly sprung to Francis Zammit Dimech's defence.

While Dr Zammit Dimech has been singled out for scathing criticism for the tourism decline, Mr Formosa Gauci says it is useless blaming all the country's shortcomings on the minister.

"Yes some of our members had problems with Dr Zammit Dimech in the past but Mr Farrugia's demand was eight months too late. We believe Dr Zammit Dimech has understood our arguments. When there are problems with roads, government projects and surcharges, everyone starts targeting the minister. Changing the minister will not make any difference at this stage."

The MHRA president may rely on the recent tourism statistics to back his defence.

The decline was stopped last November and the prospects for this year are positive. Figures released by the National Statistics Office showed that arrivals in February rose by nearly seven per cent over the same month last year. Tourism expenditure increased by 13 per cent.

Of course, hoteliers are cautious about the rising figures. The government had, after all, originally forecast an increase of 150,000 visitors between 2005 and 2007.

"We've stemmed the decline but at this stage we need substantial growth," Mr Formosa Gauci notes.

Prospects for the five-star hotel category this year are positive as these establishments successfully tap the conference and incentive travel sector. Luxury hotels are expecting an increase of 10 per cent in occupancy in the next three months.

The same cannot be said for the three-star category and to a certain extent four-star hotels (see list below), which will once again be left with floors of unoccupied rooms.

While the inter-ministerial committee for tourism was a good idea, it is clearly not delivering fast enough.

"We're not convinced that the necessary bold decisions will be taken in the coming year. The government should, however, be aware that come next year, on the eve of an election, bad press on tourism can be very detrimental," Mr Formosa Gauci warns.

The problem with tourism in the past three years hinged on three factors - poor marketing, poor product and the lack of seating capacity.

The MHRA president believes the Malta Tourism Authority has finally put its house in order. With a new chairman and board, and changes in the marketing department, the MTA is now more focused.

"Up until last year it was spending money without knowing whether it was the best way to spend it... The authority did the right thing by pulling CNN's $1 million promotional campaign for Malta in favour of a drive in the British press," he says.

The introduction of low-cost airlines was also a step in the right direction but Mr Formosa Gauci wonders why it had to take the government two years to get three cheap routes.

The government, he argues, is clearly still proceeding too slowly on providing assistance for the introduction of more low-cost routes, especially in light of the evident success of the few budget airlines operating to Malta.

The increase in tourism figures in the past few months is no coincidence - suffice to say that the tourism arrivals from Italy increased by 100 per cent as Ryanair introduced a daily flight from Pisa. No less than 93 per cent of them are visiting Malta for the first time.

Recent figures show that Ryanair is flying at least 80 per cent capacity to Malta, more than three quarters of its passengers being foreign.

Yet the arrival figures are still a drop in the ocean compared with the real potential of low-cost travel. At the moment an estimated 10 per cent of all travel to Malta is spawned by low-cost airlines - in the rest of Europe it is 40 per cent. Half of all British passengers last year used budget airlines.

The delay in introducing another low-cost route to the UK is particularly frustrating for the MHRA. Easyjet dropped plans to fly to Malta while Ryanair's interest to fly to the East Midlands and Southampton was not met with enthusiasm.

Striking a deal with a budget airline now would mean the introduction of a service in September or October.

Air Malta's provision of a weekly service to certain British airports provides no substitute for the sheer numbers carried on a daily budget service, Mr Formosa Gauci says.

The MHRA acknowledges Air Malta's essential role and warns that the worst thing that could happen to the industry is the national airline going bust.

Air Malta is, however, still suffering the legacy of different governments which have used the airline as a job provider. The airline needs to concentrate on major routes, while the government needs to reallocate some of Air Malta's 1,500 workers, the MHRA president contends.

It is worth noting, he says, that despite the alarm bells, the introduction of low-cost airlines has had little or no effect on Air Malta - the national airline flew the same number of passengers in December when compared with the previous year.

The authorities need to continue monitoring tourism trends, Mr Formosa Gauci says - the tour operator business is in decline all over Europe to the extent that many operators are now concentrating on direct investment. Suffice to say that there was an 11.7 per cent drop in package holidays. Travellers nowadays prefer shorter breaks and are booking their trips online.

In a cut-throat sector, the government simply could not afford to procrastinate for months, possibly years, to take action especially on the recently announced national tourism plan.

"We are so small that the vested interests of small groups can be important at a national level. It's petty, but that's the sad reality for Malta. For example, our recommendation to fully liberalise the taxi service was turned down."

In the MHRA president's opinion, taxi drivers are being short-sighted since the sector's liberalisation would drive prices down, encouraging Maltese people to make use of taxis.

"We get frequent complaints about taxis but it seems that the government is reluctant to touch certain sectors. And as we get closer to the election, this will become more prevalent."

Likewise, the MHRA is frustrated with the sheer delays of the promised building regulations. He says it is high time for the authorities to talk less and act more.

"The construction industry is having an impact on tourists' satisfaction. When you are about to check into a hotel and find two cranes outside, you are bound to complain. I'm not advocating putting a stop to construction but why should we disrupt an entire area when some construction is taking place."

The reputation of the hunting lobby is also giving Malta a bad name.

"How can the island promote country walks with tourists when birds are being blasted out of the sky?" Mr Formosa Gauci wonders.

He envisages that the introduction of the euro will have little or no effect on the hotel industry especially since any contracts with tour operators are negotiated in euro anyway.

The MHRA, which is a participant on the National Euro Changeover Committee, has made it clear to its members that they have to comply fully with the national guidelines.

"There should not be an increase in prices but we have to see if the cost of food supplies, for example, will increase," he says.