First quarter tourism hits five-year high

Tourist arrivals were up in the first quarter of the year and although they were spending less time in Malta, expenditure was on the increase and they were opting to stay in hotels of a high category, a Deloitte study has shown.

With arrivals rising seven per cent (11,398), guest nights falling by 3.5 per cent (53,900) and expenditure up 9.9 per cent, it was a case of "the good, the bad and the ugly", in the words of Deloitte partner Raphael Aloisio.

The reaction by the president of the Malta Hotels and Restaurants Association, Josef Formosa Gauci, was "mixed".

At 173,564 for Q1, tourist arrivals were the highest for the last five years, but Mr Formosa Gauci expressed caution in over-interpreting the figures.

The statistics were indicative of the changing profile and habits of tourists visiting Malta and on a global level, Mr Aloisio said.

The fact that they were bigger spenders was comforting, both for the operators and the economy. Even the expenditure on airfares was actually up, he said.

Trends in the correlation between flights and arrivals, however, were not consistent, the survey showed. The German market did not grow, despite the significant increase in seat capacity on the route, while the Italian market grew by a hefty 33.4 per cent - more than the 13 per cent increase in flights. The UK and French markets also remained flat, but so did the number of flights from these destinations. Therefore, increases could not be expected.

Mr Aloisio said these trends were an indication that the key to success was the right balance between seat capacity and marketing drive.

The Benelux, Scandinavian and Russian markets registered positive increases, the BOV MHRA hotel survey found. Other markets - mainly Ireland - had reached an all-time high over the last four years, with an increase of 14 per cent.

Overall, the performance of hotels in the three categories improved in the first three months of the year over 2006.

Occupancy levels rose in every category, particularly the four-star hotels (16.4 per cent), and the gross operating profit per available room declined. Room rates reached a five-year high in the four- and three-star hotels, decreasing by 2.4 per cent in the five-star properties.

The result of increased occupancy levels and turnover was that hotel operators registered lower losses in the first quarter, Mr Aloisio said.

In terms of occupancy and rates, the five- and four-star categories were mostly upbeat about the future prospects, but the levels of optimism were low among the three-star hotels.

While welcoming the increase in arrivals, a cautiously optimistic MHRA president held that it had to be substantially higher for the guest nights to be satisfactory.

A critical assessment of the trends showed that improvement in the operational results was driven primarily by a higher average spend, the closure of a number of hotels (mostly in the lower category), the reduction in bed stock availability, and the fact that more tourists were opting for hotel accommodation as opposed to other forms.

The increases from Italy and Dublin and the fact that the UK market had stopped shrinking were related to the low-cost carriers, meaning their introduction had been crucial, Mr Formosa Gauci said.

As to the future, a decline in tour operator business was expected in the second quarter, while arrivals would continue to grow, but this had to be substantial, he insisted.

An increase in occupancy was also expected in May and June, but the figures would remain the same in July and August.

The increased arrivals over the last few months confirmed the effect of correct strategic decisions and a genuine collective effort. However, the survey results also showed there was "a long way to go and a number of challenges to overcome".

It was critical that the marketing drive be stepped up and carried out in the core markets throughout the year, Mr Formosa Gauci insisted, welcoming the engagement of German agency Media Consulta by the Malta Tourism Authority.

"We must keep our feet on the ground and continue to collectively face the challenges of a dynamically changing market," he said.

It was a time for action, but Mr Formosa Gauci was confident that a collective effort and push in the right direction would lead to success - an achievement that left no room for political divide and personal agendas.

An update on the National Tourism Plan, its implementation and monitoring was presented by Marie-Louise Mangion, head of EU affairs and policy development within the Tourism Ministry, who said that the first draft of the MTA's marketing plan would be ready by next month.

One idea was to create a marine aquarium in Qawra, funded by the EU and complete with marine archaeology and a roof garden.

Initiatives were also being taken to develop Qawra beach, while a pilot project for the Sliema rocky beach was in the pipeline, and CCTV cameras would be installed in major dive sites.

The inclusion of tourism in the national curriculum to induce a culture change in future generations was meant to start in the second half of the year, Ms Mangion said.

The Private Sector Consultative Group, which had given its input for the plan, was satisfied that "things are being done".