MHRA calls for urgent, increased funding for tourism

The Malta Hotels and Restaurants Association has called for increased government funding for tourism, saying the crisis in the sector caused by the international recession is worse than originally thought.

“It is true that the government increased funds for the MTA in the last budget, specifically for use with low cost carriers and increased marketing efforts.

These increases were well received by MHRA, but I am afraid to say that the situation has totally changed since last November. Actually, as an industry, we underestimated the depth, impact and the extent of the recession. It is apparent that the situation is far more serious than was anticipated by the government,” MHRA President Kevin DeCesare said this afternoon.

“It is therefore clear that much more funds are required to sustain the tourism industry. We estimate, and indeed have already asked the Prime Minister, to allocate a further €8 million for increased marketing and to help establish new routes.”

Mr DeCesare was speaking at the announcement of the hotel occupancy survey results for the fourth quarter of 2008.

Mr DeCesare said that the drop in arrivals experienced in the last quarter of 2008 was bad, “but the indications for the first quarter of this year are even worse.”

“If this downward trend continues over the next six months, then we are definitely heading towards an unmitigated disaster. We just cannot afford to have that kind of reductions. The room rate in the first three months of this year has reduced across the board and hotels are facing a problem with cash flow.”

He thanked Parliamentary Secretary Mario de Marco for being instrumental for the agreement with all banks to grant a 12 month moratorium for hotels for capital repayments.

In his speech Mr DeCesare called on the government to reduce VAT on restaurants (see separate story in news section).

OPPOSITION TO NEW TAX

He also strongly criticised plans for the imposition of a 50c tax on every hotel tourist per day as from next year.

“This is one of the most ill-thought impositions, especially in the current scenario. Not only are we sending out the wrong message to the tourist, but this seems to be sending out a totally different message overall, namely that where other industries are getting a helping hand, and quite rightly so, we are getting clobbered with this ridiculous tax, under the pretext that the funds would go towards marketing the Islands.”

“Mr DeCesare said the MHRA would be advising its members to refuse to collect this tax.

“If the government insists then they should find a way to collect from the airport but let’s hope that common sense will prevail.”

Mr DeCasare complained of poor coordination within the government and called for a super ministry to deal with the roads, cleanliness, street furniture, noise pollution and alcohol consumption in public. In the mean time an emergency task force should be set up to deal immediately with some of the serious issues, he said.

INTEREST FROM MAJOR LOW COST AIRLINE

Concluding, he said there has been a request from a major low cost carrier to fly three routes from Italy and UK starting by June.

“This is a fundamental need which will be very positive for this coming summer and could actually save it. We know that things are not looking good at all and we cannot afford not to have these routes not accepted immediately,” he said.

SURVEY RESULTS

The survey results shown that during the fourth quarter of 2008, 5-star hotels saw occupancy drop to 49.4% from 57.9% in Q4 of 2007. The 4-star hotels had an occupancy of 61.2% (Q4 2007 = 66.3%) while the 3-star sector had an occupancy of 56.4% (Q4 2007 = 61.2%).

Room rates appeared to hold until December and most hotel categories registered rates improvements which partly offset the losses in occupancy.

However it appeared that things got increasingly challenging this year and many hotels were seeing decreasing rate trends, the survey says.