Gloomy outlook for tourism

The tourism picture in Malta was gloomy in the first quarter and occupancy prospects were looking worse across all categories, Malta Hotels and Restaurants president Kevin deCesare said this afternoon.

Speaking during the presentation of the MHRA Hotel Survey, Mr deCesare said that the industry’s performance was adversely affected by the international slowdown in demand as a result of the global economic crisis and a drop in available seat capacity over the winter months.

But although the country results were negative, they were not as bad as in other countries. France had witnessed a drop of 27 percent in arrivals, Germany of 36 percent and Spain of 64 percent.

The survey, for the first quarter this year, found that there was a 17.8 percent drop in tourist arrivals compared to the previous quarter, an 11.4 percent drop in guest nights generated and a 21.1 percent drop in tourist expenditure.

Expenditure was lower not only because there were fewer tourists but also because they were spending less money.

The decrease in arrivals and guest nights led to a significant drop in occupancy rates for all three hotel categories with the three and five star being worst hit.

Compared to the first quarter of last year, the 50 percent occupancy in the five star hotel sector went down to 40 percent, the 59 percent occupancy in the four star sector went down to 56 percent and in the three star category it moved from 54 to 41 percent.

The survey, conducted by Deloitte, showed that efforts to stimulate demand through lower rates had not achieved the desired results as most hotels ended up with lower occupancy at lower rates.

One of the few positive highlights of the report was the increase in non-accommodation income, namely food and beverages which registered an increase in all three hotel categories.

Cost saving initiatives undertaken by most hotels were generally successful but not enough to prevent a significant increase in gross operating losses for the hotels.

Compared to the first quarter of 2008, when five-star hotels registered a gross operating loss of €74 per room, their loss had now gone up to €462 per room.

The loss for four star hotels increased from €4 to €474 and for three star hotels from €396 to €576.

In five star hotels, energy costs had increased by 1.4 percent despite lower occupancy.

Mr deCesare said: “I believe that it would be foolish to console ourselves by the fact that the decline in tourism performance in many other countries is worse than Malta's or to accept this against a backdrop of severe economic recession.”

The MHRA, he said, believed that a significant part of the decline in the first quarter was attributable to the 10.7 percent decline in available seat capacity. The negative trend could not be improved unless seat capacity was increased in a structure and sustainable manner.

“Drops for hotels are even worse than arrivals. I would like to make it clear to the authorities that if things do not improve we will have serious issues this winter.”

He emphasised the need to tackle the product. “Product in Malta needs to be defined more clearly. The authorities need to have a clear vision of what product is and not leave it as subjective matter. Product is cleanliness, controlling noise pollution, roads, street furniture, alcohol consumption on the streets, and our heritage.

“A positive guest experience is important because these go back and through word of mouth advertise our country.”

Malta, he said, had faced hard times on other occasions and it always came out strong. The country should work together to find a solution that could move it forward.

He condemned the industrial action being threatened by cabin crew.