The Malta Hotels and Restaurants Association (MHRA) said this afternoon that Malta was making 'snail pace' progress in the tourism sector, and the current situation was still a far cry from the position in 2007 and 2008.

Association president George Micallef said matters had been improving since the second half of last year and improvement was expected to gather pace in the second quarter of this year.

In the first quarter of this year, tourist arrivals were up 7.1 per cent compared to the same period in 2009, but down 11.9 per cent compared to 2008 - which was one of the best years ever.

Guest nights went up 6.3 per cent compared to January-March 2009 but were down 12.2 per cent in the corresponding period in 2008.

Tourist spending was up 17.6 per cent this year but down 4.6 per cent from 2008.

Mr Micallef said that all key performance indicators had improved but fell short of 2008.

He said that an occupancy survey for the first quarter, conducted by Deloitte, showed that the five star hotels had benefited most from the recovery, enabling the hotels to claw back some 50 per cent of the drop in occupancy registered in the first three months of last year.

The four and three star categories registered comparable occupancy levels of 2009 and failed to make up for the volume losses registered last year.

He said the increase in tourist spending of 17.6 per cent did not result in significant improvements in room rates. Whereas the three and four star hotels saw an improvement of 10 per cent and nine per cent respectively, rates in five-star hotels decreased by five per cent.

Mr Micallef warned hoteliers not to discount rates too heavily because they would be very difficult to recover.

He said one of the biggest problems faced by the sector was the utility tariffs - the overhead costs increased by 10.5 per cent in five star hotels and 4.6 per cent in four-star hotels.

He said that in the five-star category, the gains from occupancy gains were offset by a five per cent drop in room rates and a 13 per cent drop in food and beverage income because people were opting to buy from outside the hotels, he said. As a result there was no revenue growth.

"All three hotel categories registered a gross operating loss for the quartered, with the largest in the five star category which made higher losses this year than last year," Mr Micallef said.