Interview: 'We must be doing something right'

Marketing, bus drivers, hunting, Ryanair... Christian Peregin speaks to Malta Tourism Authority CEO Josef Formosa Gauci about his pivotal role in a vital sector.

Malta used to be known as the "grandparents' destination" but it is slowly being transformed into "a place where things happen", according to Josef Formosa Gauci.

His task to bring about this change in visitors' mentality and to ensure a constant large flow of tourists to Malta is not an easy one. He is dealing with rapidly increasing competition from cheaper, larger countries that can afford to spend much more on advertising.

And all this competition comes at a time of international recession which has grounded thousands of passengers, an active Icelandic volcano which has sent shockwaves well beyond its plume, and consistently high oil prices.

On the plus side, Malta's tourism industry has finally started to recover following a disastrous year the world over. Considering that tourism accounts for one fifth of Malta's gross domestic product, Mr Formosa Gauci is beginning to breathe a huge sigh of relief.

When discussing the figures that emerged for the first three months of the year, the Malta Hotel and Restaurants Association (MHRA) compared the rate of growth to the pace of a snail.

But with his eyes on the second quarter of the year, and statistics at the tip of his fingers, Mr Formosa Gauci is more optimistic:

"The growth is accelerating. In April we started with a very good performance, despite the volcanic ash disruption. But since then things have picked up. The fact that up to May we've managed to increase arrivals, bed nights and expenditure shows the recovery has started. The MHRA said it started but is slow. I don't think we should argue about pace," he said.

"The increase is being felt across the board and we're starting to approach 2008 figures. Remember that 2007 was a record year for tourist arrivals and 2008 was better than that. We're already better than 2007 and the way things are going... the indications are positive," he says, adding the caveat that in this industry no one can predict what will happen in the afternoon.

Malta's tourism prospects remain very much in the balance, especially because of austerity measures being imposed around Europe, particularly Malta's source markets.

"We're not out of the woods. We are worried about things happening across Europe. The UK (which accounts for 35 per cent of all travellers coming to Malta) is increasing taxes and threatening to make certain cuts which may result in unemployment, and this will have a knock-on effect."

However, Mr Formosa Gauci believes that such problems can be tackled.

"The English traveller has to be in dire straits not to travel. It is part of their lifestyle... they want to go away. Their weather, as a rule, is not good."

So Malta needs to be quick to react to the choices they make.

"Will they look for a cheaper holiday? An all-inclusive holiday? We need to see how the market is going to react to certain changes..."

Mr Formosa Gauci believes Malta must be doing something right, because the improvement has been much quicker than most of its competitors, with the exception of Turkey and Morocco.

"But these are non-eurozone countries... they're much, much cheaper."

Compared with Malta's competitors "we are definitely not the cheapest destination", though labour costs in other countries are much lower. Instead of lowering wages, Mr Formosa Gauci believes the Maltese should focus on giving value for money and making tourists feel they are not being ripped off.

One way of doing this is through Advance, an EU-sponsored project to train around 1,300 'tourism leaders'.

"We also have to look at the soft side of tourism - the service we are offering. As the Malta Tourism Authority (MTA), we help train people in the tourism sector. Not just people who work in hotels, but taxi drivers, bus drivers, karozzini drivers."

Although most five-star hotels are branded and have training requirements from abroad, many smaller hotels and restaurants find it more difficult to invest in their staff.

The secret to Malta's success, according to Mr Formosa Gauci, is strategic marketing, increasing accessibility and investment in the product.

"It's an undisputed fact that the number of people coming to our island is directly dependent on the number of seats we have available," he says, pointing out the importance of encouraging more airlines to increase routes to Malta.

Last Thursday, Malta International Airport (MIA) announced that passenger movements in the first six months of the year increased by 10.3 per cent compared with the same period last year, reaching 1.38 million.

MIA CEO Julian Jaeger said the growth in passenger movements during the January-June period was mainly brought about by a substantial increase in seat capacity, equivalent to 8.5 per cent, coupled with the strengthening of the average seat load factor.

Meanwhile, around €30 million is spent on marketing Malta, a massive injection from a local perspective but a drop in the ocean for countries like Turkey and Egypt.

"We can never compete with what is being spent by these countries - they are constantly pumping in a lot of money in advertising. But we have a different type of product and we have to market differently."

Rather than taking out full-page adverts, the MTA believes in bringing over journalists- some 800 a year - to produce travel pieces which have more of an impact and cost less.

But a third of Malta's tourists are 'repeat visitors' and around 60 per cent choose the island after it was recommended by somebody else - so word of mouth is also important.

One of the things Malta is doing right is capitalising on its assets. The island used to be advertised as a sun and sea destination but the CEO insists this is not the right way to go about it.

"The climate is important. But if you were to ask me if Malta was the ideal destination to sit on the beach for a whole week in summer, I'd say probably not.

"Our competitors have much bigger and less crowded beaches. So if all you want to do is sit on a beach, our competitors are better than us."

Only 2.8 per cent of Malta's coastline is made up of sandy beaches. While Cyprus has 54 blue flag beaches, Malta has just two.

"But if you want a diverse holiday where you can visit ancient temples in the morning, relax on a beach or a pool in the afternoon and experience a Mediterranean lifestyle at night - all in such a small area - I think our competitors can't compete with us.

"Our biggest disadvantage is also our biggest strength," he says, pointing out that in a country like Egypt it takes a four-hour coach ride to get from a beach to a temple.

Still, a lot more has to be done. The private sector is investing in hotels, the government is investing in restoring places like Valletta and Mdina and local councils are helping to restore towns and villages which provide an "authentic experience" of Malta.

The MTA itself is taking a leading role in improving the state of the beaches, employing lifeguards and achieving quality status in a number of the larger beaches.

But the authority also has to deal with a number of complaints each year, ranging from badly behaved foreign students, persistent timeshare operators who stop tourists in the streets, problems with public transport, overpriced hotels...

One of the major areas of complaints has to do with road infrastructure and signage.

"Recently I carried out a bit of an experiment by going around as a tourist and the signage is very poor. We're trying to convince the authorities to take action."

On the plus side, however, the satisfaction surveys carried out by the MTA show that more than 70 per cent of tourists said they would return to the island and more than 80 per cent would recommend Malta to a friend.

Mr Formosa Gauci underlines the need for a good and efficient public transport service which offers the right services to tourists.

"We cannot have buses stopping their services very early in the evening from a location like Mellieħa," he says.

However, Malta's older buses are part of its charm, and he points out that virtually all journalists writing about Malta will include a photo of an old bus in their pieces, even though the locals probably want to see the back of the pollution-emitting vehicles for good.

He suggests refurbishing some older buses from the inside to be used specifically for tourists while ensuring that more efficient and comfortable buses are kept for everyday use.

Another challenge for Malta is to increase flight accessibility without having to become too dependent on volatile airlines.

Ryanair recently announced it will be cutting down on several flights from the UK to various areas of Europe this winter, and although nothing has yet been finalised regarding Malta, the MTA is assessing the situation.

"We are still talking to Ryanair and they have not yet finalised their winter schedule. What is happening is very typical of Ryanair: the British government is introducing a form of departure tax... and to pressure the government they said they will decrease their capacity and put their planes elsewhere. In some cases they have already done it," Mr Formosa Gauci says.

So is Malta's tourism already too reliant on low-cost carriers like Ryanair - the Irish airline had a 20 per cent share of total traffic in the first six months of this year.

"I think it's important to find the right balance. Air Malta still brings 60 per cent of our tourists so it will remain a cornerstone. We assist all airlines, but we need to help Air Malta because it is competing in a cutthroat market. Let's not forget that when all the airlines reduced capacity last year, Air Malta increased theirs."

However, Malta could not afford to remain out of the low cost "phenomenon".

Mr Formosa Gauci says Malta should focus its energy on ensuring routes are increased in under-served areas.

"But there will come a time when we will say we can't let a particular airline grow beyond a certain figure.

Ryanair has grown substantially... We now need to see if we've reached more or less the limit of where we want to go there. That's still open to discussion."

Cheaper airlines bring a different quality of tourist to the island - and that is one issue the country is currently striving to strike a balance with.

Around 70,000 language students visit Malta each year and international media reports have not always been favourable about their antics on the island.

Mr Formosa Gauci points out it is not only teenagers who visit Malta to learn English - this year-long industry also attracts executives from all over the world.

However, the peak months of June to August, where an influx of younger students arrive, can lead to problems.

"We welcome them, but we have to ensure their behaviour does not harm our reputation and it doesn't have a counter effect on the rest of our tourism. We're working closely with the government to come up with measures that can assist to monitor and improve their behaviour."

Among such measures are policies introduced in Paceville to improve the environment and make it safer. Glass bottles have been banned from the streets, but a more controversial measure has been to impose a 4 a.m. curfew for nightclubs.

Some argue that this has almost dealt a fatal blow to Malta's clubbing scene, but Mr Formosa Gauci disagrees.

"I think the richness of our clubbing scene has increased tremendously and part of it has been a result of things that we have done to change our image abroad, with events like Isle of MTV and Malta Music Week."

Although such events do not prompt hundreds of people to plan a holiday to Malta, it gives tourists a treat.

"It shows them that this is a destination where things are happening."

Mr Formosa Gauci is also pleased with the fact that the environment has become a priority in Malta, with around 20 hotels achieving an eco label. He says such certification is something many tourists look out for.

"There was a time when the environment wasn't anyone's priority. But things have changed and we are now also careful about where we approve tourism projects. As much as possible we should refurbish old properties rather than developing outside (development) schemes."

Discussions are also underway to have a scheme through which hotels can be given government incentives to improve energy efficiency.

Mr Formosa Gauci says that when the price of oil increased the government had the option of subsidising industries or using a more sustainable option of helping businesses reduce their oil dependence.

He says the increase in water and electricity tariffs hurt the industry but the government had no option because it needed to balance the books.

He also argues that the hunting issue has been overly inflated, damaging tourism in the process.

"We find several news reports saying people won't come to Malta because of bird hunting. Without going into the merits of hunting I think some of the articles that appear are exaggerated and I think public opinion overseas has taken account of this."

In fact, he believes Malta can also be a birdwatching destination.