Hoteliers are worried about the effect the austerity measures announced in the UK last week could have on tourism, given that Britain remains the island’s strongest market.
George Micallef, president of the Malta Hotels and Restaurants Association, said hoteliers were already facing requests from tour operators for prices next year to remain at this year’s level or even be reduced.
“They are putting a lot of pressure on us because they know holidays are very much price-driven. Tour operators want us to make cuts to prices we had established before our running costs sky-rocketed with increases in water and electricity bills, among others.
“Although it is still early to pre-empt the effect of the UK spending cuts, this is an indication of what we’re up against and certainly a threat to the Maltese tourism industry,” he said.
Britain’s new coalition government last Wednesday announced a package of spending cuts expected to lead to half a million jobs being lost in the public sector over the next four years.
The UK represents about one-third of Malta’s tourism market and tour operators are responsible for bringing over about 45 per cent of these tourists to the island.
Mr Micallef said that, although the contracts between operators and hotels for summer 2011 had already been finalised or were in the final stages, this did not mean the tour operators could not press for lower prices. Moreover, although contracted, the prices would not have been made public yet.
The effects of the UK measures would probably start to bite in the winter 2011/2012 season because the contracts for the shoulder months were still in the process of being concluded, he said. The job cuts as such would not affect the type of tourists who visited the island during these months, as they were usually elderly tourists, he explained.
“The market is very much price-driven. The price is the most influential factor on whether people travel or not. We are trying to entertain tour operators’ requests but it is proving extremely difficult. We will certainly keep an eye on these measures and monitor developments.”
Hotelier Michael Zammit Tabona believes it is too early to try to predict the effect the austerity measures will have on tourism in Malta. He said if those who lost their job were to be absorbed by the private sector, the effect would not be as devastating as predicted.
At the end of the day, he said, holidays were still in demand and, whereas before they were considered a luxury, they had become a necessity. However, the trend had been shifting from the traditional, once-yearly long holiday to frequent, shorter holidays and this factor could be negative for Malta, he added.
Tourism Parliamentary Secretary Mario de Marco agreed that it was too early to predict the effects although he conceded that anything that affected consumer confidence could affect tourism. He said 34 per cent of the total number of visitors, or about 400,000 British tourists, came to Malta every year, making it the country’s strongest market.
“Presumably, the measures could have an effect on the Maltese tourism sector because they would impact the UK’s outbound tourism. The multi-billion euro budget is intended to strengthen the British economy and this could also have a positive impact on Malta. We have to wait and see, although we have to be very careful and take nothing for granted,” he said when contacted.
The British government slashed budgets by about a fifth, also axing the country’s comprehensive welfare system.
Departments are facing average cuts of 19 per cent over four years, lower than the expected 25 per cent. The Chancellor of the Exchequer, George Osborne said the £83-billion (€95 billion) package marked “the day that Britain steps back from the brink”.
Prime Minister David Cameron’s coalition came to power in May pledging drastic action to eliminate the country’s deficit, which has surpassed the £154 billion mark, a legacy of the previous Labour government and the recession.