Caution as we cheer tourism

In the flush of a rain of details about the ongoing success of the tourism industry this year, the Tourism Minister, Mario de Marco, felt he had to bring in a warning. It was important not to be complacent, he cautioned. This (success) doesn’t mean we can rest on our laurels as every year in tourism is different and challenging, and I have no doubt that even the coming winter and next year will be challenging…” (The Times, October 6).

Hoteliers have been doing their utmost to give value for money- Lino Spiteri

The year did not start at all well but picked up in the spring to notch up a record performance up to August. Statistics for August show a 4.4 per cent increase in arrivals, to a total of 199,430 – the highest number of visitors in a single month. The visitors spent over two million nights in Malta.

Rather oddly the increase went mostly to private accommodation, up 22 per cent on a year before. Stays in hotels increased by only two per cent. In overall terms the rise was still strong, but it is not comforting that hotels only nibbled at it. Private accommodation is important. In employment and earning terms, hotels have a better claim. Still, hoteliers are not complaining, though they are still operating at relatively low margins which have not recovered ground lost in recent years.

The average length of stay went up to an impressive 10.5 nights and estimated total expenditure reached €225.6 million, an advance of eight per cent on 2011. September figures will also tell a positive story. Airport passenger movements touched 408,000, 6.6 per cent above the same month last year and a record for any September, the sixth consecutive record month for MIA.

Taken by themselves, these results are very good. They need to be placed in context to understand why they came about. Seat capacity, a key factor related to arrivals, has been good. Air Malta seems to be quite judicious with its routes and has compensated for fewer flights with an improved load factor, enabling the airline to cut down its losses somewhat.

A good relationship with Ryanair, bought with handsome financial resources equivalent to strong marketing and advertising, helped arrivals, as did the relationship with other low-cost carriers. Hoteliers have been doing their utmost to give value for money, although much more needs to be done and can be effected once their profit levels are more adequate. There have also been relative improvements in the public infrastructure, though much more cries out for action, and with better planning.

Why, then, was the minister correct to be cautious in his assessment? A sense of balance is always necessary in economic and financial analysis, particularly in a sector which has suffered a decline in profitability, and one which is fragmented and so defies ad hoc analysis. Cautiousness can be a spur to higher efforts, and it is certainly a fact that no one can predict what might happen in the ongoing quarter, let alone a year ahead.

It is also the minister’s role to keep the industry on its toes. He has to give credit where credit is due without using superlatives to go over the moon. On their part, hoteliers and restaurateurs will say that the summer situation has been good, but it could be and they need it to be better.

There is also another major factor which has not been brought into play in the discussion on the progress made by the tourism industry so far this year. That is the political situation in the Middle East. The Arab Spring still has to be translated into a return to calm and harmony.

Egypt, the major tourist destin-ation on the southern Mediterranean littoral, has yet to experience a significant recovery in its tourism industry. The same can be said of Tunisia. Cyprus and Greece are not the easiest of destinations nowadays. In brief, Malta has stood to gain, and has gained as it always does, from the misfortunes of others. There is no saying how long relative instability in these countries will last. But it cannot be taken for granted that competitive pressure will not build up soon.

In that context and in a wider context too, much more needs to be done. The road network has to be improved, and that does not only refer to a number of main arteries which have benefited from the EU TEN-T programme. Some hotels and restaurants need early refurbishment.

Much more attention needs to be paid to the price structure, especially outside hotels. Prices in some of our restaurants are reaching levels which are not compatible with the destination. Trade liberalis-ation and entry into the EU has not brought about fairer prices, as evidenced by the listed price of foreign wines in our restaurants, with domestic prices rubbing shoulders in sympathy.

Minister de Marco said that Malta – public and private – has to keep on investing to have a viable and sustainable tourism industry in the long term. True enough. We need more investment in human and capital resources, more investment in competitive prices. We are on the right track, but there is no room at all for breaks in effort.

*For personal reasons outside my control, this column will not appear for a while.