Challenging times on the menu

The hospitality industry faces challenging times as it tries to meet the expectations of both local and foreign clients who frequent our hotels and restaurants.

Two surveys commissioned by the Malta Hotels and Restaurants Association on restaurant operations, as well as a legal notice defining new standards for the classification of hotels, give the hospitality industry the opportunity for some meaningful soul searching.

The most interesting findings of the MHRA surveys are that 83 per cent of those participating in the research reported higher turnover in 2011 while only 57 per cent experienced growth in the first eight months of this year.

Perhaps more interesting is the finding that restaurants in St Julian’s reported higher sales while those in Sliema and Gżira saw a fall in sales. Not much is known on how restaurants in Valletta, Marsaxlokk and Marsascala fared.

It is significant that the restaurants that seem to be more successful are those at the lower end of the market – where customers spend €10 to €20 per head. Those who frequent restaurants know that these places provide customers with quite basic meals at those price tags. However, it is only when high-end restaurants experience significant growth similar to that of those serving the lower end of the market that industry leaders can be happy.

The current state of affairs may be a cause for concern for high-end restaurant owners who seem to have “suffered most reporting negative growth or a very minimal increase in turnover” so far this year.

Restaurant owners quote various possible causes behind this poor performance. Some blame the high water and electricity rates while others believe that “unauthorised eateries” are to blame. However, the MTA study comes up with more substantial causes based on customers’ experiences that may explain why the restaurant industry is facing challenging times.

One of the surveys held by the MTA found “tourists and local customers generally have a positive overall restaurant experience but a number of concerns were raised”.

With some Maltese respondents participating in the survey claiming that “they could not afford to eat out”, it is abundantly clear that both tourists and local restaurant customers expect better value for the money that they spend, money that is evidently scarcer in these tough economic times that are affecting most people in Europe.

According to Tourism Minister Mario de Marco, the revamped classification system for hotels is designed to “bring hotel standards in line with client expectation and trends in Europe”.

This is a convincing argument to promote change and one hopes that at the end of this exercise Maltese hotels will be viewed more positively by their users.

Practically all operators, including hoteliers and restaurant owners, are searching for the magic formula that will make their businesses recession- proof.

Some will just moan and blame forces beyond their control for the bad patch they are going through. Others will engage in serious soul searching to find ways that will give them a competitive edge. What will make a difference for most hospitality businesses is the operators’ commitment to quality goods and services at affordable prices. This is still lacking and cutting costs has limitations.

Adding value is the best strategy for survival as well as growth in these challenging times. This is what restaurant owners should include in their management menu.