English language schools reported a 4.3 per cent average decline in gross operating profits last year over 2013.
This is the second year running that the industry reported declining average prices and increasing costs, leading to reduced profitability and raising concerns about profit erosion and the long-term sustainability and competitiveness of the sector.
A news conference heard this morning that student arrivals for the purpose of learning English last year were 3.4 per cent higher than in 2013 and their average length of stay increased 1.8 per cent. There was also a five per cent increase in student weeks.
The number rose from 74,992 students in 2013 to 77,550 in 2014.
The English Language Teaching sector accounted for 12.7 per cent of total tourist bed nights with significant contribution recorded in February and March as well as in the peak summer period.
The sector reported significant numbers from Italy, Germany and France but also attracted students from non-traditional markets such as Colombia, South Korea, Brazil and Poland.
“This year’s report confirms the importance of this sector and the contribution that it is giving to the Maltese economy given that it sees the involvement of around 2,300 gainfully occupied people as well as 1,000 licenced families who host students in their homes, Feltom CEO Genevieve Abela said.
She said the government could support the industry by commissioning a market competitiveness analysis which could help it understand better when the sector stood in relation to its foreign counterparts, with whom Malta was competing, and how Malta could attract a bigger share of the world market.
The report noted that while total revenue increased by 4.4 per cent from 2013 to 2014, total revenue per student week dropped by 0.6 per cent.
The drop contrasted with the shift in business mix towards more juniors as average revenue per week was typically higher on junior bookings.
David Bonnet, from Deloitte, expressed concern that while there was a growth in student weeks, average prices had eroded while costs increased.
There were more students taking up intensive courses and more juniors but although this should be yielding more profit, it was not.
However, the weak euro compared to the dollar and sterling, the currency used by Malta’s main competitors, should place Malta in a good bargaining position, he said.
The study found that accommodation costs per week increased by 1.5 per cent in contrast with the decrease in accommodation revenue per week of 8.3 per cent.
The average margin on accommodation dropped from 27 per cent in 2013 to 24 per cent last year.