Hotels have been hit by the international financial crisis and performed badly in the last quarter of 2008 but measures are being taken to limit the damage, Tourism Parliamentary Secretary Mario de Marco insisted yesterday.
Dr de Marco said the Malta Tourism Authority's marketing team was meeting on a fortnightly basis to prepare a clear plan on how to best spend the €21 million earmarked for marketing efforts this year.
He was addressing hoteliers at the launch of the Malta Hotels and Restaurants Association survey results covering the last quarter of 2008.
The survey, carried out by auditing firm Deloitte, confirmed the hoteliers' fears. The key performance indicators were down by between eight and 10 per cent. Tourist arrivals for the quarter dropped by 10.3 per cent, also bringing down, by eight per cent each, the total guest nights in Malta and the amount tourists spent here.
The biggest drops were registered in arrivals from the UK, Germany and Italy.
Occupancy levels fell in all three main hotel categories. The five-star hotels were clearly the hardest hit with a drop of nearly 15 per cent. The occupancy levels in four- and three-star hotels fell by eight per cent.
Despite the drop, five-star hotels still managed to increase their room rates. Even four- and three-star hotels raised their rates but, in all cases, profitability plummeted, mainly due to higher energy costs, estimated at about 20 per cent.
In the period under review, three-star hotels operated at a loss, which was higher than losses incurred in the same quarter of 2007.
Throughout all last year, five-star hotels saw a decrease in gross operating profits but three- and four-star hotels experienced slight increases.
On the outlook for this year, most hotels anticipated a drop in occupancy levels. With regard to rates, most five-star hotels feel rates will worsen, while four- and three-star hotels feel they will remain unchanged.
Dr de Marco told hoteliers they were approaching the end of "a winter of discontent" and looking forward to "a summer of relief". The situation, he said, was affecting Malta like it was impacting other countries but it was important that Malta emerged from the present cycle in a strong position.
He said the government would shortly launch a scheme where it would subsidise loans granted to hotels by one to two per cent when the investment was made to refurbish or improve the product.
He also disclosed that a €300,000 fund had been set up to attract conference travel to Malta. Efforts had yielded the first result with a conference by the European Broadcasting Union confirmed for November.
There had been a shift from package holidays to independent travel, which shot up to 54 per cent last year from 45 per cent in 2007. Arrivals between November and January were down 13 per cent compared to 2007 and were comparable to the 2006 figures. Guest nights were down by 3.3 per cent.
In the face of the challenges ahead, the MTA was well geared for the year, he said, with a number of marketing campaigns in place to promote Malta as a value-for-money destination.
The crisis was not affecting people's desire to travel but their means to afford it so all MTA's adverts included a price for people to know the cost of their holiday.
Dr de Marco said the MTA's marketing strategy revolved around two areas: the continued development of airline accessibility and a sustained promotional campaign that was sensitive to the needs of today's markets. Seat capacity had been increased marginally by 0.8 per cent, he said.
In terms of marketing, the MTA had prepared sales-driven adverts and television spots on top national stations, showing advantageous prices and the enhanced value of a Malta holiday. The spots on UK television were "well-received", he said.
MHRA president Kevin DeCesare called for increased government funding for tourism, saying the crisis in the sector was worse than originally thought. He said the drop in arrivals experienced in the last quarter of 2008 was bad "but the indications for the first quarter of this year are even worse".
"If this downward trend continues over the next six months, then we are definitely heading towards an unmitigated disaster," he warned.
He called on the government to reduce VAT on restaurants, saying he could not understand why the Finance Minister insisted this cannot be done before the next budget in November.
He strongly criticised plans for the imposition of a 50c tax on every hotel tourist per day as from next year: "This is one of the most ill-thought, ridiculous impositions, especially in the current scenario. MHRA would be advising its members to refuse to collect this tax".
Mr DeCesare complained of poor coordination within the government and called for a super ministry to deal with the roads, cleanliness, street furniture, noise pollution and alcohol consumption in public.
He said there had been a request from Ryanair to fly three routes from Italy and UK starting by June. But, in an immediate reaction, Dr de Marco said the service would operate from airports already serviced by Air Malta. Introducing this low-cost carrier would not increase seats but would substitute airlines as the national carrier would have to pull out.