Hoteliers stressed today that amid the uncertainty over Air Malta, it was important that Malta did not miss out on any opportunities for tourism.

George Micallef, president of the Malta Hotels and Restaurants Association said there was a 23% increase in arrivals in the first quarter of this year, compared to the same period last year.

However, spiralling costs meant that the profitability of hotels had not  improved.

Malta, he warned, needed to be careful that in reforming Air Malta, it did not reduce seat capacity.

"A significant drop in seat capacity will have very serious consequences for the tourism industry," he said, adding that the government should continue efforts to boost capacity.

He said the basing of a Ryanair aircraft in Malta and the opening of new routes had been one of the factors for the increase this year.

Mr Micallef said the situation at Air Malta was delicate and needed to be concluded in the shortest time possible. The uncertainty over seat capacity and routes meant that planning, especially for the winter was difficult.

"Any cutbacks could mean hotel closures in the winter," he warned.

That the hotel business was not doing as well as it was being made out to be was well known to the government since Air Malta had had to close down Selmun Palace Hotel, he said. Clearly, he added, costs needed to be contained and should not be allowed to raise any further without eroding competitiveness.

The MHRA quarterly survey shows that between January and March there was growth in tourist  arrivals from the UK and Italy and a drop in arrivals from Germany.

Arrivals from the Benelux countries totalled 9,799 almost double what they were in the first quarter  of 2010. The French market grew to 14,896 from 8,996.