Malta’s largest hotel chain, the Corinthia, plans to concentrate guests into only one of its three properties at St George’s Bay this winter, as tourism continues to slump due to the global pandemic.

As industry experts forecast occupancy to hover around 15 per cent in the foreseeable future, other major hotels are also considering shutting down temporarily.

Corinthia said only one of its three hotels in the St George’s Bay complex will house guests, with the other two opening as demand returns.

Asked which hotels will shut, the group said the complex, which comprises the Radisson Blu St Julian’s, the Marina Beach Resort and the Corinthia St George’s, has always been run as a single enterprise with three products.

Its Radisson Blu Golden Sands resort, along with its Corinthia Palace hotel in Attard, will continue to operate.

But Corinthia is not the only hotel considering winter closures in October. 

Henri Mattocks, general manager of the Ramla Bay Resort in Marfa, said there remains a question mark around whether it will stay open.

This was dependent on a number of factors, including an extension of the government’s wage subsidy beyond October until March.

“We keep on going until we can,” Mattocks said. “But winter is a different story.”

And while the hotel did not go for widespread discounts over summer, the local market, with its penchant for weekend breaks, was destined to change again with the start of school, he said.

Occupancy and room rates are down

The average room rate in five-star hotels in the peak months of July and August was down by 25 per cent compared to the same period last year, according to the STR Report, based on data submitted by hotels to provide insight into the market and competition.

Five-star properties closed off last month with an average occupancy of 42 per cent up from 22 in July, the report shows.

The relative success of August was only in its first 15 days

But the relative success of August was only in its first 15 days. Until then, hotels were running at 50 per cent occupancy, but as coronavirus-related travel restrictions to key markets started being imposed, it spiralled down to 29 per cent by the end of the month.

Looking ahead, hoteliers forecast occupancy to range between 10 and “an optimistic” 20 per cent, but the feeling is that “nobody knows, and we have no trends to go by”.

July and August gave a “false economy” and tough times lay ahead.

Tourism strategy

While some hotels are considering closure, a couple more have just opened their doors at the height of the pandemic: the newly built Mercure St Julian’s, which was ready to go in May (see below), and the Malta Marriot, after it closed in March following only two months of operation due to a previous refurbishment project.

The Corinthia Palace in Attard is not considering closing but its general manager, Adrian Attard, predicted the industry would need years to find its feet again, particularly in view of the significant oversupply in 2019.

The “home” of its brand, he attributed the hotel’s survival through the winter to its location and the fact that it is “not a rooms machine” but is focused on a mix of revenue streams from the food and beverage and spa business.

Nevertheless, it is reducing staff from 130 to 80, although Attard said this was not a matter of 50 redundancies but of resignations. Employees are moving onto new job opportunities and not being replaced, while expired contracts are not being renewed.

Corinthia Palace closed off August with 30 per cent occupancy but only dropped its room rate by five per cent.

Attard said it was time to question the long-term direction of the island’s tourism strategy, the sustainability of big hotels and business that only generates volume.

“We should be talking about tourist expenditure not numbers,” he said, adding that the conversation has been going on since the 1970s.

Rising to the challenge

The industry has gone through challenges in the past and there was “no doubt it would come out the other side in good shape,” said Malta Hotels and Restaurants Association president Tony Zahra, adding that COVID-19 was “just another challenge”.

Hilton Malta also acknowledged the situation was “very bleak”, adding that “unfortunately, without the UK and Italy markets, the potential of business improving is very slim”.

Nonetheless, the five-star hotel in St Julian’s remains open and will continue to operate.

“We are all focused on trying to attract as much business as we can and deliver exceptional, safe and memorable experiences to our guests under the circumstances,” said Hilton Malta commercial director Julian Diacono.

New 113-room hotel to open

Opening a 113-room hotel at the height of a pandemic, when others are struggling, shut, or planning to close, is a brave decision.

As COVID-19 cases spiked and countries began advising against travel to Malta this summer, a two-year, €13 million project was waiting in the wings.

Mercure St Julian’s has decided to swim against the current and open its doors this month, rather than next March, with a plan to keep costs to a minimum to survive until things start looking up.

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“When we took the decision to open in September – at some point, you just have to – the UK had not yet imposed quarantine on travellers from Malta,” general manager Kurt Micallef said.

The owners made their calculations, comparing losses if no one walked through the door to if they remained shut. And they decided to bite the bullet.

Micallef is upbeat, despite “tough times ahead”. He knows the month will close at 20 per cent occupancy and having just reduced room rates for the rest of September.

He hopes that once the COVID-19 cloud passes, the four-star property will shine through, and is putting his hopes on the brand behind the hotel, Accor, which, up until the outbreak, was “opening a hotel every 29 hours” – 59 million people are on its loyalty programme.

“Your guess is as good as mine,” Micallef says about when he thinks business will turn around.

But whenever that may be – and he tentatively looks at April 2021 – he says the Mercure will be at the forefront.

Until then, there is no hiding that winter is looking dismal and he would be happy with 15 per cent occupancy.

Eventually, people will tire of not travelling, he suggests, and with a vaccine in the pipeline, the worst-case scenario would be waiting it out until then.

Micallef’s silver lining is that the soft start means time to fine-tune.

The trick to surviving is keeping costs down for the time being, he says. And it involves some thinking outside the box.

With only two managers among five full-time employees, they are all ready to adapt their roles. A flexible team and outsourcing are key.

Reservations staff double as front desk and the person manning the lobby bar takes orders from the rooftop pool deck every hour.

The Mercure only serves breakfast and has worked around room service by providing guests with the contacts of a food delivery company, through its QR-coded hotel information, together with a list of recommended eateries so they do not go wrong.

Unlike other hotels, one thing it will not be doing to bridge the gap is focus on the local market, with Micallef acknowledging that the Mercure is more of a city hotel and that families would look for vast grounds and pools for weekend breaks.

It is an “emotional journey”, he adds, with the good days and the bad.