Operating losses in the hotel sector in the first three months of the year were not as bad as in 2003 but have not recovered to the levels experienced in 2002 and 2001, according to a Malta Hotels and Restaurants Association study conducted by Deloitte.
The results of the survey, released yesterday, confirmed the MHRA's predictions of a "weak" winter season, MHRA president Winston Zahra said. He was pleased, however, that the study was "not bad news only".
Operating losses still had to get back to their normal levels in the five-star industry and had a long way to go to hit sustainable levels, Mr Zahra said.
The problem was that Malta had a European cost base and a North African rate base, which resulted in low profit margins, he said.
Among the key findings of the survey, five-star occupancy was five percentage points lower than last year at just 43 per cent. Deloitte partner Nick Captur highlighted the fact that the sector was still adjusting to an increase in capacity. Actual five-star room nights were on a par with last year but as a new hotel was fully open for the whole period, the resulting occupancy figure had fallen.
The average achieved room rate in the five-star category has increased by 10.2 per cent over last year from Lm24.52 to Lm27.03. This was considered to be a positive result but the rates in the first quarter three years ago were higher.
The study showed that four-star occupancy was unchanged at 54 per cent while average room rates fell by 8.9 per cent, which suggested that price reductions were not stimulating demand.
Three-star occupancy fell by two per cent to 52 per cent in line with the overall fall in tourism volumes but was generally compensated by an increase in room rates.
March was the weakest month under review for the three- and four-star hotels, while for the five-star category, February was the weakest.
What concerned the MHRA was that international trends were moving in the opposite direction and that the first quarter of the year marked a growth of 10 per cent in most European countries whereas the local trend had not turned around, Mr Zahra said.
"Despite the pressure on the government authorities to get their act together, very little movement has been registered. We need to do so much more and so much faster. The international situation can no longer be blamed," he said.
As a tourist and conference destination, Malta appeared to be underperforming in an international marketplace that was recovering, suggesting that it was losing market share and not just suffering because the market was bad.
Tourism volumes were down three per cent and earnings per capita fell by seven per cent, meaning that overall tourism expenditure in the industry fell by 10 per cent.
Mr Zahra reiterated that the government's decision to cut the Malta Tourism Authority's budget by Lm500,000 was a "big mistake" and "dangerous".
The MHRA has been calling for the full audit of the MTA's operation but maintained that the money saved from the exercise should be channelled into marketing the tourism product.
The second quarter of 2004 would show an improvement and indications pointed at a growth in volume of two to four per cent and also a growth in rates, Mr Zahra said.