It's not all doom and gloom for the tourism industry, according to Parliamentary Secretary for Tourism Mario de Marco. Speaking to the Times Business after NSO figures showed a 10.6 per cent decline in tourist arrivals for February and a 15 per cent decline in January and February, Dr de Marco pointed out that February witnessed a growth in guest nights of almost three per cent.
"While being fully aware of the drop in arrivals in January and February, I think we have to make a distinction between drops in arrivals and total guest nights. Any hotelier will tell you that he is not really concerned with arrivals but with guest nights. A hotelier would rather have one foreigner who spends seven nights in his hotel than three tourists who spend one night each.
"If you look at the total guest nights generated in January, the drop was of three per cent. In February, even though we had a drop of 10 per cent in arrivals, we actually had a growth in guest nights of almost three per cent. That growth was generated because the average length of stay has actually increased. At least, from that point of view, the result for February was not that bad," he said.
Dr De Marco emphasises, however, that the government has to concentrate on boosting both arrivals and guest nights.
"Last year we started working on replacing the routes we had lost. I think we have more or less succeeded in doing so. This year Ryanair started operating twice weekly from Trapani which will be increasing to four times a week. Ryanair will also be flying from Edinburgh this April and Bristol from July. Easyjet will be flying from Newcastle and SAS will be flying from Stockholm from this April. Air Nostrum will be flying from Madrid and ClickAir will be flying from Valencia this summer. Air Malta has also made available its 12th aircraft. Usually Air Malta operates its routes with 11 aircraft and uses its 12th aircraft for flights within Europe, not to Malta."
He explained that Air Malta is to operate new routes, from Verona, Stuttgart, Charles de Gaulle and Warsaw and that the airline has increased its frequency on routes such as Heathrow, Gatwick, Manchester, Munich, Malpensa, Istanbul, Moscow and Sofia. From France alone, Air Malta has increased its seat capacity by 30 per cent.
"From April until November we are not only going to maintain our seat capacity but we are actually going to increase it marginally by 0.8 per cent. Considering the international situation I think this is quite an achievement," he said. Dr de Marco points out that increasing seat capacity alone, however, is not enough, and that seats "have to be filled".
"We have to stimulate demand. The MTA has a focused marketing campaign which seeks to promote Malta as a good value for money destination. With every printed advert we don't just produce an image of Malta, but we actually show the price to fly to Malta, including in particular cases, the price of a package holiday.
"The MTA budget has been increased by the government to €28 million to take into account the current international scenario. Besides TV campaigns in the UK, the MTA has just launched a TV campaign on the Mediaset stations in Italy, on French television and we hope to start one soon in Germany. We also intend to host about 800 foreign journalists in Malta throughout the year."
He says the drop in tourist arrivals is "worrying" but also expected, pointing to the recession in Malta's core markets, as well as the international financial and economic crisis.
"This has led to less disposable income which means that people will drop their second or third holiday. It seems that they want to take their main holiday but there is still an element of uncertainty. Somebody whose job is on the line will not be booking his summer holiday in advance but will wait a bit longer. In the UK Thomas Cook took the unprecedented move - in order to simulate bookings for their holidays - of promising clients that if they are made redundant before June they will be given a full refund of the deposit paid."
Dr de Marco says the global economic climate has not only affected the number of leisure tourists but also corporate clients.
"The winter months are very dependent on conference business. We actually had instances this winter of companies who had booked their conference, which was fully paid, which either downsized the conference or cancelled the conference, in order not to give the impression to their shareholders that it was business as usual."
He explains that when the price of oil hit $147 a barrel in July 2008 many airlines took a battering.
"With that price any flight over two and a half hours was not feasible. We are very much on the periphery of this flying time. Last year alone 35 airlines went bust and it is calculated that this winter within Europe there were 83,000 less flights as airlines reduced routes. Worldwide there were 43 million less seats this winter. Malta was affected in two ways. We had a number of routes which were dropped.
"German Wings, operating from Stuttgart and Cologne dropped their flights, so we lost capacity in Germany. Alitalia, flying from Malpensa, decided to stop the route. Ryanair had a problem with the authorities in Bremen and Valencia, and decided to close their base in both these cities, so we lost flights. This winter we had 14 per cent less capacity than we had in the previous winter, and this undoubtedly had an impact on our winter arrival figures too."
Dr de Marco said Malta is more prone to the global crisis because it is more heavily dependent on air travel than any other destination and it lacks domestic tourism.
"Other places have tourists coming in by car or train. Ninety eight per cent of our tourists come by air. Also, we do not have a strong domestic tourism market, except for Gozo. Other countries have a thriving domestic tourism market which does well in times of international crises. Last summer in the UK, for example, domestic tourism went up by 65 per cent because the British were not travelling. We do not have that luxury and we are totally dependent on foreigners to occupy our hotel beds," he said.
Asked if he agreed with Finance Minister Tonio Fenech's decision not to cut the VAT rate on restaurants before the next budget, Dr de Marco replied:
"In an ideal scenario it would be welcome if VAT could be reduced immediately as this would make us a more competitive holiday destination. However, there are two concerns that need to be addressed if we need to keep our feet to the ground. We need to ensure that any VAT reduction is passed on to the consumer and not to the bottom line of the restaurant operator.
"As we all know when the levies were removed on imported wine the price difference in many restaurants was not reflected in what consumers were paying. Secondly, the government has to makes its calculations over the loss in revenue from any VAT reduction. I know that Finance Minister Tonio Fenech is working on this at the moment. It is therefore still too early to take a decision until these two issues are clarified."
He explained that Malta featured as a good value for money holiday destination according to a survey in The Daily Telegraph, in fact it was the second cheapest eurozone country.
He adds: "We were not the cheapest because of our restaurant prices. If we had better restaurant prices we would be the cheapest holiday destination. My appeal to people in this industry - while understanding that there are certain problems with economies of scale - is that we have to be careful on what we charge".
Regarding MHRA president Kevin Decesare's promise to advise his members not to collect the €0.50 tax per person per day on hotel rooms which takes effect in January, Dr de Marco was diplomatic in his response:
"I never expected such a contribution to be popular or that MHRA would immediately accept it. We must realise, however, that getting tourists to our country costs money. A lot of the money that MTA spends goes on marketing, low-cost carriers and tour operator support.
"When the government increased MTA's 2009 budget by €3.5 million, it did not ask stakeholders to contribute towards this. In other countries, when low-cost carriers were introduced, the regional authorities in the localities where the airports were based had a substantial contribution by private industry such as the local Chamber of Commerce or the hoteliers. Close to 40 per cent was generated by the private sector.
"We are not asking the private sector to contribute and all the support is coming from the government. The industry must understand that the money has to come from somewhere. If a tourist's average length of stay is eight nights, and the contribution is €0.50, then we are talking about a contribution of €4 per person. Every new route opened by a low cost carrier costs between €400,000 and €500,000. Success does not come cheap," he said.
He said he will shortly be launching a scheme to subsidise loans granted to hotels by one to two per cent when the investment is made to refurbish or improve the product.
"This scheme will be directed mainly towards the lower category hotels. Our surveys show that many people staying in three-star hotels, while satisfied with the level of service, are quite disappointed by the level of product in such hotels. These hotels host close to 23.4 per cent of our bed stock. Five-star hotels represent 15.4 per cent, and the four star hotels represent 39.4 per cent. While last year's hotels occupancy showed an increase in both the five-star and four-star sector, there was a drop of 3.4 per cent in the three star occupancy level.
"We believe there is still a market for three-star hotels and we want to help them as much as we can to invest in the product and upgrade. Some of these hotels were built in the 1970s as family run hotels and it seems they haven't moved on with the times. People still want to travel, and if they have less disposable income they will go to lower category hotels but they will still expect the same level of service as they were used to in higher grade hotels.People expect a decent service and good quality hotel rooms," he said.
Dr De Marco said that he was having discussions with UK experts in town centre management over the appointment of tourism zone managers in various town and villages in Malta.
"In towns and villages with a large business element there seems to be some tension between the local councils and the commercial establishment. The commercial establishment feels that the councils cater only for the residents who ultimately are their electorate. We want to balance the needs of residents and those of the commercial sector and that is what the tourism zone manager would be responsible for.
"In the UK a tourism zone manager is answerable to the various stakeholders, such as local councils, the commercial sector, hotels, restaurants and the transport authority. In Malta we are talking about places such as Valletta, Bugibba, Sliema, St Julians and Paceville. We are in the process of identifying the town or village in which to introduce, as a pilot project, this town centre management. The response from the local councils has been very positive so far and an expert from the UK has already come to Malta to carry out his field work," he said.
Did he feel frustrated over the fact that, as Parliamentary Secretary for Tourism, he has no control over the poor state of the roads, cleanliness and the transport system, all of which need improving and which affect our tourism product?
"Whenever I am on a discussion programme on the radio about tourism the first phone calls I get are always about the roads or cleanliness. However, before undermining our product we must realise that we are getting something right. Thirty per cent of our tourists are repeat tourists, which is a very high number. Few destinations can boast such a high figure.
"TripAdvisor recently voted Malta the fourth best Mediterranean island destination. The most prominent diving magazine in the UK voted Malta the third best dive site in the world and the top one in the Mediterranean. So let's not underrate our product. Having said this I'd be the first to complain about the general lack of cleanliness and the state of our roads and public transport. This is why we are going to reform public transport and the local councils."
He said that Malta has a unique spread of tourist attractions, which are easily accessible, but that there were other tourist attractions which were not really being taking advantage of.
"For example, what are we doing to encourage tourists to visit the centres of our old villages such as Siġġiewi, Żejtun, Zebbuġ, Qormi, Lija, Balzan and Attard? I am working a lot with the local councils of these localities. I feel we should pedestrianise the historic cores of these places which could help regenerate these areas. Our Grand Harbour is also unique and Minister Austin Gatt's recently launched water taxis initiative is very laudable," he said.
"While being fully aware of the drop in arrivals in January and February, I think we have to make a distinction between drops in arrivals and total guest nights. Any hotelier will tell you that he is not really concerned with arrivals but with guest nights. A hotelier would rather have one foreigner who spends seven nights in his hotel than three tourists who spend one night each.
"If you look at the total guest nights generated in January, the drop was of three per cent. In February, even though we had a drop of 10 per cent in arrivals, we actually had a growth in guest nights of almost three per cent. That growth was generated because the average length of stay has actually increased. At least, from that point of view, the result for February was not that bad," he said.
Dr De Marco emphasises, however, that the government has to concentrate on boosting both arrivals and guest nights.
"Last year we started working on replacing the routes we had lost. I think we have more or less succeeded in doing so. This year Ryanair started operating twice weekly from Trapani which will be increasing to four times a week. Ryanair will also be flying from Edinburgh this April and Bristol from July. Easyjet will be flying from Newcastle and SAS will be flying from Stockholm from this April. Air Nostrum will be flying from Madrid and ClickAir will be flying from Valencia this summer. Air Malta has also made available its 12th aircraft. Usually Air Malta operates its routes with 11 aircraft and uses its 12th aircraft for flights within Europe, not to Malta."
He explained that Air Malta is to operate new routes, from Verona, Stuttgart, Charles de Gaulle and Warsaw and that the airline has increased its frequency on routes such as Heathrow, Gatwick, Manchester, Munich, Malpensa, Istanbul, Moscow and Sofia. From France alone, Air Malta has increased its seat capacity by 30 per cent.
"From April until November we are not only going to maintain our seat capacity but we are actually going to increase it marginally by 0.8 per cent. Considering the international situation I think this is quite an achievement," he said. Dr de Marco points out that increasing seat capacity alone, however, is not enough, and that seats "have to be filled".
"We have to stimulate demand. The MTA has a focused marketing campaign which seeks to promote Malta as a good value for money destination. With every printed advert we don't just produce an image of Malta, but we actually show the price to fly to Malta, including in particular cases, the price of a package holiday.
"The MTA budget has been increased by the government to €28 million to take into account the current international scenario. Besides TV campaigns in the UK, the MTA has just launched a TV campaign on the Mediaset stations in Italy, on French television and we hope to start one soon in Germany. We also intend to host about 800 foreign journalists in Malta throughout the year."
He says the drop in tourist arrivals is "worrying" but also expected, pointing to the recession in Malta's core markets, as well as the international financial and economic crisis.
"This has led to less disposable income which means that people will drop their second or third holiday. It seems that they want to take their main holiday but there is still an element of uncertainty. Somebody whose job is on the line will not be booking his summer holiday in advance but will wait a bit longer. In the UK Thomas Cook took the unprecedented move - in order to simulate bookings for their holidays - of promising clients that if they are made redundant before June they will be given a full refund of the deposit paid."
Dr de Marco says the global economic climate has not only affected the number of leisure tourists but also corporate clients.
"The winter months are very dependent on conference business. We actually had instances this winter of companies who had booked their conference, which was fully paid, which either downsized the conference or cancelled the conference, in order not to give the impression to their shareholders that it was business as usual."
He explains that when the price of oil hit $147 a barrel in July 2008 many airlines took a battering.
"With that price any flight over two and a half hours was not feasible. We are very much on the periphery of this flying time. Last year alone 35 airlines went bust and it is calculated that this winter within Europe there were 83,000 less flights as airlines reduced routes. Worldwide there were 43 million less seats this winter. Malta was affected in two ways. We had a number of routes which were dropped.
"German Wings, operating from Stuttgart and Cologne dropped their flights, so we lost capacity in Germany. Alitalia, flying from Malpensa, decided to stop the route. Ryanair had a problem with the authorities in Bremen and Valencia, and decided to close their base in both these cities, so we lost flights. This winter we had 14 per cent less capacity than we had in the previous winter, and this undoubtedly had an impact on our winter arrival figures too."
Dr de Marco said Malta is more prone to the global crisis because it is more heavily dependent on air travel than any other destination and it lacks domestic tourism.
"Other places have tourists coming in by car or train. Ninety eight per cent of our tourists come by air. Also, we do not have a strong domestic tourism market, except for Gozo. Other countries have a thriving domestic tourism market which does well in times of international crises. Last summer in the UK, for example, domestic tourism went up by 65 per cent because the British were not travelling. We do not have that luxury and we are totally dependent on foreigners to occupy our hotel beds," he said.
Asked if he agreed with Finance Minister Tonio Fenech's decision not to cut the VAT rate on restaurants before the next budget, Dr de Marco replied:
"In an ideal scenario it would be welcome if VAT could be reduced immediately as this would make us a more competitive holiday destination. However, there are two concerns that need to be addressed if we need to keep our feet to the ground. We need to ensure that any VAT reduction is passed on to the consumer and not to the bottom line of the restaurant operator.
"As we all know when the levies were removed on imported wine the price difference in many restaurants was not reflected in what consumers were paying. Secondly, the government has to makes its calculations over the loss in revenue from any VAT reduction. I know that Finance Minister Tonio Fenech is working on this at the moment. It is therefore still too early to take a decision until these two issues are clarified."
He explained that Malta featured as a good value for money holiday destination according to a survey in The Daily Telegraph, in fact it was the second cheapest eurozone country.
He adds: "We were not the cheapest because of our restaurant prices. If we had better restaurant prices we would be the cheapest holiday destination. My appeal to people in this industry - while understanding that there are certain problems with economies of scale - is that we have to be careful on what we charge".
Regarding MHRA president Kevin Decesare's promise to advise his members not to collect the €0.50 tax per person per day on hotel rooms which takes effect in January, Dr de Marco was diplomatic in his response:
"I never expected such a contribution to be popular or that MHRA would immediately accept it. We must realise, however, that getting tourists to our country costs money. A lot of the money that MTA spends goes on marketing, low-cost carriers and tour operator support.
"When the government increased MTA's 2009 budget by €3.5 million, it did not ask stakeholders to contribute towards this. In other countries, when low-cost carriers were introduced, the regional authorities in the localities where the airports were based had a substantial contribution by private industry such as the local Chamber of Commerce or the hoteliers. Close to 40 per cent was generated by the private sector.
"We are not asking the private sector to contribute and all the support is coming from the government. The industry must understand that the money has to come from somewhere. If a tourist's average length of stay is eight nights, and the contribution is €0.50, then we are talking about a contribution of €4 per person. Every new route opened by a low cost carrier costs between €400,000 and €500,000. Success does not come cheap," he said.
He said he will shortly be launching a scheme to subsidise loans granted to hotels by one to two per cent when the investment is made to refurbish or improve the product.
"This scheme will be directed mainly towards the lower category hotels. Our surveys show that many people staying in three-star hotels, while satisfied with the level of service, are quite disappointed by the level of product in such hotels. These hotels host close to 23.4 per cent of our bed stock. Five-star hotels represent 15.4 per cent, and the four star hotels represent 39.4 per cent. While last year's hotels occupancy showed an increase in both the five-star and four-star sector, there was a drop of 3.4 per cent in the three star occupancy level.
"We believe there is still a market for three-star hotels and we want to help them as much as we can to invest in the product and upgrade. Some of these hotels were built in the 1970s as family run hotels and it seems they haven't moved on with the times. People still want to travel, and if they have less disposable income they will go to lower category hotels but they will still expect the same level of service as they were used to in higher grade hotels.People expect a decent service and good quality hotel rooms," he said.
Dr De Marco said that he was having discussions with UK experts in town centre management over the appointment of tourism zone managers in various town and villages in Malta.
"In towns and villages with a large business element there seems to be some tension between the local councils and the commercial establishment. The commercial establishment feels that the councils cater only for the residents who ultimately are their electorate. We want to balance the needs of residents and those of the commercial sector and that is what the tourism zone manager would be responsible for.
"In the UK a tourism zone manager is answerable to the various stakeholders, such as local councils, the commercial sector, hotels, restaurants and the transport authority. In Malta we are talking about places such as Valletta, Bugibba, Sliema, St Julians and Paceville. We are in the process of identifying the town or village in which to introduce, as a pilot project, this town centre management. The response from the local councils has been very positive so far and an expert from the UK has already come to Malta to carry out his field work," he said.
Did he feel frustrated over the fact that, as Parliamentary Secretary for Tourism, he has no control over the poor state of the roads, cleanliness and the transport system, all of which need improving and which affect our tourism product?
"Whenever I am on a discussion programme on the radio about tourism the first phone calls I get are always about the roads or cleanliness. However, before undermining our product we must realise that we are getting something right. Thirty per cent of our tourists are repeat tourists, which is a very high number. Few destinations can boast such a high figure.
"TripAdvisor recently voted Malta the fourth best Mediterranean island destination. The most prominent diving magazine in the UK voted Malta the third best dive site in the world and the top one in the Mediterranean. So let's not underrate our product. Having said this I'd be the first to complain about the general lack of cleanliness and the state of our roads and public transport. This is why we are going to reform public transport and the local councils."
He said that Malta has a unique spread of tourist attractions, which are easily accessible, but that there were other tourist attractions which were not really being taking advantage of.
"For example, what are we doing to encourage tourists to visit the centres of our old villages such as Siġġiewi, Żejtun, Zebbuġ, Qormi, Lija, Balzan and Attard? I am working a lot with the local councils of these localities. I feel we should pedestrianise the historic cores of these places which could help regenerate these areas. Our Grand Harbour is also unique and Minister Austin Gatt's recently launched water taxis initiative is very laudable," he said.