Now that last year’s crisis is over and that there is increased access to Malta from 74 airports, and now that tourism figures are on the increase nearing the 2008 figures, the problem in the tourism sector lies within the hotels, said Parliamentary Secretary Mario de Marco yesterday.
Not so, replied George Schembri from MHRA: The problem is due to the government-induced costs, especially the water and electricity rates. The industry lost some €54 million in last year’s crisis and the higher rates will not allow the hotels to carry out necessary refurbishment.
Besides, Mr Schembri complained, hotels have not yet received their electricity bills for the first quarter of the year, so they do not know what the cost of their bill will be. They would be keeping money aside to be able to face the bill, but whenever something crops up, they tend to dip into this fund.
Dr de Marco was one of the two main speakers at a business breakfast held at Le Meridien St Julian’s and organised by the Malta Business Weekly. The other speaker was Adrian Said, from EMCS.
Dr de Marco chose to structure his presentation around figures, a language best suited to his interlocutors. It was at the end that he drew some trenchant conclusions.
In 2009, Malta got 8.4% less tourists than the preceding year. Or to put it in figures, a total of 1.18 million tourists came to Malta, 104,000 less than the preceding year. This is also lower than 2007 but higher than 2006.
Analysing the markets, the German market lost some 18% while the Italian market gained 10% due to new routes being established and Italy has now overtaken Germany as Malta’s second biggest market. The Spanish market contracted by 10% while the all-important UK market decreased by 8% to 35% of the whole.
Nevertheless, the tourism market in Malta has proved to be more resilient than that in other countries. Among UK tourists, for instance, it was only Malta that suffered an 8% decline: other markets suffered far worse.
There was also a reduction in guest nights, estimated at 8.8%, hence even more than tourism figures. People now tend to stay for shorter periods, mostly due to the increased presence of low-cost airlines.
This means that the number of arrivals has to be increased to reach the same number of guest nights.
Tourist expenditure last year was down by 12% but even here there was a change as less tourists came through tour operators and more came independently. Up to just a few years ago, tour operators accounted for 75% of all tourists: this meant that a sizeable proportion of the money they got ended up abroad. Tourists on package holidays decreased by 17.9% between 2006 and 2009.
In 2006, 72% stayed in hotels while 27% stayed in private accommodation. This latter figure increased to 31% by 2009 as with low-cost airlines more people stayed in and even purchased private property.
Tourism to Malta is still seasonal with 75% of all tourists coming between April and October. Compared to other destinations, they have an even higher seasonality in places like Cyprus and the Balearics.
Repeat tourists averaged 32% of all arrivals in 2006 and 34% in 2009. Low-cost carriers also helped get more repeat tourists to Malta.
As for the age distribution of tourists coming to Malta, while the prevailing perception is that Malta is favoured mainly by elderly tourists, this is not borne out by statistics which show an almost even distribution among age groups and which also shows that recent years have slightly increased the numbers of young people who come to Malta.
The arrival of low-cost carriers has affected more the charter operations than the legacy carriers whose share has decreased from 69% to 66.3% while low cost carriers increased from 13% to 22% between 2007 and 2009.
2010
The results for the first four months of this year show that last year’s crisis has become something of the past. These results would have been better had it not been for the ash cloud disruption in April but as it is, the results show an overall increase of 4%. MIA’s May figures show a 20% increase in passenger movements and the indications for June are healthy, as are bookings for the coming months.
The other competing tourism venues are mainly still in recession: Spain is still down by 4.3%, the Balearics by 16.3%, Cyprus by 8.2%, Tunisia by 3.6%, Croatia by 2.1% while Slovenia is up by 3% and Morocco up by 10%.
As for the individual markets, France is growing slightly while we still have problems in Germany and we do not seem to have found the right formula. Italy is simply great with a further 30% increase and the Scandinavian market has grown by 19% and Spain by 113%. The UK market has grown by 20% while the average length of stay has edged slightly upwards to 7.8 nights on average.
Expenditure has risen by 11% or €20 million while the per capita spend has risen from €712 in 2009 to €758 in 2010, a 15.7% increase.
Airfare spend has increased from €30 million to €35 million while accommodation spend by 8.9% from €25 million to €27 million.
And there has significantly been a 21% increase in ‘other expenditure’ from €70 million to €83 million in restaurants and excursions.
Malta today has better access to Italy and to Scandinavia: Oslo is doing very well and in fact Norwegian has asked to increase the frequency of its flights.
There has been huge growth from Spain where no scheduled flight connects and where all connections are operated by low-cost airlines.
We must now understand, Dr de Marco noted, that each incoming market has its own likes and dislikes: with Italy as the second biggest market, with a growing Scandinavian market and a growing Spanish market, we cannot structure our tourism offer as if we are still catering for mainly British tourists.
More importantly, there is now increased seat capacity: there are 74 non-stop scheduled connections to Malta, up from 54 in 2007.
MIA now estimates there will be a 6% growth in 2010 to 3.1 million passenger movements.
While ensuring that low-cost carriers continue to come to Malta, we must also ensure that Air Malta remains the national airline. The question is: how much do we want the low cost sector to grow. Many say the optimal would be low-cost carriers between 30% and 40% and the best mean would be around 32%. We are at the 28% mark.
Tourist perceptions
MTA surveys have studied how tourists view Malta. 27% say Malta exceeded their expectations, 64% said it matched. 90% would recommend Malta to friends and 72% intended to repeat their visits.
44% prized Malta as welcoming, 37% loved Malta for its heritage and 25% identified Malta with sea and sun.
So the question is, Dr de Marco added, are we offering the same product we used to offer 30 years ago when our tourist base has changed so much. The main impression one gets is that the industry, in its widest sense, is not upgrading much.
Sun umbrellas on the few beaches are still a motley collection of garish clashing colours, mostly advertising brands. Our tourist today is far removed from the typical British tourist of past years.
Malta can offer its visitors a diversity that other destinations cannot offer, certainly not the Balearics which have no history and certainly far more history than Cyprus can offer. Apart from the history of the temples and the Knights, Malta can also offer life in the villages.
Recent MTA surveys have also shown that the real problem lies in the hotels. While the five-star hotels showed a 60% very good rating, the four-star hotels can only show a 27% very good rating and a 19% average rating. The three-star hotels can only register 16% as fully satisfied while 29% found them average and the two-star hotels were only classed as very good by 14% while 32% found them average.
The self-catering sector is on the whole better: 27% rated them very good and 41% good.
As for attractions, the historical sites were rated as very good by 35% and good by 48%; museums as very good by 37%, restaurants as very good by 20% and good by 53%. As for entertainment this was registered at very good by 12% and good by 44%.
Malta suffers in the retail sector, Dr de Marco added to the general amazement of everyone who in the past months have seen so many complexes open. Only 12% say that the retail section in Malta is very good while 52% say it is good.
Dr de Marco re-emphasised the value of rural tourism, especially since the sea is never far away. While Bugibba may have a limited attractiveness, yet if combined with places such as Mgarr and Mellieha it offers a unique Malta experience, while Gozo remains in a class of its own.
When analysed by country of origin, it is clear that the new tourist wave from Spain may not be a lasting one: 21% of Spanish tourists consider Malta as below expectations while 40% said it lived up to their expectations. On the other hand, 39% said it exceeded expectations, a far greater number than in any other nationality.
The problem here is that Spain is the only market lined to Malta solely by low-cost carriers and such passengers tend to vary their venues and test them all first.
Bookings are now being done more on the internet and people tend to leave deciding on their holiday till as late as possible.
However, IT also has a downside: through websites such as Trip Advisor, people can post their experiences of a destination, whether good or bad. So negative experiences can affect far more people than they would have affected some years ago.
Dr de Marco reiterated his often-repeated insistence that hotels must not only get a website but also enter in the booking portals and engines.
He also urged more boutique hotels especially in old palazzos in the villages to offer a taste of Maltese village life.
On the wider picture, MTA has now opened an office in Dubai and it is trying to attract more tourists from India and China.
One of the things most tourists find missing in Malta is proper road signage: the tourists coming as independent tourists tend to hire a car but then find it impossible to travel from St Julian’s to Ghaxaq.
Replying to MHRA’s George Schembri at question time, Dr de Marco explained that Enemalta must recover its costs and the government finances must be brought under control, as otherwise Malta would end up as Greece.
A five-star hotel manager complained that any time his hotel is dealing about a conference and approaches Air Malta, it finds that the airline suddenly puts its prices up, which then makes the package that was being offered out of reach and so many conferences are lost.
Dr de Marco replied that MTA is aware of this and is working for a solution together with Air Malta.
Another hotel manager pointed out that the rates hotels are paying are the highest in Europe, which led Dr de Marco to point out a Malta Enterprise scheme which offers hoteliers money to go for alternative energy systems.
Lastly he also confirmed government moves to increase routes to Israel but warned that the Israeli tourists who used to go to Turkey before the current spat were ‘casino junkeys’ where they would get hotels free of charge as long as they played in the casinos. This is not possible in Malta, he said.