Tourist arrivals up while hotel guest nights down for the first time in years – MHRA survey
Jeremy Micallef
While tourist arrivals and guest nights have increased by 2.8% and 4.2% respectively, the number of guest nights spent in hotels decreased by 5.5%, key highlights in Deloitte’s hotel survey indicated.
Presented at the Corinthia Hotel in Attard, the Malta Hotels & Restaurants Association (MHRA) published survey results from the first quarter of 2019 collected and collated by Deloitte.
Although the increases in tourist arrivals were increasing but less pronounced, the overall increase in guest nights during quarter one was effectively taken up by the private accommodation sector – usually through services such as Air BnB.
The figures as they stood in the first quarter in the last three years (2017 – 2019) noted Private Accommodation rising from 92,000, to 117,000, to 130,000, and Collective Accommodation from 349,000, to 414,000, to 426,000.
This was a jump in tourist arrivals staying in private accommodation from 26.4% (2017), to 28.3% (2018), to 30.5% (2019).
Speaking at the press conference, Minister for Tourism Konrad Mizzi said that all in attendance would all agree that the market is changing.
“The reality is that grows in arrivals has been boosted, but we must ensure that it is channelled in the right way and there is a level playing field.”
The Tourism Minister said that they have engaged with various service providers such as Booking.com, and an agreement was reached with them whereby a system will be implemented on the website where new users will need to insert their licensing number, provided by the Ministry, with Booking.com to join their portal.
“We have also agreed in principal that existing users will be informed to regularise their situation.”
Mizzi did warn that this does not mean that people will choose hotels over private accommodation – “it is a market choice,” he said, “and hotels must also make sure that their prices reflect the quality they provide”.
On the note of ulterior flight routes, Mizzi believes that there is additional growth potential in the U.S. and Australia – the issue is that agents are finding it difficult to book flights.
“We are engaging with various operators to unblock this, and by June Qatar Airways will be opening new doors to Asia.”
President of the MHRA Tony Zahra said that the hotel industry has a past, but for an industry to have a future it must be sustainable.
“In the last few years we have seen the industry bounce back from the serious recession that had been brought about in 2008 by the financial meltdown and after that and for the last few years the industry went through a continuous incline in arrivals and occupancy.”
This, Zahra explained, has encouraged current operators to expand their operations, and enable many new entrants to enter the market, or are in the process of entering the market.
The MHRA President noted that the amount of supply is now outstripping not only the present demand but will place on the market a great deal of new capacity at a time when demand might not continue to grow as strongly as in the past – a phenomenon he suggested was due to the fact that countries like Turkey, Egypt and Tunisia offering hundreds of thousands of beds which for many years were off the market due to security concerns in those countries.
“Sustainability means that we do not put on the market an excess of supply compared to demand as this will result in overcapacity and the downward push on occupancy and rates.”
He pointed back to 2008, when it took five years to reverse the trend of lower hotel rates and even lower occupancy after the economic crisis.
“The overarching aim should be long term sustainability.”
Victoria Lines re-opening
Zahra also announced that through a joint MTA – MHRA initiative the Victoria Lines are being reopened and rehabilitated for walks that would extend from Fomm ir-Rih to the West of the island to Madliena to the East of Malta.
“We are extremely happy that we are returning this incredible monument to the people of Malta and the tourists who will be able to enjoy the countryside and the magnificent views that these areas provide.”
He noted that there were still a few challenges in some areas which need to be overcome but is sure that these can be overcome with good will by all concerned.
Occupancy and GOPPAR
Total guest nights in the private accommodation sector in the first quarter also saw a similar trend, rising from 788,000 nights in 2017 (34.8%), to 1,005,000 in 2018 (37.4%), to 1,212,000 in 2019 (43.3%).
“Compared to the same period last year, the overall average length of stay in Q1 increased by 1.4%. Tourist opting to stay in private accommodation spent 9.31 days in Malta, up by 8.8% over last year and almost 4 days more than those staying in hotel accommodation.”
The total guest nights in hotel accommodation was down by 5.5%, and the occupancy levels in 5-star hotels declined from Q1 in 2018 to 53.6% in Q1 of 2019.
Average room rate were down marginally by 1% while non-accommodation income slightly increasing by 0.4%, resulting in an overall drop in 6.3% in total revenue per available room.
On average, 5-star hotels registered a Gross Operation Profit Per Available Room (GOPPAR) of €918, which is €528 lower than what was reported in the same quarter last year, and €986 less than 2017.
According to the survey, 4-star hotels are feeling the brunt of the shift from hotel to private accommodation, with occupancy levels in the first quarter of the year declining by 9.2%.
The quarterly average industry profit of 4-star hotels decreased by €340 to €36 per available room.
Tourist expenditure also increase, but at a slower pace and was marginally up by 0.3%.
Restaurants’ revenue down by 0.9%
Whilst participating restaurants reported mixed results, with 48% experiencing declining revenues when compared to the previous winter, altogether Deloitte estimated that restaurants’ revenue to have decreased by 0.9% over winter last year.
Despite an overall decrease, restaurants in the North-Central part of Malta and Gozo both managed to achieve a growth of 3% in revenue, whilst catering establishments in the Costal, Valletta and Southern areas reported a negative revenue trend of 4%, 2% and 6% respectively.
Operational costs have also increase by an average of 2.3%, with payroll costs increasing by 5.7%.
The reason the operators claim for the rise in payroll expenses is recruitment challenges, noteworthy considering 60% of employees working in this sector are foreigners.
“Overall, 56% claim to have had an unsatisfactory winter performance. However, almost all participating restaurants remain upbeat and are expecting good business for the coming summer season.”