If I did not know Robert Arrigo well and if he was not so involved in the tourism industry, I would have classified this article, at best, as ill-informed. For how can one interpret the rise in VAT, which, to a large extent, has to be borne by the hotels themselves, as a “friendly hand to the industry”?

To classify the hotel association, ie the MHRA, which represents hundreds of millions in Maltese investment, as a “bitter enemy” is offensive and extreme, and we would like to think that this choice of words does not reflect the government’s views on such matters. 

Mr Arrigo, as an agent to a number of tour operators, is aware that tour operators resist even the increases we propose to cover the annual inflationary rate, let alone unanticipated VAT increases. He should know that what he referred to as the “moans and groans” of the industry is nothing more than a genuine attempt on the part of the hotels and restaurants sector to create an awareness that the industry is indeed feeling the pinch of rising costs. Mr Arrigo, both as a politician but more so as an industry player, should appreciate this and not attempt to dismiss it as if it were some frivolous claim on the part of the association. 

Mr Arrigo also claimed that we were aware of the increase in VAT for over 22 months. This cannot be further from the truth. It is pertinent to point out that Mr Arrigo was never present nor involved in any single meeting the MHRA had with the government on the VAT or bed tax, or any other subject for that matter. The MHRA reiterates that the first time it became aware of the increase was three days before the budget was announced in Parliament.

In his article, Mr Arrigo acknowledged that Malta can never successfully compete with destinations like Tunisia, because hotels in Malta are too expensive. In truth, Malta cannot compete with such destinations because of the significantly cheaper labour and operating costs which prevail in places like Tunisia, Turkey and also Egypt. Our high operating and labour costs inevitably make the prices of our hotels and other services we provide more expensive than these countries offer. These destinations also cater in a big way to a very particular market segment, which is the all-inclusive holiday. However, there are few hotels in Malta that can successfully cater for this segment and it will be counter-productive if we go after this segment of the market if we are not well geared up for it.

Mr Arrigo claims that there were a few hotels in Malta that asked to double the prices for business which was diverted from Egypt. We have been following the situation very closely and have been in constant contact with MTA since the crisis in Tunisia and Egypt emerged. The vast majority of requests we have received so far were for similar or lower hotel prices than those offered to tour operators. In fact, some potential business was turned down because the requested prices were far too low to be considered by the hotels.

Mr Arrigo made another sweeping statement when he referred to “the never-ending stop sales of hotels”, which goes to suggest that hotels are constantly fully booked. But, as Mr Arrigo knows, this is not what takes place and the official overall hotel occupancy demonstrates this. Mr Arrigo is very well positioned to appreciate that traditionally tour operators request to be allocated hotel rooms well in excess of their capacity and at times up to 300 per cent or more of what they can deliver. This is in order that they are in a position to secure a good choice and supply of hotel beds.

On the other hand, hotels have to similarly over-allocate with tour operators and still this situation does not always secure an acceptable level of occupancy. It is fair to say that this is the norm with tour-operator business, and consequently it is inevitable that at times stop sales are issued for certain days to avoid over-bookings for certain periods. But this has always been the case and there is nothing unusual taking place at present.

There is but one thing, however, where MHRA agrees with Mr Arrigo in his article. This is that we should all look ahead to a good year in 2011.

However, Mr Arrigo should appreciate that a good year for the industry is not only measured by tourist arrivals alone, as the bottom line is ultimately the most important success indicator that secures long-term sustainability.

George Micallef is President, Malta Hotels and Restaurants Association