Urgent action needed to avoid Air Malta closure - Mizzi
● Tourist arrivals increase by 24% in Q1 2017
Tourism Minister Konrad Mizzi said yesterday that urgent action is needed or else Air Malta will have to close down. “The current costs are not sustainable,” Mizzi said, when speaking during the presentation of the MHRA Deloitte-BOV Hotels Performance Survey.
“We would feel the pinch if it closed down,” the minister said, adding that the government has been working on a plan for Air Malta for quite a while. “I am convinced that the plan we are proposing will grow the airline and is fit for purpose for this century.”
He revealed that the ministry has mandated leadership teams to make changes that cut across the organisational structure. “We will carve out part of the functions into separate entities.”
This he said will be discussed with stakeholders over the coming weeks. “We will try to be more aggressive on the commercial side, we will open new routes that were previously closed, and make new low cost offerings on the market.”
He assured that the government would be fair with employees. “The plan will make sense from a numbers point of view. This impetus early on the legislature, will allow us to successfully negotiate with a strategic partner later on.”
MHRA President Tony Zahra said that the national airline was what made the difference between “us and other countries.”
“In the 70s, it was the big jump in the tourism sector.” He said
that while there has been an increase of foreign airlines in the country, these companies only “looked after their own pockets,” and will leave should the financial situation in Malta take a downturn. “We keep looking for strategic partners around the globe. Why are we looking around the world when we should be looking in Malta? We keep thinking some foreign company will come because they love us. When only Maltese people truly love the country.”
Tourism figures
In the meantime, the survey showed that tourist arrivals for the first quarter of 2017 have increased by 24%. The survey involved 53 participants around the island, a number that was described by Deloitte’s Raphael Aloisio as disappointing.
The growth was attributed by an increase in private accommodation arrivals, which increased by 37.1%, bringing the market share up to 27% of total arrivals.
Collective accommodation establishments also generated a “healthy, albeit slower growth” of 19.9% in the first quarter.
Expenditure also increased by 13% in three years from 2015 to 2017.
The survey reported higher occupancy rates in hotels, with an increase registered in the four star sector, which now stands at 12.3% of the market.
Five star hotels also reported an increase of 12.5% in average daily rates.
Three star hotels also reported an 11% improvement.
The total revenue per available room was up in all hotel sectors, with five and four star hotels registering increases of 14.1% and 9.7% respectively.
The average gross operating profit has also increased from €815 to €1,684 for five-star hotels; and €317 to €510 for four-star hotels.
65% of employees in the industries are Maltese, while 35% are foreigners.
There were also indications that Gozo and Valletta are growing industries with regards to restaurants. “It is important,” Aloisio said, “that the market grows with the economy.”
He said that it could cause serious concern in the future.
Aloisio said that in spite of Valletta’s performance, the area only recorded a 31% positive sentiment, which he attributes to substantial increase of outlets in the area.
Trends
According to Aloisio, the trend lines over the last five years also show that the “hard work” of the industry, with tourism and arrivals showing sustained growth with 2 million arrivals registered in 2016, compared with the 1.4 million arrivals in 2013.
Tourist expenditure has also increased from €1.3 billion in 2012 to €1.7 billion in 2016.
There has also been a diversification of the industry, meaning that the country no longer relies on one particular type of tourism.
For the period, there have been increases in the arrivals of British, Italians and Germans while there was a drop in numbers from Spain, Libya and Russia.
Profitability has increased by 91% for five star hotels, 111% for four star hotels, and 84% for three star hotels. In six years, Aloisio said, the hotels went from recording a gross operating loss, a substantial profit.
Mediterranean Institute for Tourism and Cultural Studies
A memorandum of understanding was also signed at the meeting regarding the launch of the Mediterranean Institute for Tourism and Cultural Studies, which is a network of international schools which will operate in Malta and various other satellites around the Mediterranean.
Malta is the main structure, while schools have already been set up in Italy, Algeria, and Palestine.