English Language Travel Industry Report 2016

The EFL (Teaching English as a Foreign Language) statistics for 2016 issued by the National Statistics Office reported the number of language students at a relatively consistent level for the fourth year running, up just 1.6% over 2015 and in line with the average reported over the last four years.

Student weeks, on the other hand were reported down 4% in 2016 as a result of shorter stays and a shift in the student mix with junior students accounting for 50% of total student arrivals (vs 48% in 2015).

The average length of stay fell to 20.9 days in 2016 from 22.1 days in 2015. Notwithstanding this decline the ELT sector accounted for approximately 10.7% of total tourist guest nights.

Furthermore, Deloitte estimates place indicative total expenditure by ELT students during 2016 at approximately €139m representing 8.1% of total indicative tourist expenditure.

During 2016 the number of student weeks from EU/EEA countries increased by 5.5% while those from third countries fell by 13.6%.

Language schools continued to report significant declines from the Libyan and Russian markets. Other declining markets include Switzerland, Czech and South Korea.

The decreases in the latter two markets represent a return to normal levels following significant gains reported from these markets in 2015.

The sector continued to attract students from markets which are not traditional tourist source markets for Malta, such as Turkey, Colombia, Brazil and Japan.

In 2016 these non-traditional markets accounted for around 26% of total student weeks registered by the industry.

The annual Feltom survey carried out by Deloitte shows that total gross revenue in 2016 increased by 2.8% when compared to the previous year. Average turnover per student week (net of agency commission) increased by approximately 5.9% resulting in 1.7% net revenue growth.

Revenue growth was mostly driven by accommodation rev- enue which increased by 8.1% in line with general accommodation prices across the island.

Tuition revenue also increased slightly by 1.1%. Other ancillary revenue generated through activities fell by 7.8%, adjusting back to normal levels after a significant increase had been reported in 2015.

From the cost side the FeltomDeloitte survey shows that all direct cost elements have increased during 2016 resulting in an overall increase of approximately 6.1% when compared to the previous year.

Teacher payroll costs increased by 3.5%, possibly reflecting wage pressures. Accommodation costs increased in line with corresponding increases in revenue leading accommodation margins to remain stable over 2015. Total other direct costs increased by 7.9%.

Total overhead costs increased by approximately 4.5% driven mainly by increases in marketing spend, rent and non-teaching payroll cost. These costs were partially offset by savings in energy costs and reductions in administration costs.

Overall direct contribution margins dropped from 42.7% in 2015 to 40.2% in 2016. Overall profitability of the sector is estimated to have decreased to approximately €35.86 per student week.