Arrivals and guest nights continue to increase but less tourists are staying in hotels
The MHRA BOV Deloitte Q2 survey shows an increase of 4.6% in arrivals and 1.4% increase in bed nights when compared to the same quarter of 2018. This means that the average stay per visitor is getting shorter.
Hotels seem to have borne the brunt of this reduction and in general we continue to see the private rented accommodation growing. In Q2, the number of guest nights in collective accommodation (hotels) decreased by 2.6%, while private rented accommodation guest nights rose by just under 13%. The number of licensed beds in private rented accommodation is around 18,000, but thousands more continue to operate in breach of the law. The latter are not licensed by the Malta Tourism Authority (MTA) neither do they pay eco contribution nor VAT and tax. They are also breaching competition and consumer protection laws. This is creating an unlevel playing field in the hospitality industry.
Like several other countries, the industry is facing challenges brought about by its own success. The president of MHRA Tony Zahra said that: “Managing success, as was pointed out recently at another forum, can be nearly as difficult as managing problems and we are now in a situation where we need to manage our success to ensure that we have a sustainable industry.”
Zahra said that “sustainability must be measured in the long-term, as we are the guardians of the country, not the owners. We must ensure that future generations are passed on a country and an industry which is sustainable. Therefore, it is important to have a vision and to carry out what the industry was requesting for a very long time”.
“In the harsh world we live in, there is no such thing as a guaranteed future and we have to invariably work hard for continued success and, in particular, we have to have policies and plans in place to mitigate the rough seas ahead given an ever-increasing number of disruptors to our comfort zone and re-emerging competitive threats,” added Zahra.
With 2020 less than four months away, two important policy documents for our industry will soon reach their end of life and MHRA cannot see any extension or replacement, or any policies and plans for either of them. Zahra noted that: “A serious and professional policy and plan does not fall out of the sky. It requires many months of consultation, drafting, presentation and approval, and thereafter execution.”
Zahra also referred to Malta’s National Tourism Policy for the period 2015 to 2020 and the still born, A Civil Aviation Policy for Malta 2014-2020. Zahra said that: “These are, or rather were two important documents that are intrinsically intertwined given the close correlation between tourist arrivals and connectivity as proven time and time again. The National Tourism Policy for the period 2015 to 2020 was subtitled Ensuring Sustainable Growth. I leave it up to you to decide whether we are indeed in an era of sustainable tourism,” remarked Zahra.
The other, Guiding Principles in the policy 2015/2020 were: Managing visitor numbers; Raising the level of quality across the entire tourism industry and Reducing seasonality. Reducing seasonality has to a good extent been achieved, however, can we truly say that we have been successful in “raising the level of quality across the entire tourism value chain?” remarked Zahra.
This year marks the 30th anniversary of Malta’s one and only Master Plan for Tourism of 1989 better known as the Horwarth & Horwarth reports which included strategic planning, marketing measures, quality improvement plans and, moreover, regional master plans for the quality upgrading of areas such as Qawra/Bugibba and Paceville. The total disregard to master planning since then has resulted in a mishmash instead of quality tourism resort areas. A fresh Master Plan for Tourism is long overdue to be preceded, as per professional practice, by a Carrying Capacity Assessment.
“Finally, I must again stress the looming overcapacity that is in the pipeline in tourist accommodation. We have seen in Quarter 2 that once occupancy levels start dropping so does the room rate, and the lower the occupancy the bigger the room rate drop. For those that are still in time to rethink their investment in tourist accommodation, my advice is to think carefully before you commit your investments. Overcapacity will result in rate wars where there will only be losers. Only the strongest will survive the rate wars,” concluded Zahra.