13 December 2006

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Business Today

Putting the plan in action

Malta Chamber of SMEs president for hospitality and leisure PHILIP FENECH has been a part of the Paceville entertainment landscape for over 26 years and he carries the entertainment and leisure division’s banner within the GRTU. Today he hopes that a new national tourism plan can actually be the springboard to change the fortunes of the ailing industry which has suffered due to the notable downturn in tourism. He also talks about various issues affecting small businesses and the entertainment sector.

What do you think of the recently unveiled tourism plan? What is your assessment of this plan and its policy?
The plan is positive because it incorporates a general outlook of where we need to go and there are also timeframes. In fact, there were a lot of suggestions made by GRTU with various meetings it held with MTA officials, but also comments that have been in the media on various issues – such as low-cost airlines, and also the product development issues. So it was good to see all these viewpoints from the different organisations, crystallised into one document. This document was long overdue, but what is important is that we get going to catch up on all the lost ground. So hopefully the industry will get itself on the mend. We hope that all this is actually sprung into action, because action has really been overdue.

What are the areas which need to be urgently taken care of?
The most important is obviously product development, but mainly we have to get figures here. We need tourists. If we don’t have these tourists, the industry will not have the necessary finances to keep on upgrading. I am amazed how, when you look back and see the difficult economic situation and how difficult the last five years have been for the industry, the private sector has still invested a lot. This has come with a lot of strain on personal finances for entrepreneurs who have tied themselves down with the banks. But it’s positive to see, for example, all the new hotels, new entertainment places, and restaurants – everybody seems willing to upgrade and has confidence in our product. But if we are not going to get those figures – and that’s the first priority – these investments will not realise themselves and will put people into greater financial difficulty than they already are.

As for the arrival of low-fares airlines, have any positive effects already been felt on the ground?
Yes, and what’s so positive is that government has finally warmed up to the idea that low-fares airlines are an integral part of our marketing mix. We are already seeing how in November, in such a short time, figures have went up and replaced the previous 10% drop. That is increasingly positive and shows you we are 5% up already, and how important low-cost airlines are. It is also positive that government seems to be taking Air Malta’s restructuring seriously, so that the national airline will be able to reposition itself and compete within this scenario, because it’s also a rapidly changing scenario. I believe that when that will happen, government will also be in a position to further incentivise low-cost airlines, because Ryanair and others have offered several routes they would like to operate from. However we have seen that those routes offered by government have not been picked up by Ryanair. But Ryanair has offered other destinations. The more we open, the more we get a good spread, the faster we’ll recover. The scenario has changed at such a rapid pace that some operators haven’t woken up to this reality yet. If we don’t accept this reality, we’ll remain stagnant. Hopefully we’ll attract more low cost airlines because there are more which have shown interest. If I was in government’s position I would be chasing these operators and see which are the routes that interest them.

Some critics say Ryanair are, at the end of the day, being subsidised from government revenue, and therefore taxpayers’ money in order to create the incentives needed to have a low-cost player operate to Malta. Are these critics justified? Is it true that this does not offer a level playing field for legacy airlines?
You are referring to the market support scheme. This scheme is open to any airline which would like to operate, not only low-fares airlines, even to legacy airlines which would like to operate those underserved routes that government feels it should incentivise from ttime to time. If taxpayers are going to get a return for what was forked out for a market support scheme, this will be returned in terms of value added input to our economy; I think that is a good return for our taxpayer, even in terms of job creation.

But is our tourism product something which can attract more tourists? Is this not the main problem affecting the rate of arrivals, that tourists are not happy with Malta?
From a positive point of view, I think the product has never been as good as it is today. We’ve never had so many five-star hotels, our service has improved a lot, and we’ve never had a greater variety of entertainment outlets as today. Even in terms of cultural recreation and heritage areas, the variety today is greater and more accessible than ever before. I feel there’s been a physical improvement and an improvement in terms of service, but obviously this does not mean we are at our best and that there’s no room for improvement. I mean, when we compare to other destinations, a lot of our product leaves a lot to be desired. So this is an ongoing process. Malta has its uniqueness as well. Given its size, Malta has a lot of segments that are being developed all the time, and given this kind of rich mix, makes it very unique for such a small island. Which island the size of Malta has such a variety in such a small space? I do wish however we could attract some more adult tourists through some adult entertainment, cabaret clubs and other themed clubs. Most of our nightlife is geared towards a young type of client. Recently there was the issue on the gentlemen’s clubs – should that be marketed as well as part of Malta’s tourism product? Maybe someone could take up the idea of the Playboy club back in the 70s, which at best was sophisticated ‘naughty’ behaviour. I think there’s room for that kind of entertainment. Having said this, I’m not talking about any form of sex tourism, definitely not.

Despite all the lip service on the mix of segments, the MTA recently removed the Gozo-based holidays segment from its marketing directorate. The Chamber of Commerce’s leisure and tourism group was especially critical of this decision. Your comments?
Quite honestly, I don’t know what was behind this decision. But obviously, Gozo needs to be and should be marketed on its own because it has a lot of potential in it. MTA should take it seriously – if business is bad in Malta, in Gozo it’s doubly felt. Gozo offers another experience, beyond what Malta can offer. Gozo can offer a different product for tourists and should be given its specific importance.

So are you pleased with the current marketing mix being pushed by the MTA?
I’ll give you an example – wedding tourism, which is a relatively new segment. Telegraphically, I’d say we have wedding tourism, diving tourism, English-language tourism, conference and incentive travel, and also fun and leisure, mainstream tourism. And we have our sun and sea, culture and even agro-tourism. We should also be marketing our music concerts, especially the Malta Jazz Festival, to an international audience. I personally would like to go in the market of bringing international musicians even to a club level, which would mean little pockets of 200 tourists or over staying at a five-star hotel, who come specifically to see a musician as part of a package, for say three to five days. There is so much we can do. And that is why cheap flights are an important factor in the whole chain. As Michael O’Leary himself said, Malta’s product is very good, and enjoys a good reputation – it’s the linkage which is expensive. If we open ourselves up to more underserved routes, this will only make it easier for more tourists to come to Malta. We would be booming, literally. Can you imagine what that would mean for entrepreneurs, who will be able to repay their loans and other payments? I mean, is it that difficult to find 500,000 tourists more with what we can offer? I believe this is coming mainly from the expense of flying to Malta, not because we have an inferior product.

Are you happy with the marketing efforts of the MTA’s marketing directorate? Its most recent ‘shock’ was the sacking of its head of marketing.
Well, there seems to be now a new kind of beginning now that the strategic plan is out. Hopefully, marketing will be taken seriously because the MTA has had its fair share of hiccups. Hopefully, the right people will be chosen to implement the national plan. We’ve been through this before – when we had a reasonably good marketing plan, tourists who came to book found Malta too expensive, and instead chose to go somewhere else that was Lm200 cheaper for a family of three.

You consider price to be the main ingredient of success here…
I’d say price of linkage – not the only problem, again, because there is also further product development, but definitely one of the major stumbling blocks. We need a good marketing plan and also have positioning online, on the internet. Our hotels and touristic services need to be more accessible online through a portal.

You were critical of the Brand Malta campaign – your views today?
Well, I criticised it for the way it was packaged. The idea was good, but the package left a lot to be desired. Positively, even bad advertising is good advertising. So while many people spoke about it critically, it however actually imbued some sense of branding in everyone. Now it’s a question of appreciating more of what we have and what we can offer. Some of the negativism about our tourism product is unjustified – there are destinations which don’t have a quarter of what Malta can offer, and are still faring well.

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