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News | Wednesday, 23 September 2009

Mixed feelings over summer performance

Clearly, those companies peaking in the summer months have felt the pinch of a global recession this last season. But has it been so tragic? Now that the season came to an end, how are business leaders looking at the dreaded summer of 2009? DAVID DARMANIN asks

Jeremy Cassar
Executive Director, Marsovin
We did not fare as well as we did last summer, June was a particularly slow month, July improved a little and august slowed down once again. We can confidently say that this is due to the drop in tourism.
We were expecting a drop of 10 per cent over 2008. During some months, we have managed to match them though other months dropped a little further.
Consumers are changing the type of restaurant they frequent. Rather than dining at high class restaurants most consumers are settling for less expensive alternatives. Tourists are spending less when in Malta, which accounts for our drop in sales in hotels and restaurants. We also still suffer from the ongoing problem we have from our local consumers where more foreign wine is being consumed by Maltese than ever before. Most consumers do not as yet appreciate the quality of Maltese wines. Although their is a strong segment of proud Maltese wine consumers, certain Maltese would rather be seen with a bottle of foreign wine as a fashion statement rather than actually preferring the quality of the wine.
Our results this summer will affect our overall turnover as well as profitability. We hope that this does not carry throughout the rest of 2009 as this may have more serious repercussions.

Winston J.Zahra
CEO, Island Hotels Group
This summer was a reasonably good summer for us as a Group especially when one considers the overall economic situation internationally. Two of our properties performed very well and proved to be very resilient to the economic climate while the third more or less reflected the overall average performance of the tourism industry as a whole.
Despite the overall situation as a group we remained positive and continued to work to achieve the best results possible. Our expectations vis-a-vis our internal performance have been met overall.
The most important change we have noticed in customer trends this year is that the lead time for bookings has continued to decrease with a large percentage of bookings taking place very close to the date of arrival. This makes it more difficult to plan and lends itself to a higher discounting factor in the market.
I believe we have achieved the results we have thanks to the overall strength and positive attitude of our team of close to 1,000 people. It’s been a tremendous team effort in the circumstances.
I personally feel that this whole year, not just summer, has made us even sharper as a company. Winter ahead is still very uncertain within our industry and it is going to take a mammoth effort by all stakeholders concerned to ensure that the best possible results are achieved. As a company we feel we are well placed to deal with the situation and augur that the right decisions will also be taken at central government level to ensure that the whole industry, and by default the whole island, is given the support it deserves both by way of marketing support and product development and management.

Andrew Mangion
Chairman, EC GroupOur trend analysis starting showing a difficult 2009 as early August 2008 and hence I would like to think that we went into 2009 somewhat prepared for a rough ride. June and July, as forecast were down on 2008 although August showed some element of comeback. While summer 2009 was difficult I am pleased that we were reasonably well prepared for it and it has certainly allowed us to cut back on costs.
During quarters 1 and 2, our outlook for summer was worse than our conservative budgets but a last minute upsurge in sales coupled with tight cost management brought us close enough to our initial expectations.
Changes we have noticed in customer trends vary from country to country. Some markets, such as South Korea, have been decimated and we are really just “holding hands” and giving each other moral support and looking to the future, while other markets have been less affected and hence are more bullish. I think that people held on quite late before making decisions to travel. I think that some nations were particularly concerned about pandemics and put off travel. I also think that people are much more conscious about currency fluctuations than ever before and will book their destination based on the strength and weakness of the currency.
Malta was impacted by a number of issues: The global economic recession impacted a number of key source markets such as Germany, South Korea, France and Russia; The Strength of the Euro suddenly made the Sterling more attractive and people shifted to the UK more this year; Malta’s entry into Schengen in 2008 caused problems with Visas that continued to affect us into Quarters 1, 2 and 3 of this year; Swine Flu fears make some groups choose not to travel during 2009.
On the positive side of things however I would say that the following helped us: Our forward planning and budgeting for Malta in 2009 was very cautious; Staying away from Price dumping and holding our prices helped us immensely; Staying together as a team and working together to cut costs made everyone feel part of the solution rather than part of the problem; Tracking our results on an almost daily basis made sure that there were no surprises.
Having a portfolio of schools spread around four countries and three continents has allowed us to balance weaker results from one market with strong results from other markets. EC is coming to the end of one three year strategy and is starting another three-year strategy. We will stay steadfast to our plans and we will not be affected.

Kevin de Cesare
Director, Club Numero Uno
We exceeded expectations especially in these difficult times. We were confident that we could be 5 per cent up as we have developed a strong brand with Uno. In fact we exceeded our targets, which in the current situation is very good.
What we noticed was that people are more concerned with value for money. Therefore, we had to make sure that our clients were satisfied with what we gave them by increasing entertainment value and diversifying our target market. Our strategy, experience and delivering on our product promise.
Our performance was excellent and we attribute this to our ability to anticipate market changes

Alex Ellul
Managing Director, Marina Restaurants
We fared same as last summer this year, although obviously we had higher expectations. The starkest changes that we noticed in customer trends were lower budgets. We need to become meaner and leaner without any affect on quality.

Paul Selis
Director, Onsite Malta
My company organises conferences and incentives, so our summers are traditionally quiet in summer since it’s a period reserved for family holidays during which few companies organise corporate events.
So apart from myself and my team taking some time off, we usually spend summer catching up with paperwork and preparing for September and October, which are always two of our most busy months.
Clients do tend to plan inspection visits during the summer months and this year we had our fair share of those again, leading me to believe that we’re slowly getting out of the slump that also this line of business experienced.
If anything however, the trend is that people are more cautious: smaller budgets, more shopping around, tougher contract negotiations, etc. In actual fact, the “shopping around” has tremendously increased competition for Malta as a destination for the so called MICE segment of tourism with a result that profit margins have been pushed down. At this stage, end of September, I would say that we’re back in “almost full swing” with the summer having been a switch to a more positive development, which should result in a slow recovery this semester, bridge what is still a weak winter season, to a high season next year that could be considered as being on the right track.

 

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23 September 2009
ISSUE NO. 600

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Malta Today

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