The state of tourism

Tourism Minister Michael Refalo address the launch of the new Coralia San Antonio Hotel and gives a breakdown on where the local and regional tourism sector currently stands and in what direction it is headed. Following are extracts from his speech

You have also joined the trend which sees Maltese entrepreneurs invest in hotels and join forces in strategic partnership with international hotel chain operators, in your case with Accor. I would be most appreciative if you could kindly convey my thanks and congratulations to everyone who contributed to this magnificent metamorphosis from old to new.

May I say that I do share the frustration which you express which investors experience while negotiating the long drawn passage through the bureaucratic mine field and regulatory process. While I am sure that you agree that the procedures applied today are superior, all encompassing and certainly more transparent than when passage was either faster or never ending depending on a ministerial nod, I believe that while retaining transparency, remaining all encompassing, and independent of ministerial input, procedures should be processed more efficiently and within a much shorter time frame.

In the presence of so many of the tourism’s top decision makers and investors, and so soon after my meetings in Madrid with colleague ministers from Mediterranean countries, this is an excellent occasion to update the trade about developments and prospects in our region as well as the state of play of tourism to Malta.

The attack on America made an already precarious economic situation much worse. Problems in North and South America, Japan and, closer to home, Germany, had already impacted negatively on tourism worldwide.

Although we had our own particular problems, by August, performance was generally in line with the Mediterranean average. Our end of year 2001 results, despite the adverse conditions encountered throughout these months should show a minimal decrease in volume of around 3 – 4%. This is a better than expected result, especially as guest nights are substantially more than in 2000. I put this down to the more innovative and more aggressive marketing and promotion techniques employed by MTA to further a strategy designed to fuel early bookings from core and other markets.

Despite the 11 September whirlwind, the traditional holiday market sector stood up well and Malta succeeded in retaining the vast majority of bookings already made by then. We did however lose out on a large scale from other sectors, significantly the conference, business and incentive segment. It is no use moping now about how well we might have performed, for amazingly, despite all problems, I would not have been at all surprised had 2001 turned out to be yet another record year !

Although we have pretty clear indications of the industry’s post October 01 out-turn, definitive statistics cover only the first 10 months of the year. Against those of neighbouring Mediterranean destinations, our results to October compare relatively well. As will those for November. December and January however, are disappointing and reflect the holiday booking standstill following the Twin Towers tragedy. We are hopeful that from first indications for this month, especially the revival of the meetings and conference sector, that we may be close to the start of a recovery, which although slight and possibly slow, is good augury for the all important summer season.

In Madrid, we were given an insight of WTO’s findings and the views of analysts and those of mega-players in the tour operator league. Recent IMF and OECD forecasts are not as despondent as some time back, the situation in Afghanistan is clearer, public perception on airline safety has improved, and the fear of flying syndrome appears to be on the way out.

However, our two main tourism generating markets are down on last years levels. UK operators have trimmed two million holidays from their programmes and air seat capacity by a minimum of 15%. The UK booking situation when compared to this time last year is down by 10% while the shortfall in Germany is as much as 40%. General consensus points towards a mid summer recovery for international tourism. That is the big picture. Although Malta’s performance is better than average, sales are still generally down.

With Spain being 25% below last year’s levels, when one considers the exposure which German and UK interests have in that market, one can expect Malta to have a bumpy ride.

On the plus side, we see Malta specialists performing well and an overall drop in UK air seat capacity of only 3%. Germany gives conflicting signs, in turn comforting and worrying, and one would have to assess the market’s Easter performance before coming to any definite conclusions. We anticipate a good turn out from France, problems in Northern Italy and in Switzerland, a better performance from the Benelux, some air seat capacity constraints over Scandinavia and improvement in smaller markets.

Thanks to Government’s increase of funding to MTA and the withdrawal of the exchange subsidy element from the TOSS programme, MTA disposes of additional means for marketing, promotion and publicity which, with the extra million allocated to cushion the industry against the 11th. September effect, makes this year’s Lm7 million marketing, advertising and promotion budget the biggest ever.

There is however much still to be done on the home front. More than ever before the industry must show that it cares. In an industry where the consumer is the undisputed king one marvels why some Maltese operators are sometimes neglectful and unthinking about customers’ needs and feelings. The Ministry though ITS will, as from 25 February, offer training courses at no charge to all those who have never had the opportunity to receive professional trained.

March should be a month which gives us pretty accurate indications, and although the Malta product has improved immeasurably, there is still much to do to wean Maltese from the popular perception that tourism grows on trees and from the mindset that the industry’s fortunes depend purely and simply on hoteliers and the tourism’s traditional activities. Yes, there is still much hard work to do. However the industry’s resilience is proven. I am convinced that the good times will return and, we will prosper and do well again. The difficult bit is putting a date and an exact time frame.

It is on occasions such as this where experienced tourism operators with excellent track records, continue to put their money where their mouth is, that should convince the industry, if ever it needed further proof, that Malta’s tourism is on the right track and heading for better times.