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Chaos in N. Africa, uncertainty over Air Malta hurt tourism

Double blow to Malta's tourism industry

Mar 20, 2011

The problems in Libya and the region coupled with the uncertainty over Air Malta have struck two blows to the tourism industry, according to hotels and restaurants association president George Micallef.

He told The Times the crisis had led to cancellations by small groups from the UK, France and Germany. There had also been a drastic slowdown in bookings, especially at the time when foreign media were in Malta reporting about the incidents in Libya and people’s evacuation from the beleaguered country.

At this time of the year the country usually experienced a surge in bookings, said Mr Micallef.

“Unfortunately, the media abroad is saying Malta will be used as a military base and this is creating anxiety for possible visitors. People are booking late but those who are planning a holiday want to choose and once they choose another country we’ve lost them,” he said.

This was a blow as big as the uncertainty surrounding the future of the national airline which, he said, was creating anxiety among stakeholders in the tourism industry.

“Libya is a one-off and it could be damaging if it takes long to solve, but Air Malta has a more long-term effect on the industry.”

Mr Micallef told hoteliers, gathered to hear the results of the last three months of 2010, that the airline was crucial, especially since Air Malta carried more than 51 per cent of the tourists who visited last year.

“This situation has been brought about because of the prevailing market trends, stiffer competition and in particular, because of the substantial increases in operating costs,” he said, reiterating his appeal to the government to curb costs.

Deloitte partner Raphael Aloisio said the efforts undertaken throughout 2010 delivered tangibly as the results achieved were “substantially different” to 2009 and “very comparable” to 2008, considered by many in the industry as a benchmark and record-breaking year.

Malta last year outperformed the majority of EU member states but despite these results, especially with regard to tourist arrivals and expenditure, hotels reported a decline in both average achieved room rate and occupancy when compared to 2008.

As an example, Mr Micallef mentioned the increase from five to seven per cent in the VAT rate on accommodation when countries such as Greece and Germany had reduced theirs. This increase “could not have come at a worse time”.

The figures showed a shift from hotels towards private accommodation which increased by 11.3 per cent over 2009. This explained why the record arrivals and record expenditure were not felt so much by hotels in terms of profitability figures, Mr Aloisio said.

Gross operating profits dropped by 5.5 per cent in five-star hotels over 2008, while profits of four-star hotels decreased by a massive 16.4 per cent. ­­­On unlicensed operations, Mr Micallef said the figures showed that 32 per cent of the 11 million bed nights spent in Malta were not accounted for in the official statistics.

“While we assume that these were spent in paid-for accommodation, the authorities have to do something about this because here we are looking at possible unfair competition,” he said.

Double blow to Malta's tourism industry
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