THE Malta Hotels and Restaurants Association (MHRA) reported that the performance of the country’s hotel industry during the first quarter of 2011 has registered positive growth but operating costs exceeded revenue gains in the three- and four-star categories.
According to MHRA president, George Micallef, the main concern remains in the fact that the ‘cost pressures’ seem to be coming from various angles, with sharp increases being reported in the cost of food sales, direct operating costs, administration costs, marketing costs, property expenses and utility costs and a higher rate of VAT.
Speaking to Malta Business Weekly, he said: “This negative phenomenon of ‘spiralling’ costs must be addressed as a matter of urgency, as it is eating viciously into hard earned revenue gains of most hotels and is actually leaving a large number of operators worse off than previous years.
“Despite the improvements registered, results show that for the first three months of this year the gross operating loss is estimated to be around €6 million ($8.5 million), compared to around €7 million ($9.9 million) in 2010. If we were to add on the financing and depreciation costs, the losses would increase substantially.”
There seems to be a growing trend of shorter average stays as well. While the country witnessed an impressive increase in arrivals of 24 per cent, spent nights in collective accommodation (hotels) only went up by 13 per cent. Another concern is the national per capita spent, which declined by six per cent for the first three months of the year.
Looking ahead, the current booking situation has remained good but not as good as most expected it to be, with certain hotel categories securing occupancies at the expense of rate discounting.
After the recent restructuring decision at the national carrier, Air Malta, which is expected to see substantial job losses and will require significant government funding for the carrier which must be agreed by the European Commission, Micallef added: ‘We understand that the Air Malta process is a delicate one and that we are now at a very important juncture, but the clock is ticking and has been ticking for a while now, and it is imperative that negotiations with the European Commission are concluded soonest’.
“Winter operations are around the corner, and we need to determine the seat capacity and routes schedules soonest in order that we can start selling them. The Malta Tourism Authority needs to be better informed and kept abreast of developments, not just because of its marketing role but also because it would be expected to find ways of fillings gaps and there needs to be enough lead time to plan things.”
He added that any further significant cutbacks on seat capacity for next winter could only mean that a number of hotels will have no choice but to close for the winter months and, if this were to take place, tourism and the hotel industry in Malta would certainly suffer.