Low-fares airlines make mark on Malta’s changing tourism landscape

The Malta Hotels and Restaurants Association’s survey for the second quarter of the year have continued to confirm the changing pattern of underline a changing pattern – a shorter average stay, a price driven market, an extremely late booking situation, and a continued decline in non-accommodation income in all hotel categories.

The MHRA said both second and third quarters were showing an expected slowdown compared to first quarter increases, linked to a 5% drop in seat capacity this summer although improvements in load factors are making up for this drop in seats.

“Although rates in 2011 are improving, they are still below the levels registered in benchmark years of 2007/2008, when costs were also significantly lower. Only through further growth can Malta realistically expect to push rates up and counter the pressures caused by a steadily declining average length of stay. The MHRA however is encouraged by the steady growth in arrivals since 2009,” the association said.

The MHRA said the positive trends and steadily improving results achieved over the past eighteen months were directly linked to the ability of the Malta Tourism Authority to stimulate increased demand by increasing available seat capacity.

“This was supported by Air Malta and other airlines during the particularly challenging global economic climate. The wisdom of those bold decisions are unequivocally supported by the increase in tourist expenditure of €111 million in the first six months of this year, compared to expenditure levels in 2009. This figure is expected to more than double by the end of this year. Furthermore, the overall per capita tourist spend has increased by 2% for the first 6 months of the year,” the MRHA said.

MHRA president George Micallef said one would dread to imagine where the economy would be had it not been for the substantial incremental inflows into the economy generated by the strong rebound in tourist arrivals.

“There is no doubt that Air Malta played a major role in all of this, a role which must be retained. However the reality is that changes in the way the product is distributed are taking place in the industry and low cost airlines are a reality, which needs to be accepted by all stakeholders. MHRA appreciates the significance of the difficult decisions that need to be taken, but feels that delays in taking certain important decisions will only come back to haunt us,” Micallef said.

Micallef said the MTA had to increase seat capacity from underserved markets while nurturing Air Malta to sustainable commercial pastures.

“We appreciates that Air Malta’s restructuring is an elaborate process which needs to take its pace and that its outcome cannot be predetermined, but this should not stop government from setting clear targets for tourism next year, given the huge influence tourism has on the economy,” Micallef said.

“Air Malta will no doubt play a huge role in the targets for next year, we should set targets and see how Air Malta fares in these plans to fill the gaps as necessary within the prevailing circumstances.”

Micallef added that in the  background of the recent downgrade by Moody’s, tourism could restore pre-recession economic growth rates. “It is empirically proven that tourism benefits the economy with the highest multiplier, which in turn can have significant impacts on government revenue. Given that we are now in the budget process, we will therefore continue to urge Government to continue its support to tourism, as this can be a key to accelerated economic recovery,” Micallef said.