15% decline in Italian tourists wipes out gains from other markets

The Malta Hotels and Restaurants Association's tourism survey for the third quarter of 2011 has revealed that while key markets like the UK, Germany and France continued to register sustained growth, 'star performer' Italy has declined by 15% and virtually wiped out the gains registered from other markets.

MHRA president Tony Zahra said the significance of the situation was more relevant when profitability was a far cry from a "fair and sustainable return" on investment for hoteliers.

"MHRA believes the situation remains very delicate and that with future prospects becoming more uncertain, it is critical that stakeholders continue to work to avoid any unsustainable shocks to an already highly volatile industry," Zahra said.

While referring to the key challenges during 2012, Tony Zahra referred to an 11% drop in seat capacity and the increasingly sluggish market conditions across the main tourism markets for Malta.

Zahra said this situation makes it even more important for Air Malta to be restructured and put back onto sound footing.

"We cannot stress enough the importance of sustaining seat capacity that gives us numbers which is the main factor that is keeping us moving forward, since rates cannot be improved due to high competition being offered by other competing destinations."

The survey

The survey compiled by audit firm Deloitte showed that after a positive period of sustained growth, guest night generation during the third quarter of 2011 fell marginally below the levels registered during the previous year.

The survey also reveals that average achieved room rates have continued to improve at an encouraging pace but total accommodation revenue in 2011 remained below those registered in 2007-2008.

Non-accommodation revenue in 2011 continued to decline across all hotel sectors as hotels continued to lose out in food and beverage sales to other operators, creating a visible shift in consumer patterns.

The survey which was presented by Raphael Aloisio, director at Deloitte, explained that the results confirm that hoteliers appear to have sustained payroll and other 'manageable' costs, however, they had to sustain substantial increases in energy and other induced costs.

As a result of subdued revenue and higher operating costs, the results for the first nine months of 2011 show that gross operating profits in 2011 in each of the three main hotel categories remain below the levels reached in 2007 and 2008, considered to be the years of absolute records.