Despite bullish hotel results, MHRA rails against AirBnB ‘threat’

Positive performances were registered in the hotel sector in the first quarter of 2015, with 7.7% overall increase in tourism arrivals and 5.8% increase in guest nights over the same period in 2014.

But the president of the Malta Hotels and Restaurants Association, Tony Zahra, was vehemently critical about the growth of unlicensed private accommodation.

“It is clear that the market favours this kind of accommodation as we can see from such applications like AirBnB… the hotel stays are shortening, and private accommodation is getting longer. We now have a situation where the market is leading us away from licensed accommodation – it’s a reality, much like low-cost is to legacy airlines,” Zahra said.

Zahra said that the MHRA would lobby legislators to ensure private accommodation will have to be equally compliant in safety and licensing as other licensed hotels. “We’re ready to compete… on a level-playing field. This is what we want to tell the government. We want private accommodation to be on the same level as us.”

The main traditional markets of Italy, UK, and France remain main drivers of growth, while Russian and Libyan markets had massive drops largely due to political reasons.

Occupancy levels increased in four- and five-star hotels, registering 18.3% and 16% growths respectively, while occupancy fell by 0.3% in the three-star hotel sector.

Incomes for five-star hotels also saw an increase of 10% with an average room revenue of €95.70, while non-accommodation revenue increased by 22.1% and 23% for five- and four-star hotels respectively.

Total revenues per available room increased by 22.1% and 23% respectively for five- and four-star hotels.

Deloitte’s David Bonnet said the results showed a significant milestone had been reached, with top hotels diluting the effect of seasonality in tourism. “They have reversed the trend of reporting losses in the low season by recoding first-quarter profits for the first time in the last five-year period.”

On the other hand, the three-star sector did not appear to have benefited from occupancy growth, but its improved revenue and managed cost-base led to a 29% reduction in first-quarter losses.

Micro-cap finance developments

Steve Ellul, portfolio manager at Bank of Valletta, said a game-changer for tourism SMEs seeking to expand would be gaining access to capital markets.

“Discussions are underway with the Malta Stock Exchange to offer easier access for companies with a minimum share capital of €11,646 to set up a plc, to be able to offer IPOs of up to €5 million,” Ellul said.

Issuers would still have to employ corporate advisors and provide due diligence on their companies.

But the challenge for SMEs would be that of attracting the kind of liquidity that Maltese investors pour into the bond market, into capital markets.

Tourism-related companies form 26% of Maltese bond issuers, totaling €303 million in market value across five companies. But only two companies have issued equity on the stock exchange, with €480 million in market capital. But their willingness to invest was recently confirmed, with an over-subscription of 3.4 times the amount requested in the last two tourism-related issues.

Language skills’ drought concerns

A large number of 16-year-olds are leaving school with no certification in foreign language skills, despite having studied languages at school for a number of years.

Dr Mario Pace from the University of Malta sounded the warning on the level of language certification amongst school-leavers seeking jobs, adding that even the Institute for Tourism Studies had not given languages their appropriate due with just 12 hours of language teaching offered per week.

Pace said that foreign languages were only taught in two courses, but as from 2016, ITS will be offering languages in all courses with an average of two hours per week per course. The exam will be certify individual skills in listening, reading, writing and speaking.

Over 35% of school-leavers did not sit for any language O’level in 2014, and a worrying 13.6% did not sit for their English exam while 17.4% did not sit for their Maltese exam.

“Add to this worrying trend the failure rate in languages like Italian, French, German and Spanish,” Pace added, with rates ranging from 11% to 25% in these languages.

Pace said that young people were no longer exposed to languages in either reading or watching television, and the dominant perception was that languages were unnecessary in making a good living.

“Additionally there is the problem of our one-size-fits-all system in schools: students who fail their languages in Form 1 fail to grasp basic skills, and are still promoted to Form 2 and expected to continue in the language syllabus. How is this possible without basic skills in languages?” Pace asked.

Pace also said that a major stumbling block was the disconnection between spoken and written languages.

“Students see little connection between what is taught in class and in realistic situations – 80% of marks in the SEC exam are based on writing skills, when this is the least skill you need.”