Air Malta must see MTA as its ‘most valuable partner’ – MHRA

Addressing the MHRA's annual general meeting for the last time as president, George Micallef said it is important that nothing comes in the way of the commercial side of the airline's operation.

"Air Malta needs to appreciate that tour operator business remains hugely important to the tourism industry and the economy," he said, adding that tour operator business represents over 40% of tourist arrivals.

Quoting recent figures, Micallef warned the coming winter appears to be tough, with large tour operators and online travel agents reporting late booking trends and a market which is extremely price sensitive.

"Maintaining growth figures is a huge challenge. MTA must continue working with both Air Malta and other airlines, including low cost carriers, to support increased seat capacity from underserved markets," he said, adding that it is important for Malta not to miss out on any single opportunity to get business to Malta.

"And this risk is real. Which means that MTA will require additional funds to make up for the shortfall in seat capacity and to increase arrivals for next year."

Micallef said the economic pressures will no doubt influence the number of visitors to our islands next year, and given Malta's high exposure to the core European economies - which represent our main trading partners - tourism and economy, may well end up suffering.

"But the concerns at present of the local tourism industry are not strictly limited to the economic turmoil in Europe, as, in our case, these are compounded further by the uncertainties linked with our national airline."

MHRA, he said, sees Air Malta and MTA as the two most important strategically state owned organizations for tourism: "It is absolutely necessary that they improve their working collaboration. Air Malta has to appreciate that MTA can be its most valuable and strongest partner. The tourism industry cannot afford otherwise."

Micallef said hoteliers and restaurateurs this year had to pay an additional €6 million to their costs, because of the increase in VAT rate. They will only get back €1.5 million.

"Increasing rates next year is very unlikely given the difficult economic scenario. This means that any increases in costs will have to be absorbed once again by the industry which will continue to deplete declining profits."

He called for a decisive plan of action that sets clear targets, including the number of tourist arrivals during 2012. He said that by end of 2011, hotels may spend around €10.5 million in marketing costs, in addition to around a million paid in the form of contributions to the tourism authority.

Micallef did not mince his words when he outlined that the critical success factor remains seat capacity: "According to an MHRA's study, for every 1,000 seats drop arrivals will go down by 630 in winter months to 770 in the summer months. Hotels are most vulnerable to seat volatility as it directly affects their occupancy levels. In fact the Hotels overall profitability is mainly driven by improvements in the number of nights spent not rates, with circa 60% of their profitability attributed to occupancy and the remaining 40% to room rates."

Echoing statements by the Opposition spokesman's for tourism Gavin Gulia, Micallef said the additional funding allocated to MTA for next year might not be sufficient.

But parliamentary secretary Mario de Marco praised the €36 million allocated for MTA, adding it is a substantial increase from 2007's €21 million. He however acknowledged that Malta needs to advertise all year around and not only during peak seasons.

"In fact, MTA's marketing work has been internationally recognized, especially in its ability to take advantage of the opportunities which lie in advertising online," de Marco said.

De Marco noted that every year in tourism "is a new year of challenges seeking new solutions" adding that it is a highly volatile sector where its success depends on flexibility.

He praised the MHRA for the record results achieved, saying they succeeded in spite of the constant uncertainty.

Despite calls by the Opposition that Air Malta and MTA must be politically linked by falling under the same ministry, and the renewed call by MHRA for greater collaboration between the two entities, de Marco said ultimately everyone is one player: "The Finance Minister ensures that Air Malta's solutions will be viable, while sensitive to tourism needs."