Emergency product Malta
MATTHEW VELLA gets the low-down on brewing trouble
for product Malta. Have the Maltese Islands failed to get
out the doldrums of national activity? Hotelier and Malta Hotels and
Restaurants Association president Winston J Zahra wishes things could
At a time of tumultuous reform in the Maltese islands,
with dubious planning skills incurring the opprobrium of Joe Public,
hotelier Winston Zahra Jr has much to say about the threat of Maltas
dilapidating environment to the tourism industry. Theres much
to suggest that Ghallis weighs heavily on his mind, although Zahra sees
a place in the island for another, strongly-opposed human creation
golf courses. But the proposed landfill at Ghallis threatens not only
the Coastline Hotel, one of the gems in the Island Hotels chain. Ninu
Zammits landfill threatens to hit the tourism industry further
across the island, according to Zahra:
"The Coastline happens to be the closest hotel but Ghallis threatens
the whole industry. They intend putting a major waste facility, which
also handles hazardous waste, at 900 metres away from the Qawra coast,
where there are over 40 per cent of the beds that exist in Malta. We
are certified mad."
Asked whether Ghallis poses fatal consequences for the Coastline, Zahra
says that a decision in that regard has not yet been discussed. He says
that what has to be focused upon is that fact that Ghallis "is
the wrong place for a landfill and a waste management facility due to
the negative effect it will have on tourism on our Island."
This would be just the tip of the iceberg for what is plaguing the Maltese
tourism industry, which for many people, seems to be encountering its
moment of truth as the recent spate of closures, jobless workers and
recriminations about who had to act faster become the order of the day.
"Basically this is a situation where the industry is emerging out
of a tough two and a half years 9/11, bad performance in the
economies of a number of our core markets, SARS and Iraq these
combined factors have affected the travel industry worldwide and we
are not outside that scenario. This has led to a number of hoteliers
finding it unsustainable to remain in the industry, re-analysing their
investment, some of them feeling they can get a return in another activity.
Predominantly it seems to be real estate at the moment.
"This is no surprise. We had been warning of this scenario for
a long time, through statistics and forecasts, which unfortunately were
spot-on. What we said last June, predicting closures in winter is actually
happening. We dont feel that this is a crisis situation, but it
is unhealthy. Some of those operators leaving the market and others
considering leaving still have properties which are not past their sell-by
date, which goes to show what sort of level the rate of returns in the
market has fallen in the Maltese industry."
Despite successful performance by certain other operators however, Zahra
says the average profitability in Malta is much lower compared to international
benchmarks, the result of a very high European cost base
and a very low, non-European rate base: our industry is
plying European standards at Hammamet bargains.
"The solution to this problem is not rocket-science, by any stretch
of the imagination. The solution is to work together collectively, Government,
opposition, MHRA and the constituted bodies and all stakeholders, to
see how we are going to make demand grow in our island. Our problems
are the problems relating to product Malta. In terms of
hardware infrastructure and the environment these aspects
are lacking on the national front. The contribution of private industry
in terms of infrastructure is totally out of synch with what we have
Most worryingly, a functional problem of the whole tourism product is
the fact that the Maltese experience is falling short of expectation.
The marketing purports a reality which is no longer veritable as the
islands fall victim to lack of environmental and urban planning. Even
so, many will ask, what is our product?
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"There is a mismatch between the product offered and that what
is professed. If we want to secure a future in tourism we have to bring
up to scratch both hardware and software us, the people, the
hospitality we offer we have to see these improvements to deliver
what we are marketing. The question is however a bit of a chicken-and-egg
quandary should we market something that is not yet in place,
or should we wait until the improvements are in place and then start
the marketing? That is quite difficult to answer. We cannot stop all
our marketing until we reach all improvements, otherwise everything
will go to the dogs.
"The product being marketed right now is moving away from sun-and-sea
and more towards what John Grech of the Malta Tourism Association terms
product clusters, traditional market segments branded as
clusters, to enable tour operators to sell their product more easily
to identifiable market segments."
Zahra says Malta has the potential for cultural and heritage tourism,
sports tourism ("we underrate this area when considering sailing
and yachting in Malta
we need more in the way of golf courses,
but again that is potential). I ask whether Malta being a safe country
could be marketable, but Zahra says that depends on how loud internationally
that sort of cry would be. A subtler tactic would be more ideal, he
"Our marketing has to be more targeted and focused, moving away
from nationwide marketing within a country like Germany, which we dont
even have the money for, to specific target markets or segments within
Germany. The discussions in MTA are heading in this direction. There
are a number of us from the private sector who sit on the MTA board.
There is a also a strategic think-tank made up of the chairmen of MTA,
Air Malta and Malta International Airport and myself as MHRA president,
aiming to set one common strategy for the island within which all these
entities will work towards. It is very important to finally have this
direction and the strategic unit is now beginning to work."
Despite all goodwill from the tourism moguls, the industry in Malta
faces a burgeoning challenge with collateral problems such as environmental
degradation. There has been no concerted effort to provide appropriate
planning in streets and towns. And Zahra emphasises that to improve
product Malta there must be a process which has to be well
thought through, well planned and well executed with some urgency in
order to fall properly into place.
"As MHRA, we always felt that the biggest threat to the industry
is the state of our environment. Malta can sit above the Monacos of
the world if we want to. We feel that we can develop our product in
that way. People might say Im dreaming, but if we get our act
together collectively and invest our island properly, we can achieve
this. We have the raw ingredients, we have the unique selling points.
We have the culture and heritage sites that other destinations would
kill for. But we have to look after these and our environment as well."
I tell Zahra that the contradiction in the Nationalist governments
administration history is that there has been a lot of money poured
out but with little strategic planning to ensure a satisfactory product.
The environment is again a focus of this lack of strategic planning.
"Without a doubt. Forget Ghallis and the Mnajdra landfill projects.
Take the square mile that comprises Paceville and St Georges Bay.
This is our golden mile, with over Lm150 million invested by the private
sector in the last six years alone. Till today there has been practically
nothing done by central government to upgrade area. The only investment
by the government has been a ridiculous housing estate sitting on our
doorstep just outside the hotels. This is not the place for social housing.
The use of this zone was determined to be an upmarket resort for tourists.
And yet we have no vegetation, no road infrastructure to be proud of,
nowhere to sit or walk around. Outside the hotels the image is cheap.
"Theres more that needs to be done apart from what progress
has already been made such as the promenades in Sliema and Bugibba.
The positive aspect is that we have had Lm10 million allocated in the
budget for these projects and it seems that action is about to be taken."
Zahra says that it is easy to spend money, but it is difficult to see
how efficiently and effectively that money can be spent: "This
is where I think Government is lacking. I think we can get much further
down the road with the same amount of money that is being spent if there
is more controlled spending."
Zahra says the MHRA has discussed these problems extensively with the
Prime Minister, the Minister for Tourism and other ministries. In a
nutshell a large nutshell the challenge is, once again,
product Malta. "Quarter two looks like there could
be a turnaround and recovery looks slow but is hoped to be sustained.
Once again I emphasise that we have to employ a collective effort to
grow demand positively towards our island."
I mention Zahras proposal for a moratorium on hotel development
a moment of irony I proffer when Island Hotels was right in the
middle of launching the Golden Bay project in Ghajn Tuffieha. Zahra
"The proposal was misunderstood. Our position paper stated that
there are enough licensed beds on the island. These 39,000-plus beds
require a minimum of 1.5 million tourists, which is around 300,000 tourists
short of what Malta attracts. We suggested a solution: the primary proposal
was to enable a growth in demand to take up that bed stock. The second
was not to allow new developments on virgin land and thirdly to encourage
properties past their sell-by date to either sell out and get out of
the market, or sell to an operator who wants to refurbish and revamp
the hotel. And thats what we are doing with Golden Bay, building
a far superior hotel with 289 beds. Our strategy with the Golden Sands
is 100% in line with the MHRA proposals on bed stock made to the government.
It upgrades the product and replaces, as opposed to increases, the bed
I tell Zahra that many are those who think there are too many hotels
on the island. He states that oversupply is not the problem. "It
is lack of demand that is the problem. It is the same argument from
a different perspective. If we had 1.5 million tourists we would not
have an overstock of beds."
And yet, there are actual cases of hotel operators which proceeded with
massive hotel developments in full knowledge that preliminary forecasts
predicted a bleak future. It is a cynical conjecture, but a plausible
one at that many operators are confident that their hotels, success
or not, are prime real estate. And there goes product Malta
out of the window: "That is an argument that used to be made previously.
But there are also a number of operators who are not necessarily pure
hoteliers at heart, who would take a decision to build a hotel on the
basis of the growth in real estate value as opposed to the profitability
of that property.
"When a certain number of properties leave the market, due to unsustainability
or to grab other opportunities in other sectors to make money, it is
not a good sign. The positive spin would be that this is a reduction
of bed stock, but that is not the right way to justify the hotel closures.
The closures are indicative of a problem which we forecast and warned
about, and one that we have to sit down and address. When a hotel closes
and turns into real estate the jobs that are lost are not replaced."
The question beckons: is Government addressing the situation? "I
am not seeing enough that is being done specifically," Zahra says.
"I dont expect Government to bale anyone out, but it has
to provide the necessary infrastructure and support to make sure the
industry has the best chances to prosper it has to address the
environmental and infrastructural issues with much more urgency and
it has to appreciate that more funds are needed for the national marketing