09 June 2005

The Web

No magical solution

Government paints a positive picture for the tourism industry but hoteliers are not swallowing it. Michael Zammit Tabona, owner of the Fortina Hotel and Spa, says Government is being misled by its own departments on the true situation of the industry. “We are the people who have a pulse on the industry,” Zammit Tabona insists. And the pulse is anything but healthy at the moment.
Zammit Tabona says hoteliers are still struggling to fill their beds for the summer season and if the situation persists, winter will be more problematic. The dark clouds amassing on the industry could lead to redundancies.
The veteran hotelier is anything but satisfied with the Malta Tourism Authority’s operation and says the reform process is too slow and does not reflect the extensive reforms outlined in the Deloitte and Touche report last year.
Zammit Tabona suggests the appointment of a parliamentary secretary entrusted with the sole responsibility of managing a budget for advertising and marketing purposes and backed by a committee of four people that would also include the Opposition’s spokesperson.

What are the prospects for the tourist industry this summer?
Between January and April there was a drop of 4.2 per cent in bed nights. I am mentioning bed nights specifically because we have to stop once and for all counting bodies, people arrivals. It makes no sense to keep on counting arrivals because I’d rather have one million tourists coming here for seven nights rather than two million tourists staying here for two nights. More bed nights means more income for the industry, the island and the economy. Hotels are not performing well because bed nights are low.

What is the major cause of this problem?
We are competing with the world and ever since the coming of cheap flights, people are travelling further, using long haul as a main holiday and the Mediterranean as a secondary holiday. Secondary holidays mean less bed nights. People are also taking weekend holidays and the Mediterranean is turning into such a destination.
We cannot blame ourselves for this but the problem is that we haven’t adapted. Malta can start new campaigns to address this phenomenon. Once we know bed nights are falling we have to start bringing over more tourists to fill in those beds. But to do this we have to invent reasons for those people to come here.

In the last budget Government announced that it would increase the money allocated to the Malta Tourism Authority if it managed to attract 50,000 more tourists. Will this be enough?
If I was prime minister, today I wouldn’t increase the MTA’s budget unless it is sorted out. Unless I see a situation in MTA where funds are being spent on advertising and marketing and it has adopted good house keeping, I would freeze everything. I am not happy with the way funds are being spent, I am not happy with the cost of the advertising and I am not happy with a lot of things that are going on in the advertising section of MTA.
Tourism and administration should have their own separate budget and then we need sales, marketing and products in a different section, maybe with a parliamentary secretary responsible for it, with four or five board members.
As things stand at present the advertising budget is being diluted because of other things; uniforms, wages, this and that. Year on year we find less money being spent on advertising apart from being spent late because of the excuse that no money is available.
We need a change. We have to know exactly what the advertising budget is and no wages or mobile phones should be paid from it.
If this happens we can then have a proper plan on how to develop the island and its niche markets.

But there is a reform process going on…
I have seen the Deloitte and Touche report on reforms and there are a lot of things with which I concur such as the closing of overseas offices but that reform process has stopped because the board members who were responsible for implementing it have been disbanded.
In my last meeting with the minister he said MTA took on board some of the reform suggestions but certain things they are not implementing. They seem to be retaining the foreign offices in four of the core markets even if the report had suggested their closure.
We don’t need people abroad in today’s world. I would send people abroad on specific jobs or to attract specific niches and come back with a report, but not living there and wasting money that could be put to better use elsewhere.

But the reform at MTA is ongoing. Currently all MTA’s staff are being profiled and interviewed…
For me it’s all a waste of time. I’ve had this argument with the minister and I don’t agree with the way they are going about it. The exercise will drag on until September and the first question they are asking the staff is what job they would prefer doing. The question we should be asking at this stage is what can we do to save summer?
Industry will have to mega discount to fill summer when by June we should be already full and concentrating our efforts on winter. As a consequence we will end up running behind the market. We should come up with some creative advertising, pointing out where Malta is in the heart of the Mediterranean because most don’t even know where the island is, give the reasons why people should come and put the contact numbers and average prices offered by a couple of influential tour operators.

Who should be doing this creative work?
Preferably the new committee I am suggesting headed by a parliamentary secretary. I am not quite certain the present people have the ability to come up with things like this.

Isn’t this committee another level of bureaucracy?
The minister for tourism today has a big portfolio. I would also make it slightly bigger by giving the ministry an extra budget to embellish key tourist areas in conjunction with local councils.
But the committee would be responsible solely for marketing and advertising and it would be hived off from the rest of the ministry because there is so much to be done in this area. At present the minister can’t and won’t know what is happening apart from the fact that the advertising and marketing budget is being diluted.
The Opposition spokesperson for tourism should also be invited to sit on the committee to make it work in the national interest.

In tourism circles Nationalist MP Robert Arrigo’s name has cropped up as the ideal person to be appointed parliamentary secretary to manage tourism’s advertising budget. Arrigo has big business interests in the industry will he not have a conflict of interest?
One has to understand that many people in this industry have been working together for almost 30 years and I don’t think there is any conflict between us. If the Prime Minister decides to appoint Robert Arrigo parliamentary secretary or minister, we in the industry have absolutely no problem with him. The few people who may have a problem with him are those who have not worked with him before. We believe that if there is a problem he will understand the problem before any other lawyer, doctor or chief because he was born in the industry like us. Do you think that we won’t monitor him? Do you think that if he was doing something wrong we wouldn’t stop him? Of course we will. Today, he is in a more likely position to have a conflict of interest because he can do what he likes and nobody is monitoring him.

Government officials are upbeat about prospects in the industry. Why are hoteliers and tour operators not sharing the same enthusiasm?
We are the people who have a pulse on the industry. There could be a situation whereby Government is misinformed but at that point I don’t blame Government when the feed back it gets from its own departments is that everything is ‘glory glory halleluliah’.
The truth is that we are worse than worse. What is happening is that we are not just suffering from less bed nights but also less tourists. Once these two combine industry is in a crisis. However, the situation could easily be reversed but we need to take immediate and urgent action.

What would you say are the ideal niches for Malta?
There are many niches we can create. There are those we already have but others we must create. In summer we suffer a lot because there aren’t enough beaches. Anybody coming to Malta does not come here with beaches being a top priority. The Prime Minister recently said Government was going to develop one new beach a year and that is good because we cannot continue having a high season price that is being diluted because of lack of beaches.
We need to invent events and festivals that cover each and every month of the year so that different people find particular reasons for coming here. Why not create a wine festival in November where all new Maltese vintages are sampled and offered for half the price by hotels and restaurants?
It has often been said that we need to diversify into cultural tourism. Will that work or is it a myth?
We mustn’t dream. I don’t like hearing people say that we must diversify into cultural tourism as if this was a magical solution. The solution is everything. We have to create four seasons with four different reasons and in each of those seasons we have to give 20 reasons why tourists should come. Culture is important but alongside other niches.
We have to stop thinking of magical solutions. The same has happened with low cost airlines. There was all this hullabaloo about them as if they are the solution to our problems. First of all we already have low cost airlines such as British Jet. These are always full and somehow they are always being ignored by the authorities. They are cheap and offer a good service. What difference would it make if Ryan Air came. We have to attract low cost airlines in a different way, targeting particular markets such as Italy.
How sustainable is our dependence on the British market, which draws heavily on our colonial roots and the relationship ex-servicemen had with Malta?
Our success in tourism stemmed from the fact that we were one of the first countries in the Mediterranean to start up tourism, probably even before the Spanish. I remember it was the English-speaking Mediterranean, Gibraltar-Malta-Cyprus. Exchange Travel used to market that in 1968-69, I remember that because I used to work with them. The UK was our core market attracting people who came here before, during and after the war and returned back to the island with their families and friends. It was a loyal market with repeat visits year after year.
During the 60s, 70s and 80s we boomed on this. But today these people have either passed away or else are simply waiting for the Lord’s call and are probably travelling less or not travelling at all. This market has diminished drastically.
Where we have gone wrong and a lot of people don’t understand this, is that we haven’t managed to replace this market and we haven’t convinced those who are 50 to 60 today and who have no military connection to Malta to come here.
These are a more difficult generation to convince because these people 15 years ago started getting cheap air fares and so travelled more than their predecessors. They’ve been to many more countries in the world and so have to be convinced to choose Malta rather than another destination they’ve already experienced.
We have to create the reasons for these people to come to Malta for long winter stays. There is a potential market but we need to work harder to attract it.

What would you say are the overseas markets that are easier to tap given our geographic location, language and budgets?
As in everything we have to select those markets where we can compete strongly. I wouldn’t put money into bad markets because that is stupid. The UK is a prime market. We should be selling ourselves as English-speaking, only three hours away and highlighting our historical connections. But now we have to teach the British about our history because they know nothing of us.
The Italian market is also a potential growth market. Somehow there has always been this lethargic behaviour towards the Italian market believing they only come in August. I would put money in the Italian market.
Many Maltese go to Sicily for a weekend break to enjoy a good meal, do shopping and a few tours here and there. It’s a good weekend chill out. But again, the Sicilians should be coming here to chill out. I would expect a 100,000 people to come from Sicily. I would expect a further 200,000 even 400,000 people to come from the Italian mainland. After Italy we are probably the only other country in the world where most people in the street can speak Italian fluently. Italy has the potential of being developed as a market but we are not doing that.
The French market also has good potential. They have schemes, especially in the North - Brittony, Normandy and Paris - paid for by the local governments, whereby senior citizens are sent abroad in the winter.
Germany is also a good market even if it is harder to crack. I don’t think we have handled the German market well. I don’t know what the solution for Germany is but I am sure if the MTA speaks to the specialist operators who handle the German market they will come up with a number of proposals.

What about China?
China is poor at the moment. I wouldn’t waste my money in China at this stage. We should concentrate on six to seven core markets and act within our budget constraints to ensure the marketing budget is not diluted.

What would you advocate as a stop gap measure to save summer?
We should find some money and put it into some serious advertising in the UK. Not the type the MTA came up with recently, trying to sell Napoleon to the British or selling Malta as a bridge to Sicily. Hopefully we would be able to save the summer without discounting.
We won’t be able to sustain wages if we continue discounting in the peak season. That will mean redundancies in the winter. I do not want to sound all doom and gloom but the possibility of negative consequences is there if we don’t react. A growth of 100,000 a year can be achieved easily but if bed nights continue falling we have to attract more than that.
I am suggesting to the Malta Hotels Restaurants Association that unless we are convinced we are getting top value for every cent going into marketing and advertising by MTA we should pay our annual licence to the MHRA rather than MTA and we will do our own marketing.

What is the financial situation of hotels at present?
Bad. Wages, capital costs and interest rates are too high. In the current financial situation it is very difficult to invest and a number of hotels have closed down. Our industry has been neglected and it has been used as a political football with key appointments being political rather than strategic.

Should Air Malta be utilised as part of Malta’s effort to attract tourists or should it operate as a commercial entity irrespective of the country’s tourist needs?
Air Malta has to choose where it is going. The national airline can create a low cost subsidiary, hive off two airplanes, give them a different name and livery, put five people to run the operation with the leanest management possible, less stewards and stewardesses on the plane, no frills and tap the low cost market. The new company must not be loaded with the mother company’s huge wage bill and the hundreds of ‘political’ employees that were recruited over the last 30 years by both governments.
This low cost subsidiary can then operate to secondary airports in Italy and Sicily currently not covered by Air Malta’s scheduled service. Air Malta can’t really lose much from Italy because it doesn’t get much from there in any case.

Michael Zammit Tabona was interviewed by Kurt Sansone

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