22 March 2006

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Business Today

Minister politically responsible for MTA failures - Winston Zahra

James Debono

Hotelier Winston Zahra Jr yesterday launched a scathing attack on the Malta Tourism Authority’s performance during 2005 by outlining a list of missed targets and deadlines for which ultimately the tourism minister must carry the can.
Zahra was addressing fellow hoteliers attending the hotel survey presentation organised by the MHRA, which painted a bad picture of the tourism sector for 2005 and a bleak picture for 2006.
“It is obvious that the political responsibility lies with the people heading the process,” Zahra told Business Today after the presentation.
Asked whether this also included the minister, Zahra said that “the answer to the question is obvious as the minister has the ultimate say.”
In his brief but tempestuous intervention from the floor, Winston Zahra lambasted the MTA for failing to deliver on its targets.
Asked for its reaction, a spokesperson for the MTA rebutted Zahra’s claims describing them as “unfounded.”
In a speech, keenly applauded by those present, the former MHRA President expressed his concern that operators are describing the dismal situation in the first months of 2006 as a "complete washout" for the tourist industry.
Referring to government procrastination on low cost airlines, Zahra expressed his concern that "while the world is going south by opening up to these airlines and using the web to drive business, Malta is heading north and chasing these airlines away."
He further explained that a solution must be found to the current impasse taking into consideration Air Malta and other national airlines currently flying to the islands.
Zahra’s call for an extraordinary general meeting in April, to discuss the situation at the MTA was met by the approval of those present. MHRA President Justin Zammit Tabona announced that the meeting is set for the first week of April.
Anger towards the tourism authority characterised all interventions made from the floor. "We are spending a lot of money on MTA. We have to check whether this is spent on bureaucrats or in getting business," said a hotelier present.
Speaking from the floor, after the presentation of the hotel survey, Zahra expressed his disappointment on the MTA’s failure to meet its target of 50,000 extra tourists in 2005.
“In January of 2005, following a pro-tourism national budget, I was upbeat about the restructuring of the MTA and the set target of 50,000 new tourists. A year later we have delivered 14,700 more tourists rather than 50,000 and revenues have fallen by over Lm5 million (-1%) meaning that the added volume actually added nothing to our revenue streams."
Zahra added that despite the marginal increase in tourists, actual revenues for 3 and 4 star operators had fallen and those for 5 star operators had only increased marginally.

Zahra also outlined a list of the MTA’s missed targets and benchmarks.
He lambasted the MTA for not delivering on the deadlines set out by the road map for the reform of the Malta Tourism Authority.
According to Zahra, the tourist industry has lost yet another year as regards the branding of the Maltese tourist product as this exercise set to be completed by June 2005 has not yet been finalised.
“As things stand we will not benefit from the re-branding exercise before 2008,” he said.
Zahra pointed out that the consultative board to oversee the MTA has not even been appointed despite the fact that this board had to be in place by March of 2005.
He also criticised the way MTA foreign offices were closed down without the follow through plan originally suggested in the restructuring document.
“The original plan was not just to close overseas office. The plan was to divert money from the bureaucratic expenses of these offices to having an aggressive sales force on the ground selling the destination. This has not happened. Instead foreign agencies have been appointed to sell our island,” Zahra said.
Winston Zahra Senior, was even more damning in his criticism describing the way the foreign offices were closed without the correct follow through as the "greatest mistake" committed so far in the restructuring of MTA.
But last night the Malta Tourism Authority rebutted Zahra’s criticism on the engagement of foreign agencies to sell the island in countries where the MTA’s foreign offices were closed.
Answering questions made by this newspaper, a spokesperson for the MTA rebutted Zahra’s argument that the MTA has not invested in “on the ground” marketing and sales activity. “The engagement of highly experienced, specialist companies is a far more cost-effective and effective way of operating in overseas markets. This has been made possible by the savings made from the closure of eight overseas MTA offices,” the spokesperson said.
According to the MTA, engaging specialist companies of this nature has the added benefit of acquiring the services of a one-stop-shop entity.
“Since some of the companies engaged by the MTA are also engaged in public relations communications, this results in further saving for the MTA.”
The MTA contends that the system has been utilised by a number of other countries such as, for example, the Seychelles, Malaysia, Hong Kong and Indonesia.
“Even large countries, such as Great Britain, are downsizing their overseas tourist centres, reducing the number or scope of their expensive walk-in centres,” contended the MTA spokesperson.
The MTA also rebutted Zahra’s claim that according to the MTA’s roadmap the branding of the Maltese tourist product was set to be completed by June 2005.
“How could we have concluded the Branding process by June 2005 when the whole branding exercise was kicked-off in July 2005?” asked the MTA spokesperson.
He also pointed out that funds allocated by government for the branding exercise were only made available in January 2006.
The MTA’s spokesperson acknowledged that Malta will not be benefiting from the branding exercise before 2008.
“The eminent branding consultant engaged by the MTA, Christian Sinding, had predicted that the branding process will take about three years to be implemented successfully, and this only if and when all the stakeholders are on board.”
But according to the spokesperson an “internal” branding campaign is to begin in Spring 2006.
The MTA spokesperson also announced that the Private Sector Consultative Group, shall be appointed in the next few days.
“The 51 members of the Segment advisory committees, nominated by the respective associations and organisations, will be meeting to elect the four members from their ranks that will form this group. This election will take place over the next few days.”
Hotel survey shows bleak winter
The mood for Zahra's denouncement of the MTA was set by the MHRA hotel survey-showing a sharp decline in occupancy in the autumn and winter months. "The immediate decline in business in November and December at the start of the winter season is of great concern and was sharper than in previous years," said Nick Captur from Deloitte. According to MHRA President Justin Zammit Tabona "declining winter business is becoming a major issue, adversely effecting performance."
Despite the sharp decline in the last three months of the year room occupancy levels throughout 2005 have improved slightly. The survey shows that despite the CHOGM summit, occupancy levels for the 5 star sector were unchanged in the last quarter of 2005. The negative trend registered in the last three months of 2005 is likely to persist in the first three months of 2006. A telephone survey included in the Deloitte report indicates that in January all hotel categories including five stars experienced a sharp decline in occupancy, with the decline for 3 and 4 star hotels persisting in February and March.
The survey indicates that three star sector have experienced sharp drops of 16 per cent in the first two months of 2006. Higher energy costs are also having a toll on the industry. “Despite the increase in occupancy and average room rate the increases in revenue have been fully absorbed by increases in energy costs,” Zammit Tabona said.
The report shows that energy costs in the fourth quarter of 2005 have jumped by 22 per cent. Three star hotels have experienced a sharp 20 per cent drop in profitability since 2004.
Charles Micallef a 3 star hotel owner speaking from the floor expressed this category’s disenchantment saying: “The MTA has only performed well as regards enforcement. At 45 per cent occupancy rate we have no choice but to lay off our employees. If we disappear, shops in Bugibba will vanish too. The owner of a nearby shop has Lm200,000 in unsold stocks. In a week he has only sold Lm6 worth of goods.”


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