21 February 2007

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Tourism turnaround

No information will be interpreted as no action

Unfortunately today we cannot look back at 2006 in any way other than to be glad that it is over. It was, to say the least, not a good year for the industry and a year in which many of our members suffered considerably due to the downturn of arrival figures and the resultant drops in nights spent in hotels and expenditure on accommodation. During the year tourist arrivals and nights spent decreased by 4% and tourist expenditure declined by 1.2%. This time last year, the Malta Hotels and Restaurants Association predicted a gloomy picture for the year.
The MHRA does not base its predictions on whims or wishes, nor does it base its predictions on agendas, hidden, political or otherwise. The MHRA bases its predictions on the advance bookings that its members pass on and such predictions are based on what the players in the field, players with experience, are expecting to happen. Therefore it is no surprise that the predictions made by the association unfortunately turned out to be nearly 100% correct. What greatly pains the association and its members is that it took a very long time for its predictions to be believed and for any action to start to be taken.
During the year we once again saw major changes at the Malta Tourism Authority, foremost amongst which was the removal of the executive chairman position and the appointment of a new chairman and CEO. This time round the chairman was appointed with widespread support from various players in the industry. The industry now looks forward to seeing the MTA working hand in hand with it and delivering the results we are all eagerly awaiting. Let us hope the wait is not too long and that it ultimately delivers the necessary results. From our experience to date there still is a long way to go in this regard. The MHRA feels very strongly about the importance of the communication channels being open and clear between itself and the MTA and will continue to work to ensure that both entities have a clear working relationship leading towards the achievement of the necessary results. We are aware that the MTA has now filled no less than seven posts in its overseas sales network and concurrently embarked on a major marketing campaign in our key markets. Malta is back in the print media and also beginning to show up on the right type of TV channels. It will come as no surprise that I state that the MHRA believes that in the changing market we are in, it is of paramount importance that Malta gets the widest possible exposure and publicity all year round. We all see our competitors splashed over our TV screens every day. We need to be there with them and make our offer more attractive, more exciting and more tempting to visit. In order to achieve this government must ensure that the Lm2.5m the MTA requires to achieve this is made available. I appeal to government to ensure that we do not waste time discussing this need for months as the money needs to be committed immediately to have the desired effect on growth this year.
Towards the end of last year, when the results had moved on from an MHRA prediction to a stark reality, the government appointed a Tourism Consultative Group. The group met on a regular basis and within a few weeks of being set up it presented a report to government in October. The contents of the report were supported by the MHRA. MHRA was encouraged to note that the majority of the proposals contained therein were incorporated by government within the National Tourism Plan published later on during the year.
Realistically, this was the easy part and in the same way that the tourism consultative group emphasised that their report and the tourism plan should not be left as another document produced as an end in itself I today once again emphasise the importance of the implementation of the proposals within the report as a matter of national priority and urgency. We have no time to waste, no time for continued discussion and no time for more prognosis and reports. Now it must be ensured that what has been proposed in the plan is implemented within the agreed time frames. The industry cannot afford anything less. The industry also needs to receive regular updates about what has actually been actioned from the report in order to believe in the process.
No information will be interpreted as no action and hence it is critical that we are kept updated with what is happening. I would like to encourage government to give a monthly update to the relevant stakeholders of what progress has been achieved. Concurrently I would like to assure everyone present that the MHRA will watch the process diligently and carefully and speak up as and when necessary to ensure that the interests of its members are protected.
2006 saw MHRA’s strong lobbying for the introduction of the major low cost carriers reach new heights. It was an unnecessary battle that took too long to reach a conclusion. Valuable time was lost and the final result was, in our opinion, only the tip of the iceberg. The MHRA is fully aware that low cost carriers are not the only answer to our problems, however the association is fully aware that this form of transportation is a trend and a reality that we cannot ignore. More and more customers are using low cost travel and Malta was till recently outside this market. A start has been made but let us not allude ourselves. All we have done so far is scratch the surface of this rapidly expanding market. The results speak for themselves.
In December arrivals from Italy rose by 100% and from the UK by 23%. This was no coincidence. More routes need to be opened – particularly a German route, further UK routes and routes to new and underserved markets including Spain. We need to be bold and take the required decisions to further exploit this market whilst at the same time ensuring that Air Malta is given the necessary support to restructure and compete in the market place. We are not suggesting over-protection but are advocating the political courage to take the decisions that need to be taken for Air Malta to be able to compete and survive in the long term. It is no secret that Air Malta must restructure to survive and any union that blocks this process must be held responsible for the damage it will cause not just to the national airline but to the whole industry. Air Malta will find our full support in this process.
Marketing, product and seat capacity are the three pillars on which the future success of the industry must be built. In November and December we managed to curb the monthly declines we experienced throughout 2006, however we must keep in mind that the last ten years can best be described as flat line where our industry is concerned. The November and December figures are just the start of the long and winding road that we have ahead.
The first quarter of this year is still looking sluggish with only small increases expected on last year. The MHRA has to make it abundantly clear that anything less than substantial growth in 2007 will not be good enough. The original government forecast for 2005 to 2007 was a growth of 150,000 visitors. To date, with ten and a half months to go we stand at minus 30,000 for the period in question. There is therefore still a very long way ahead for this industry to get back on its feet, for the trend of hotel closures to be reversed, for sustainable profitability to be achieved, for 3 star hotels to be able to have a future, for employment to be on a sound footing, for the very negative feelings in Bugibba and Gozo to be addressed, for our restaurants to survive and thrive.
We very much look forward to helping bring about the much needed turnaround and to our members reaping the much awaited results.

Speech given at the MHRA’s business lunch with Prime Minister
Lawrence Gonzi, 14 February.

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