With tourists numbers up, MTA snub in Budget means little to MHRA boss

Government's decision to reduce the budget of the Malta Tourism Authority by €9.5 million for 2024 will not stop the growth in the number of tourists visiting Malta, the president of the Malta Hotels and Restaurants Association said.

Tony Zahra told Business Today that everything points to the tourism industry seeing increased growth in 2024.

"For next year, in fact, the number of seats available should see an increase of 1% to 2%," he said.

During last week's 2024 Budget speech, finance minister Clyde Caruana announced a €9.5 million cut in the MTA's money allocation for next year.

This is the first time the government has not increased the MTA's budget allocation since since Labour’s election in 2013.

Zahra said the MTA's cut was not drastic and that if it helped to sustain and extend the government's subsidy on energy prices, the tourist industry would in fact benefit more.

"The industry is better served by continuing to have energy prices subsidised and maintaining our country's competititivity," he said.

Zahra's optimism was backed by figures published on Tuesday by the Malta International Airport showing and in increase in the number of passengers in October.

MIA published its October traffic results together with the Group’s financial results for Q1-Q3 2023, following the approval of the latter by the company’s board of directors. Strong performances in both instances gave the company the confidence to revise its guidance for 2023.

Between January and September 2023, the Group generated revenues amounting to €91.6 million, marking an increase of 38 per cent over the previous year.

This figure also exceeded 2019 levels.

October brought 771,253 passengers through Malta International Airport’s doors, an increase of 9.6 per cent over 2019 figures.

MIA said seat capacity saw an increase of 6.4 per cent in October. Despite this increase, strong travel demand throughout October resulted in a monthly seat load factor (SLF) of 84.7 per cent.

October’s top markets were Italy, the United Kingdom, Germany, France and Spain. While Italy (+47 per cent), France (+53 per cent) and Spain (+3 per cent) outperformed their respective 2019 results, the United Kingdom’s (-17 per cent) and Germany’s (-23 per cent) slow recoveries continued into October.

Zahra said these figures were quite in line with expectations.

"Our market is dominated by low-cost airlines and, of course, these tend to prefer shorter routes," he said.

Thus as airlines add more "short" routes to Italy and surrounding countries, the number of visitors from those countries will increase.

"As for the UK and Germany, their market share has dropped because airlines add few new routes to these destination," Zahra said.

"However, the absolute number of visitors from those countries remains unaffected and is not in decline."

January to September financials

MIA's positive traffic results for the first nine months of 2023 contributed to a strong income statement for the same period. Between January and September 2023, the Group generated revenues amounting to €91.6 million, marking an increase of 38 per cent over the previous year. This figure also exceeded 2019 levels.

The company's Statement of Comprehensive Income (SOCI) shows a significant increase in staff costs and other operating expenses.

The rise in staff costs is largely attributable to a growing workforce, which is supporting MIA in managing a busier operation and several large-scale projects while retaining high levels of service. The increase in operating expenses is also a reflection of MIA's growth during the reporting period.

The company’s capital expenditure for the first nine months amounted to €16.8 million, with the continuation of works on Apron X, the expansion of the customs area and initial works on the Terminal Expansion Project being three of the most noteworthy projects.

MIA's net profit for the first nine months of 2023 stood at €32.3 million.

Revised guidance

Given these results and the positive outlook for November and December, Malta International Airport has adjusted the guidance it published in August 2023. The company said it now now expects:

• Traffic to reach 7.8 million passenger movements
• Revenue to total €118 million
• EBITDA to reach €74 million
• Net Profit to amount to €40 million
• CAPEX to be between €45-€50 million