Earlier today the MHRA released the BOV MHRA Hotel Survey by Deloitte for the first quarter of 2010.
When presenting the results, MHRA President, Mr George Micallef confirmed that:
“The recovery trends registered in the second half of 2009 have continued into this year and the tourism industry has continued to show consistent signs that it is steadily managing to claw back some of the lost ground.”
Without playing down the significance of the improving trends, Mr Micallef went on to caution against benchmarking our performance solely against the results for 2009, which was one of the worst years in recent history for the tourism industry.
“Notwithstanding the gains registered in 2010, our results are still a far cry from what we achieved in 2007 and 2008 and we must continue to double up our efforts to surpass the results achieved in these ‘benchmark’ years.”
The key performance indicators for the tourism sector for Q1 2010 (Arrivals, Guest Nights, and Tourist Spend) all improved when compared to the corresponding period in 2009 but fell short of what was achieved in 2008.
The survey results confirm that the 5-star category was the primary beneficiary from the increase in guest nights, which enabled it to claw back approximately 50% of the drop in occupancy registered in 2009.
The 4 and 3 star categories registered comparable occupancy levels to 2009 and failed to make up for the volume losses registered last year.
The reported 17.6% increase in tourist expenditure did not result in significant improvements in room rates. Whereas the 3 and 4 star categories registered rate improvements of 10% and 9% respectively, rates in 5 star hotels decreased by 5%.
Commenting on the correlation between tourist expenditure and Average Achieved Room Rate, Mr Raphael Aloisio – Advisory Partner at Deloitte Malta, made the point that:
“Although tourist expenditure levels increased significantly, our analysis shows that in line with changing tourist preferences, an increasing percentage of total spend is flowing away from hotels to other operators in the tourism sector. Hotels must clearly take heed of these new realities and find effective ways of realigning their food and beverage operating strategies with the increased propensity for tourists, especially in the 5-star category, to seek alternative eating venues outside the hotel.”
The combined effect of changes in occupancy, achieved room rate and decreasing food and beverage spend, resulted in total revenue for 5-star hotels remaining at the same levels as 2009 and 20% below 2008.
Hotels in the 4-star category only managed to recover one fifth of the drop in revenue registered in 2009, whereas 3-star hotels registered a 6% increase in total revenue and managed to claw back 29% of the drop in revenue registered in the corresponding period last year.
Overheads increased by 10.5% and 4.6% respectively in the 5 and 4 star hotel categories, primarily as a result of the increase in energy costs of 24.5% (5-star) and 14.1% (4-star). The increase in costs had a direct negative impact on results and contributed to increased operating losses for the quarter.
In his concluding remarks Mr Micallef explained that:
“Notwithstanding the generally improving trends being registered in the key tourism performance indicators, it is becoming increasingly evident that rate pressure, loss of food and beverage sales and higher energy costs are making it difficult for hoteliers in the 4 and 5 star category to make any immediate significant inroads towards recovering performance levels registered in 2007 and 2008.”
However Mr Micallef remains confident that if all stakeholders continue to pull in the same direction and resist the temptation of ‘dropping’ rates unnecessarily, the industry can look forward to securing more tangible gains, adding further:
“Although we are now seeing a steady increase in the arrivals pattern, which should continue to prevail in the coming months, nevertheless I must underline that the increase in arrivals envisaged for this year would only make good for the substantial increases in operating costs emanating from the utility rates.”
Mr Micallef called upon Government to ensure that the tourism industry is not burdened with any further government induced costs, as this will not only render the tourism industry less competitive, but will also jeopardise the sustainability of the entire industry.