Interview | Sunday, 19 July 2009

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The worst of times

Hotelier MICHAEL ZAMMIT TABONA says this year’s tourism season has been punctuated by an all-time low in occupancy levels, a dwindling numbers of tourist arrivals, less bed nights, heavy discounts and millions of euros being lost in income

Come what may, government must find the money to continue marketing Malta within its core tourism markets, hotelier Michael Zammit Tabona warns.
So far, advertising of Malta in its main markets like the United Kingdom, Italy, France, Germany and Spain, “has stopped and is non-existent”, Zammit Tabona claims, as MTA marketing funds at the Malta Tourism Authority apparently ran out last May and only sporadic one-off investments have been made since, putting competitors at a mile’s advantage. “There are no funds left to incentivise low cost carriers to even consider opening new routes,” Zammit Tabona says.
While government continues to talk about the recession and insist that there are no funds, this mentality is set to be “suicidal” for Malta and its already ailing tourism sector. This sector needs more investment to attract new routes and more tourists
Hotelier Michael Zammit Tabona is more than clear in his warning:
“The Prime Minister is the man responsible for the sector, and he should shoulder the responsibility for the current situation and the forecast winter, that so far is looking very bleak.”
Zammit Tabona talks about the current state of play within the tourism sector, with hotels registering an all-time low in occupancy levels, with dwindling numbers of tourist arrivals, less bed nights consumed, heavily discounted rates and many millions of euros being lost in income for the economy.
“If no decisions are taken, especially on marketing the Maltese islands, then more millions of euros are set to be lost to the economy and moreover, hundreds of jobs in the sector are set to be lost, and very soon,” he warns.
According to Zammit Tabona, statistics clearly show that Malta is at the lower end of the scale amongst its competitors for tourism arrivals.
“Everybody is in recession, but while people are still taking their holidays and all our competitors seem to be able to challenge this reality and attract tourism, we in Malta seem to be contributing to the recession by taking no decisions, lamenting on no funds and worse than that, we are just not advertising, leaving tourists chose to go elsewhere,” he says.
While Malta has experienced an average 15.4% drop in tourist arrivals between January and June alone, other countries have not experienced such a dramatic loss.
“Most of our competitors are breaking even, but we are losing millions,” Zammit Tabona said.
In a nutshell, the current state of play is that the market is currently surviving on a very late market, where people are booking late, sending all predictions haywire and leaving hoteliers guessing their forecasts, and therefore discounting.
The situation is even more worrying when one considers that this is the worst summer the sector has faced in these last 10 years. The prospects for the next winter appear to be very bleak, as by this time of the year one would already see the booking trend for the season.
“As things stand at the moment we have absolutely no bookings for the winter,” Michael Zammit Tabona says, while adding that the “incredible” absence of advertising, is just making people forget about Malta and making up their minds to chose other destinations.
Michael Zammit Tabona claims that Malta remains a destination that has good value for money, however its package is dominated by the high price of airfares.
Almost 50% of the price tourists pay for a package to spend a holiday in Malta is taken up by the airline that brings them.
Air Malta will not budge from its charges, the hotelier says, and this leaves the territory open for competing airlines to keep their prices just as high, even if they are low-cost.
But on value for money, Michael Zammit Tabona insists that a tourist would still find Malta relatively cheaper when compared to other competing countries, especially for accommodation, excursions, food, drink and car hire – the prime things that tourists spend their money on.
“The product for five and four star hotels is good, and the investments are enormous and continuous. When one compares the historical content of the Maltese islands, nobody could ever compete with such a fact and this is a plus for us, especially when the distances are so short and places are quickly accessible,” Zammit Tabona says.
So why are we in the state that we are in today?
“Well, this country has wasted three years to decide on low cost airlines to start operating. We were late in opening up to these airlines and to make matters worse, government kept defending the Air Malta monopoly at a crucial time when the whole tourism world was changing.”
Michael Zammit Tabona is highly critical of government for having toyed around with low-cost airlines proposals, practically leaving them in a limbo while other destinations were reaping the benefits.
“Today we have an odd situation where again Ryanair has been waiting for a reply from government for the past three months about their proposal to base two to three aircraft of theirs in Malta, for them to be able to service a number of new routes,” he said.
“At this point, government is leaving Ryanair no choice but to scrap Malta as a base and choose another competing destination leaving us with nothing,” he says.
“One has to understand that the role of Air Malta has changed from a national airline that used to service the tourism industry, to an airline that now makes decisions solely to suit their bottom line without a care in the world about our industry. Rightly so, however¸ we need to put other airlines in place to operate new routes that are no longer serviced by Air Malta.
“Here, I also question the Malta Hotels and Restaurants Association for keeping so quiet about this, when it was the same MHRA that was the most vociferous to bring low cost airlines to Malta.”
“The bureaucracy and lack of decision from government is reaching absurd levels,” Michael Zammit Tabona claims, adding that the worst part of all this is Air Malta’s decision to terminate its operations from crucial routes that traditionally attract many passengers to Malta, especially from the UK.
He asks how does government expect people to travel to Malta from the UK when East Midlands, Birmingham, Bristol, Glasgow and other cities will not see Air Malta travel there anymore?
“Do we expect a Briton to travel to London or Manchester to get to Malta?” he asks. “We are just throwing our product away, and who takes these decisions simply is not listening to the industry.”
He also asks about who is taking such decisions and hiding behind the repeated and unjustified lament of lack of funds. Here, Michael Zammit Tabona also questions government’s decision to privatise MIA.
“I believe that government should have never privatised the airfield and the runways,” he says, and adds that it is here that government would have saved millions of euros in subsidies to low cost airlines to make up for what he could have done by reducing the landing charges to low-cost flyers. “It would have cost him nothing!”
“We are in an odd situation where government is faced with the bland reality caused by his decisional mistakes and still does not try to counter it,” he says.
As to the hoteliers’ situation, Michael Zammit Tabona says that the situation is highly critical. “We are heavily discounting our prices, operating at a loss, and our winter bookings are practically non-existent. We are losing millions of euros and worse, we are close to start making people redundant as our operations become unsustainable.”
Michael Zammit Tabona adds that the concession granted by local banks on invitation by government to set a one-year moratorium on repayment of loans, must be renewed, as money and cash-flow has now become a serious problem. “If banks do not renew this moratorium, many hotels will have no choice but to shut down their operations for the coming winter,” he warned.
Zammit Tabona also mentions the lack of the Opposition’s input into the current situation of the tourism sector. “Tourism belongs to all of us and is the fastest vehicle to inject cash into our economy and straight into people’s pockets. Therefore it is expected that both parties should agree on an immediate spending plan that can ease our way through the credit crunch.
“What frustrates me is that the Parliamentary Secretary Mario de Marco knows about this reality and what the whole sector is facing, but ultimately it’s the Prime Minister who is responsible for tourism, as the ministry now falls under the Office of the Prime Minister. I don’t know if A is speaking to B or vice versa. I have no clue of what is happening here,” Michael Zammit Tabona insists. “Someone must do something now and fast before it is too late.”

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