people

On tourism and being a parliamentarian

Photos by PIPPA ZAMMIT CUTAJAR

Karmenu Vella has served in a number of ministerial capacities - as Public Works Minister, Industry Minister and, more recently, Tourism Minister. Now, with his party in opposition, he has taken on the challenging position of Deputy Chairman of the Corinthia Hotel International Hotel Management and Operating Company within the Corinthia Management. He speaks to Ray Abdilla about his political life, the tourism industry and his private sector post.

"I’ve always had heavy workloads and I don’t see any incompatibility between my working life and being a Member of Parliament. Outside Parliament, all MPs have a job to do. And I’m no exception.

"Having said that, I realise that by the time we go to the next election, I will have spent almost 40 years in the Party and almost 30 years in Parliament. I don’t regret a single minute. Honestly speaking, I hate to think that I’m one of those MPs who want to permanently remain in Parliament at all costs.

While still giving his full support to the Party, and unlimited assistance to his constituency to whom he readily expresses his gratitude, Mr Vella explains that he wouldn't mind making way for the younger generation.

Asked whether he would be standing in the next general elections, he replies, "Within the Labour Party we have some very good young people with new ideas and a more dynamic approach. When the time comes, all MPs should be ready to move on and make way.

All the same, I am still an MP and still an MLP candidate."

Mr Vella contends that each ministry carries its fair share the burden of running the country, as each is equally demanding.

However, he explains that the visible results attained by some ministries don't always reflect the amount of resources and work put in, as the results of some ministries are more tangible than those of others.

He elaborates, "In this respect, I think that Public Works is the most difficult ministry. Industry is more rewarding but there is a long time lapse between input and the results. It takes time to attract investment, it takes time for that investment to materialise, more time to set up the operation and still more time for results, in terms of jobs and exports, to show. On the other hand, tourism is equally demanding but the fruition of the work is more immediate, more tangible and felt by a broader spectrum of the population," the former Labour Minister said.

He stresses that, out of the three ministries he has headed up, he enjoyed working for tourism the most, although he still looks back on the others with a certain amount of satisfaction.

On tourism, Mr Vella explains that the industry has changed significantly over the last 20 years, while it is continuously changing in its trends, demands, tastes, travel motivation and travel patterns. These changes, Mr Vella adds, are also apparent in the sector's products, service, costs, operations and the level of competition.

In this respect, he believes that the real question is whether we, a country, have managed to adapt and respond to these changes.

He goes on to say, "I do not hesitate to say that tourism past and present are two completely different entities. This ever-changing and developing industry is, in turn, continuously having a real impact on the economies, societies and the environment on global, national, regional and local levels.

"Starting from scratch and keeping up the momentum are both important. As in any kind of business, the challenge is always twofold. The first challenge is getting to a good start, setting the right direction and achieving positive results from the beginning. Secondly, and equally important, is the challenge to maintain and enhance results and to sustain the right course of action.

"It’s important to both start out with and maintain the a high degrees of diligence, dedication and enthusiasm. Consistency is always a very important aspect."

When asked about the difference of attitudes toward tourism between the two political parties, he notes, in his opinion, the main are the amount of commitment, the order of priorities and, their overall strategies of the industry.

"Commitment. I don’t believe the present government is as committed to tourism as the Labour government was, which had devoted complete attention and total commitment towards the industry. All ministries were, in one way or another, truly pooled in on Labour’s dedicated objective of setting tourism back on the right track.

"However, the present administration is assuming a very relaxed and passive role. As opposed to taking heed of and coming up with solutions to the industry’s ailments and concerns, it persists in conjuring up figures and statistics in attempts to make everyone believe that we have never had it so good. The government's public relations machine is trying to make a drooping duck look like a super swan. The government is more committed to hiding rather than solving tourism’s problems," Mr Vella remarked.

The Malta Labour Party’s Shadow Minister for Tourism holds the conviction that the current government has one sole priority - and tourism is certainly not it.

He explains elaborates, "The government's priority is to join the EU at any cost. This priority has left all other matters, including tourism, unattended to. If anything, the current government has shown that it can't handle more than one priority at once.

"I believe that the economic and financial mess we’re in today is nothing but the result of the present government’s deficiency in dealing with the right priorities.

"I can understand that different governments have different priorities, but I cannot understand how any government assigns tourism, with its 25 percent contribution to GDP, to lower priorities than other less important sectors. The political EU issue has taken over the economic issues of tourism."

"In terms of overall strategy, the pre 1996 government was spending more money to promote an outdated and inferior product. Apart from not achieving positive results, it was simply didn't make good business sense and at the end of the day most of our tourism activities were operating without adequate profits.
"The Labour government’s strategy was very clear - spending had to be redirected to rectify and amend the tourist product. With a better product, offered at a more competitive price, the same promotional costs were bound to achieve better results. At the same time, the industry’s competitiveness and value for money had to be addressed in the most determined manner."

Mr Vella stresses that it’s an undeniable fact that our tourism product - be it beaches, environment, historical sites, and other product related components – was, and is once again, being neglected.

"Our tourism product is rapidly deteriorating. Whilst the private sector is doing its utmost to improve and protect its investment, the government is not even addressing tourism’s very basic needs. Competitiveness is constantly deteriorating. And our marketing people have to perform the impossible task of selling an appalling product at an uncompetitive price," added Mr Vella.

The Shadow Minister said that there are various conflicting definitions of mass tourism, being difficult to distinguish between "alternative", "conventional" and "mass" tourism. Apart from looking at numbers, one needs to look into the spending patterns of tourists, their travel characteristics, their travel motives, their travel patterns, and the way that their trips are promoted and packaged. He explains that one must also look at the positive and negative effects that various types of tourists have on our economy, society and environment.

"Whatever the type of tourist, the important thing is that we learn how to manage our tourism industry. We must decide what we want and then plan to achieve what we want. It is impossible, after 40 years of mass tourism, to simply say: 'I want to reposition Malta as of this year!' This is crazy. Let’s be honest, for a number of years tourism in Malta was not planned or managed - it just happened. 40 years later, we have wound up being a mass tourism destination. This cannot be eradicated overnight. It is time for us to start managing tourism and not to remain in a situation where tourism is managing us."

When asked about the fact that in up market tourism you lose numbers but increase revenue and solve many other problems, Mr Vella argues, "I agree with you that it’s better for us to get fewer tourists who spend more, than more tourists who spend less. This has long been said but it’s never been done. Can you expect to get fewer tourists when you’re continuously increasing your bed stock? Can you get better rates when you’re increasing the supply at a faster rate than the demand? It’s all elementary. Yet, we do the exact opposite and continue to reposition ourselves facing the wrong direction.

"I think it is important that we get a good mix of the whole spectrum of all types of tourism, both volume and spending are important. Without volume, airlines would not achieve the critical mass to justify operations. If we stop, for example, volume tourism from the UK, the airlines would reduce their operations and we would end up losing also the higher spender. We can only start reducing mass tourism once we have built enough volume of high spenders."

Regarding the present administration, Dr Vella doesn't agree that the Nationalist Party is adopting the same tourism policies as the last Labour administration.

He points out some differences, "As I explained earlier, nothing is being done about the product and its competitivity. There has not been any improved working relationship between government and the private sector - if anything, these have worsened. The previous government’s policy to retain Air Malta within the tourism portfolio has been reversed - during the Labour administration this had proved to be an excellent move. Ventures, which were intended as tourism projects, ended up as real estate development with speculative intentions. The avalanche of bed stock increase will cause a downward trend on rates, attract cheaper tourists, and reposition Malta backward. Plans to improve roads, beaches and the environment in general have literally vanished. I can go on forever but I do not wish to sound over pessimistic.

"To be honest, I really doubt whether the Nationalist Party has any tourism policies at all. At least I don't see anything really spelled out, or anything that is being applied in practice." He said.

Regarding the dependence on British tourists, he explains that this dependence has been continuously diminishing over the years. Not by decreasing UK arrivals, but by increasing arrivals from other markets. The core markets, that continue to dominate tourism arrivals to Malta, remain UK, Germany, Italy, France and Holland.

"Other European markets are improving but not as much as we would have liked them to. However, I feel that there are other markets that we have been totally neglected. The Middle East, the Gulf Area, Spain and Portugal are just a few examples. We have always looked north, while totally neglecting our Eastern and Western flanks.

Regarding the decline in numbers Mr Vella explained that bed nights are a better indication than arrivals. Last year we lost around 12 per cent on bed nights and most of the loss came from our core markets.

"This year, NSO statistics show that we can partly recover that loss. Government’s optimistic statements try to give the impression that we could not have had it any better.

"However, MIA figures are contradicting NSO statistics. MIA figures on passenger movements are showing that the number of passengers coming into Malta is decreasing. The indications and feelings within the industry are more in agreement with the MIA rather than with the NSO figures.

"It’s difficult to understand what is happening in statistics. At times I become confused and accordingly I tend to take government statistics and ministerial statements with a pinch of salt.

When I asked about the Frosch Touristik crisis and how it was tackled, he contends that the FTI crisis had been completely mishandled.

"I had read several statements that appeared on local papers and then during a meeting I had with an FTI official, it was very clear that there was another side to the coin.

"Last year, FTI moved some 120,000 German tourists to Malta. Airtours, who had bought FTI to Malta, decided to downsize their operation to Malta. They had two alternatives they were prepared to discuss and if they could obtain some rate reductions from hoteliers and some assistance from government, they would downsize from 120,000 to 80,000. However, without assistance, they would have to downsize from 120,000 to 40,000.

"I was assured that FTI did not want to discuss a reduction on all rates with all hotels, but only partial rate reductions with fifteen certain hotels. I do not think the hoteliers were in a position to reduce rates and this proposal was unfair on them. They did the right thing not to concede any rate decrease and I think that FTI understood this. Although I still think that the hoteliers might have overreacted.

"But the government didn’t play his part well. Without going into too much detail, I am absolutely certain that there was room for negotiation. But, as far as I know, the FTI official was never even granted a meeting with any high level government or MTA officials. And so, I believe that the whole issue was never even seriously discussed. Today we all know what the result is. Anyway, that’s water under the bridge now.

"Having said that, and looking at things in a more positive way, one might argue that this could help Malta reduce its over dependence on a single operator in the German market. It could also be argued that other smaller operators could well replace what was lost through FTI. Provided we don’t end up bringing in the same FTI volume at more reduced rates, this could also work out fine. But as yet there is no tangible sign this is being achieved. In addition, it seems that presently Airtours has FTI under control and is reducing its losses. In fact Airtours have recently stated that load factors and prices are significantly improving. So let’s hope for the best."

As far as next year is concerned, Mr Vella stated that performance is not measured by forecasts but by actuals. For the last few years we have had nothing but very positive forecasts. More often than not, these forecasts were turning into less attractive actuals. Projections for 2000 and 2001 were also showing a "rosier" picture than they actually turned out to be.

He explains, "After the Minister’s forecast of a "rosier 2002", we can always keep our fingers crossed. But forecasts are useless and mean nothing unless they are backed by some sound economic reasoning and serious action plans. Otherwise we would be right in assuming that forecasting is only being done to divert our attention from past and present performances.

Mr Vella reminisced how he had become involved in tourism when he was appointed Shadow Minister for Tourism by Dr Alfred Sant when he became leader of the Malta Labour Party and many believe that he was one of, if not the best, Minister under a Labour government.

When asked about this, he replies, "I don’t think I can take any special credit for the results achieved when I was Minister for Tourism. I think the credit should by right go to the whole Labour Government, the private sector, and all the support that I got from all the staff and friends at the National Tourism Organisation of Malta – for which I’m still grateful to this present day."

Mr Vella is currently working for the Corinthia Group, a position he relishes, "I must say that I’m enjoying it immensely. The Corinthia Group has a very positive and broad international outlook, is well focused on its objectives, and has attained a high level of professionalism in its approach to doing business."

Regarding the affect the EU has on tourism, the Labour Party Deputy said that it is very important that we look at the EU with a more sober approach and with Malta’s political and economic interests in mind.

There is no direct correlation between EU membership and guaranteed tourism growth. As a matter of fact there are many non-EU countries within Europe with higher tourism than other EU countries. Poland, Czech Rep, Hungary and Switzerland are performing much better than Germany, Ireland, Greece, Denmark, Finland, Sweden, Luxemburg, Belgium and Holland. Another case in point is that fact that although Sicily has been an EU member for over 40 years, its performance in tourism rates lower than Malta. So it’s very misleading to relate full EU membership directly with tourism growth.

One of the most important factors, which will have a major bearing on tourism’s growth, is competitivity. The key issue we have to address in manufacturing industry and tourism is, whether by joining the EU, we will become more competitive or less.

"In this respect the government’s report on the adoption of the Acquis says it all. I quote "The adoption of the internal prices of several commodities could have a direct bearing on domestic costs and may affect negatively Malta’s international competitivity in the industrial and tourism sectors".

He adds, "Malta would lose its flexibility and must adhere to somebody else’s decisions on matters of currency rates, VAT rates on services, Duty Free, issuing of visas, timeshare operations, incentives, airline operations and other tourism issues. EU policies on all these matters will affect negatively our tourism industry.

"It is highly improbable, if not impossible, that decisions taken by other countries are compatible with the solutions to our problems. During a recent speech, Minister Refalo deplored the fact that "many of us are content to let others think for them."

"I wonder then how he can accept the fact that "many of us will have to be content to let others decide for them!"

Mr Vella continued by warning that Malta has nearly reached its tourism carrying capacity, which means that foreign service providers are not coming to Malta to generate new business but to take business away from the already existing business. Such service providers include operators, guides, incoming travel agencies, DMCs, excursion organisers, transport providers, and normal workers. All this, according to Mr Vella, will also result in heavier economic leakages out of Malta, explaining that Malta risks reducing its net positive income from tourism while still being left with all the negative social and environmental impacts.

He adds, "Some argue that we can certainly improve on environmental issues. But then why do we have to wait and depend so much on the EU to rectify the very basic problems such as rat infestation, beach pollution, roads and cleanliness. These are not simply tourism issues. Regrettably these are harmful and hazardous health issues for the whole Maltese population.

"I don’t want to sound too pessimistic, but that’s the way I feel.

In a nutshell, we need to come up with a better product, which we have to be able to sell at a competitive price, and then start marketing it in a more effective and efficient manner.

"I would say that our future challenge is not only to attract more tourists, but more importantly to manage our tourism better. On the long run, unmanaged tourism could have a worst effect than having no tourism at all.

"Are we professional enough? No, unfortunately not enough. I think it is a must that we have to become more proficient and more professional because most of our competitors are surpassing and outshining us."

Regarding the Malta Labour Party Mr Vella said that the MLP is prepared to govern the country anytime it is called upon to do so, with the experience of the last election and of this term in opposition making the it all the wiser wiser. The under-performance, insecurity and counterfeit progress of the present government has certainly made the Labour Party stronger.

Finally, Karmenu Vella squashed rumours that he is interested in the leadership post, explaining, "I believe that the party leadership is doing a wonderful job. Given that, why should I even entertain such interest?"