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Michael Zammit Tabona bets his spa will relieve any kind of stress. But the one thing you don’t find here is what can relieve hoteliers like him of the anxiety from a depressed tourism market
Michael Zammit Tabona is touring me around the new spa centre he’s just unveiled at the new Fortina hotel. We’re careering from one room to the other, a series of multi-ethnic themed relaxation techniques housed under one roof, all carrying predictable Asian pedigrees and other Scandinavian labels. His big project has come in the form of a Lm10 million investment. 
It’s big money in a tourism climate he describes as “unhealthy”, and that has dwindled to just above the one million arrivals mark since the good old days of booming tourism in Malta. As we tour around his spa, Zammit Tabona booms orders to anyone who looks in charge in the hotel to get stuff fixed and done. In no uncertain terms, Zammit Tabona never minces words. An outspoken critic of the way government has managed its tourism portfolio over the past decade, he says he would be glad to leave the Malta Tourism Authority to play around with the cash government gives it and leave the private sector to work its way out of the doldrums the way it knows. Last summer, he was among those who warned Minister Francis Zammit Dimech of the departure of major tour operators that went unheeded. Despite the bad omens for the tourism industry, Zammit Tabona chugged on with his grand hotel investment.
“Of course, tourism is not really healthy right now but this project had been conceived about ten years ago and has seen three governments and three Prime Ministers. Delays at MEPA notwithstanding, we had to carry on. And this is why we had to be different. We didn’t want another bedroom factory,” Zammit Tabona says about the hotel he conceived with a broomstick – the way he measured the rooms when he told his architect of what he had in mind. Today he runs a one-of-a-kind spa hotel in Malta, complete with training school for therapists. “I don’t think anyone here can compete with us, especially since this is the real deal, not just any place with an indoor pool.”
And yet, Zammit Tabona carries on in the industry which he says has now been stagnant for the past ten years: “We have been stagnant for the last ten years where the whole world has been experiencing growth, so there must be something wrong. In the UK, an extra 20 million people are going there on holiday, which means it is not necessarily new people going there, but probably returning there. Malta lost out. And it’s now pointless for us to bury our heads in the sand, blaming this and that. Basically we have to sit down and seriously think about why we’ve lost out. And what has happened in the last few years to revolutionise the industry? I think low-cost carriers.”
Low-cost carriers. Indeed one of the greatest inventions of the last century, its endless drive across the thoroughfare of the lucrative tourist market only stopped here, in tiny Malta, with its proud national airline carrying the flag of national excellence. The state doesn’t want to give Ryanair any discounts to land here. Why discriminate between airlines when you only have one airport servicing the entire island? Even the tourism agents in Malta don’t want anything to do with low-cost profiteers unless they enter the market on a level playing field. In fact, if there is one thing that makes travelling from Malta the biggest pain in the ass it’s the taxes and airport charges, seemingly designed to keep everyone from leaving the island of milk and honey.
“LCCs have made it possible for people to go away on three, four, five-night breaks at a low cost. These carriers are saving people a lot of money and that money is spent in the resorts, restaurants, airport shopping, and gifts. So basically, Malta has so far missed out on this market. I think the only possible reason for the growth of tourism elsewhere in the world have been the LCCs. We have missed out, so therefore stagnation.”
Zammit Tabona’s business equation makes simple sense. But the critics argue that LCCs can only create a climate of dependence that will not be beneficial in the long run. It is easy to see that bringing over LCCs will yield a short-term benefit for some stakeholders in the tourism industry and also for consumers, but other stakeholders will suffer immediately, and these include Air Malta, other regular airlines, tour operators, local incoming tourism agents and travel agents. Jobs can be lost in all of these sectors.
“Let me be clear about this. I by no means want anything to affect the national airline, although LCCs are here to stay. But if I was chairman of Air Malta today I would accept this fact and start changing the concept of Air Malta to be able to compete with LCCs. Basically, the concept of restructuring at Air Malta should have already started with this in mind. They can easily get a part of their fleet to compete head on with these carriers.”
For the hotel entrepreneur, the key factor to LCCs is growth, ultimately tied to the guarantees which so many of the bidders for a bay on the Gudja runway have offered. “If there is a proposal on the table that can give us 350,000 new tourists, how can we turn this away? It is suicidal! Air Malta will not go down if they tackle it well. We have to ask whether Air Malta is actually defending our own industry here: they have two airplanes going out of England to Spain and Greece, taking hundreds of tourists there.”
Zammit Tabona says those tourists should be coming here instead, proposing that Air Malta should splatter a couple of blue spots on its aircraft – the typical minimal design for low-cost carriers – and fly them over to Malta on a fully-fledged no-frills ticket.
“So, Air Malta are looking after themselves because it pays them to ship tourists out to other destinations, instead of getting them over here. I seriously ask whether Air Malta is really looking after our industry. Look they have to find a solution, between all parties. The government will have to fork out something, the Malta International Airport will have to reduce something, and maybe private industry will also have to do something.”
Such as contributing towards the pot, he says. The island’s hoteliers have for the past years pumped into the MTA budget with cash meant to market the island well. All semblance of a good product (the hackneyed moniker being ‘Product Malta’) bringing in travellers to an island rich in history, culture, and beach frolicking, came crashing down when MTA was garaged for an overhaul, with Deloitte obliging with a scathing criticism of a messy organisation with enormous administration costs, expensive overseas offices, and ineffective leaders. For years it had been 9-11 and SARS to be the bêtes noirs of our industry. Then the lid was lifted off the MTA’s state of affairs. Lawrence Gonzi, in his first stint as finance minister, brewed up the idea of taking Lm500,000 from MTA’s budget until it gets 50,000 tourists more, a sort of slap on the wrist, carrot-and-stick approach that didn’t work. So when the 50,000 mark was still just a mere sentence in his budget speech, he gave the MTA its half-million back, this time under a vote to ‘brand’ the island. Of course, why take the money away in the first instance if it’s going to make things work less better? It’s a mysterious form of erudition.
For Zammit Tabone, MTA’s restructuring process has arrived at a process which he says, in a blunt giveaway of his respect for the authority, of “restructuring the restructuring process”. In short, he would “ignore the MTA” – better still, he would “give them their budget, and let them plod along. It’s a political entity, and this industry is not political, it is not a little empire for the minister. They have just announced a USD1 million campaign on CNN. Tell me how many people in Europe watch an English-language channel? Who are they targeting? The British watch Sky… for me it’s a wasted USD1 million campaign.
“If we get together and find a solution it would be a solution that will be focused upon particular routes. Not the ones proposed by the ministry. Those are silly routes,” he says about Girona and Luton among the under-served routes which are however important for Maltese travellers. “Today people agree that whoever suggested those routes to government made a mistake. They are mad routes. They are winter routes. And of course, the proof of the pudding is in the eating. Has anybody taken up the routes, except for Luton? You can’t just prop up low-cost flights to Timbuctoo and other stupid airports nobody wants to go to, because you need to find the investor to fly people there. They’re not going to put their money out to lose it. You need specific routes from the UK, Germany and Scandinavia.
“I’m not saying we want to give Ryaniar or Easyjet everything. They will be specific routes, and these will carry a subsidy for the carriers. Government will have to contribute, and the private sector will have to contribute. And what we contribute today to MTA as the private sector should come back to us, and we would give it to the low-cost carriers, as part of our payment into the industry. Definitely the whole country would gain, if you can imagine an extra 350,000 tourists coming here. This industry has been reducing prices for years. We’ve been dumping prices for yonks, and we need greater demand and full occupancy rates. If this industry doesn’t become profitable it will only be the government to make the money, through taxes.”
But is everything just boiling down to LCCs? Only a year ago Zammit Tabona was harping on the need for better marketing of the island, a spoon-fed approach for tourists to see a good price and call an office to fix a quick booking. What about the regular laments? The dirty, perennial construction site the island always seems to be? The service that doesn’t come with a smile? Zammit Tabona is on a different wavelength.
“Look, at the end of the day, it’s a question of money. If I was prime minister and somebody gives me a guarantee that we’ll get our money back if they don’t fly 350,000 tourists over to Malta, it would be crazy not to accept them. It would be madness. We need to get these people in to recharge and regenerate the industry. The money would start pouring in, through tax and VAT, rendering its investment a pittance and making it easier to invest in other projects.”
Today Zammit Tabona is on the Malta Hotels and Restaurants Association’s task force on low-cost carriers. “That’s why I am speaking so passionately about it,” he admits.
So they really are the ‘low-cost-at-all-costs’ guys, in Austin Gatt’s words, the minister whose portfolio includes Air Malta and the Malta International Airport. In his equally unequivocal words, government is not protecting Air Malta behind a bureaucratic fence of inefficiency. LCCs want discounts on charges, pure and simple – subsidies which need clear overriding reasons to justify pumping public money into a private enterprise. And the fact is that, while the hotel industry is all keen about LCCs, the continued sustainability of the national airline appears to be of no importance.
“I don’t think LCCs will be here today and gone tomorrow. And neither do I believe that Air Malta will be affected. LCCs will take on local work, some 200 to 300 workers. I would like Austin Gatt to be tourism minister. He would directly defend the 9,000 workers in the tourism industry and the 30,000 benefiting indirectly from the industry. Austin Gatt is basically defending the employees at Air Malta, mistakenly… Air Malta has an important role to play in this. They can only get stronger if they rethink their position, because they aren’t doing anything much differently from what they first started to do in the 70s.” |
