Risk of hotel closures in winter due to seat cutbacks and increased costs - MHRA
MHRA president George Micallef sounds warning that significant cutbacks in Ryanair and Air Malta's seat capacity for next winter will leave hotels no choice but to close for season.
Speaking during the launch of the MHRA’s 2011 first quarter results, George Micallef urged government to be vigilant over a "negative phenomenon" of spiralling costs that were eating into hard-earned revenues of most hotels, and that could leave a large number of operators worse off than previous years.
Talking about the prospects for next winter, George Micallef said the results published today underlined the reason why the industry struggles to cope with the winter months, even with the existing seat capacity.
Micallef said that despite the improvements in tourist arrivals, the gross operating loss is still estimated to be around €6 million - down by €1 million in 2010 - in the first three months of 2011. He added that losses would increase substantially with financing and depreciation. MHRA found a continued trend of shorter average stays, where despite an increase of 24% in arrivals, nights spent in collective accommodation only went up by 13% and tourists' spending per capita declined by 6% during the same period.
“Winter operations are just around the corner, and we need to determine the seat capacity and routes schedules the soonest for us to start selling,” Micallef said. He also said the Malta Tourism Authority (MTA) needed more lead time to plan, not just in its marketing effort, but also to find ways "to filling gaps".
The MHRA president referred to the Air Malta crisis as an “unknown factor” which is causing anxiety within the tourism sector, and acknowledged that the airline’s restructuring programme is now at a very important juncture.
“But the clock is ticking and has been ticking for a while now, and it is imperative that negotiations with the European Commission are concluded as soon as possible,” he said.
Ryanair is also another unknown for the sector as recent reports have suggested the grounding of aircraft and a reduction of routes following a new surge in fuel prices.
Micallef also said a recent survey by the UK's Daily Mail had revealed that two out of every five Britons would be spending their holidays at home rather than go abroad. Thomas Cook has also announced discounted prices, prompting fears of a domino effect of a discount frenzy that would pressure Maltese operators to cut losses with reduced prices.