MHRA reiterates call to clamp down on unlicensed accommodation

MHRA president Tony Zahra has reiterated his call for the government to clamp down on unlicensed accommodation in the country.

“These operations are benefiting from economic growth while contributing little back to the economy, and they are creating an unfair playing field and also leading to unnecessary risks that jeopardise the standard of our tourism product,” Zahra said, at the presentation of the BOV MHRA Hotel Survey carried out by Deloitte for the first quarter of 2016.

“Government must take tougher action on those refusing to adhere to standards and regulations as millions of euro being foregone as public income revenue,” he said.

Zahra also went on to comment about the controversial eco-contribution tax, and reiterated MHRA’s position in favour of the tax.

“MHRA has been consistent throughout the negotiations process with the government and always represented the best interests of its members as the main collectors in this scheme and the tourists as whole,” he said, adding that it was satisfied that tourism minister  Edward Zammit Lewis recognised the association’s constructive approach in representing the best interests of the licensed accommodation providers and appointed them as partners in managing the fund collected through this scheme

Earlier today the government and MHRA announced that the tax is coming into force on June 20 after the courts ruled against the prohibition of the eco-tax contribution. The tax was initially planned for June 1, but an injunction filed by the Malta Chamber of Commerce temporarily blocked the tax.

The tax is of 50c per night, capped at €5 per tourist aged 18 and over. The contribution will apply to all accommodation guests including foreign students in Malta learning English.

Stakeholders have insisted that they were not properly consulted and that they required more time to prepare for the measure, which they called an “administrative nightmare”.

Zahra also made afew comments about Air Malta and said that a meeting would be held with Zammit Lewis to discuss the Memorandum of understanding signed with the national airline, and explore further avenues of how MHRA’s recommendations could be considered in the best interests of our national airline, the tourism sector and our economy as a whole.

 “It is now that we need to start polishing the rough diamond that the tourism sector is by embracing a vision that will set direction for a holistic plan. We cannot talk about transport issues, infrastructural development, the environment, social challenges, Air Malta, recruitment gaps, education and the economy in isolation, but they have to be treated as connected to each other,” he said, adding that the aim must be to improve the wellbeing of the people and the experience of the tourists visiting the country.

Tourist volumes continue to increase in first quarter of the year

As tourist volumes continued to increase in Q1 of 2016, the hotel sector continued to report strong overall performance according to the BOV MHRA Hotel Survey.

According to the survey, improvements were recorded primarily in the 5-star and 3-star sectors with the 4-star sector reporting a relatively flat trend compared to the same quarter last year, with the 5-star segment reporting significant growth in room rates, while occupancy was relatively flat.

The segment also reported increases in its cost base, with payroll costs increasing primarily due to headcount, and administrative expenses and property maintenance costs increasing significantly in comparison to the same period last year.

 Such cost increases were partially offset by lower energy costs in line with the reduced tariff which kicked in early 2015. The net impact on the segment’s profitability was a positive increase in Gross Operating Profit per available room (GOPAR).

On the contrary, the 4-star segment reported an overall decrease in occupancy compared to the first quarter of 2015. The segment also reported an increase in rates albeit marginal. Administrative and property operation and maintenance costs are reported to have increased although offset by significant reductions in energy costs. The overall reported cost reduction appears to have effectively compensated for the decrease in revenues and 4-star Q1 profitability was reported at break-even levels, consistent with last year’s trend.

Participating hotels in the 3-star segment reported significant volume and revenue growth with and increasing REVPAR. The increase in revenues and volumes was partially matched by increases in the cost base including staff headcount and payroll expenses, F&B cost, direct expenses and overheads. Whilst the 3-star segment continues to report losses in Q1, the survey reported a significant reduction of approximately 40% in Q1 losses for the 3-star segment.

“The results of the survey continue to affirm the trend towards a strengthening of the hotel sector on the back of consistent growth in Malta’s tourism numbers and increased investment in product and quality improvement by hoteliers,” Zahra said.

During the seminar, BOV renewed its sponsorship agreement with MHRA. In his intervention, Kenneth Farrugia, Chief Business Development Officer at Bank of Valletta, expressed his satisfaction that the Bank is renewing its collaboration with the MHRA.

“Over the past ten years, Bank of Valletta's collaboration with the MHRA has led to the consolidation of the BOV MHRA Hotel survey that has become a benchmark for the industry in Malta,” he said.

Farrugia recognised the important role of all stakeholders in the industry, whose concerted efforts are providing positive results in spite of the challenging times.