The outgoing president of the Malta Hotels and Restaurants Association Tony Zahra considers the reduction in utility tariffs to be one of his greatest satisfactions, as he was one of the most outspoken representatives of the constituted bodies on this point.
“I am over the moon that our crusade has at last yielded results. Energy costs account for around six per cent of hotels’ costs, so the reduction will make an enormous difference, all the more so because every cent of it will go to net profit... If there is a net profit,” he added.
The MHRA has always tried to dispel the idea that hotels are money-making machines. Mr Zahra pointed out that the government had three hotels – Crowne Plaza, Selmun and Ħal Ferħ – and that all had closed down.
“What does that tell you?” he asked.
“A hotel is like an engine. When it is working, it has value, but if it stops, then it only has value as scrap metal,” he said.
“In Malta, almost all the investment is Maltese – the foreign element is mostly through franchises and management contracts, not shareholding. This is because the sustainability of hotels is not that good. Foreigners will not invest unless they are convinced of a sufficient return on their investment,” he said.
He was unable to resist pointing out that the Government had not, however, reduced VAT on accommodation.
“That money would have been ploughed back into refurbishing hotels,” he shrugged.
“A five-star hotel spends four per cent of its turnover on refurbishment – each and every year.”
Mr Zahra, whose two-year term as president of the Malta Hotels and Restaurants Association ends next week, said there were some pressing issues for the tourism industry.
The 2015 reduction in utility bills was the main one when it came to positive developments, but others could flag problems for the future of the sector. He warned that stakeholders had to be aware of the country’s carrying capacity, that in spite of the optimistic financial reports on Air Malta, there were still clouds ahead that could compromise its future, and that illegal rentals were upsetting the level playing field for licensed operators.
His first concern is that Malta has now reached its capacity in August, and that everything from beaches to public transport cannot handle any more tourists.
“If we are able to bring arrivals in other months up to 200,000 (as we do in August), then supply would match demand. But the problem is that there are a considerable number of hotel extensions and new projects in the pipeline which are being dusted off again.
“Now clearly the product needs to be renewed; some beds have passed their sell-by date, so we need new ones to replace them. But my fear is that the ones in the pipeline will result in an overall increase of the bedstock, and that these will eventually outstrip demand,” he cautioned.
“Obviously if this were to happen, then prices would be driven down and this would have serious repercussions on the sustainability of the industry.”
Mr Zahra was uncharacteristically coy when it came to Air Malta, saying he was unhappy about its future.
“I am not as confident that at the end of the road we will have a profitable, government-owned company and that it will remain the national airline,” he said.
“There are rumours that make us wonder whether what is being said is what is really happening.”
Mr Zahra would not give any details, adding only that there was as yet no official succession plan in place for when current CEO Peter Davies’ term ended next March.
Another oft-mentioned issue raised by Mr Zahra and the MHRA is the ever-growing proliferation of unlicensed rentals, with hundreds of properties in Malta listed on websites like AirBnB.
“This is creating an unfair playing field as someone who does not pay any fees, or any VAT, or any tax, can clearly undercut the prices of licensed operators. Surely it should be easy for the authorities to check which of the properties listed on these websites actually have a licence,” he said.
During his tenure, Mr Zahra also gave more importance to restaurants’ issues, and has started conducting regular surveys of the sector again. The association has identified a number of areas where it can assist the sector and is working on staffing and training initiatives.
He will bid his farewell at the MHRA’s annual conference on Wednesday, which is aimed at promoting a Mediterranean vision, with Malta as a focal point.
“This is a long-term vision but it is one that could lead to many other things – not only tourism. Areas like Scandinavia have a very coherent identity that the Mediterranean does not. I am hoping that we can build this up.”
Further information about the conference may be obtained by e-mailing: secretary@mhra.org.mt.