Hotel losses up despite higher occupancy.

Hotel losses have increased in the first quarter this year due to higher costs, according to a Malta Hotels and Restaurants Association Hotel survey, released yesterday by Deloitte.

The survey shows a 2.5 per cent increase in tourist volumes over the same quarter last year and that higher room occupancy levels were mostly attributable to an early Easter.

If tourist volumes were compared to 2002, which also had an early Easter, they were down by four per cent, the survey showed. By the end of April, the increase in tourism volumes had all but disappeared.

As regards room occupancy levels in the first quarter, the best trend emerged in the four-star section, which saw an increase of 4.8 percentage points in occupancy from 54.3 per cent to 59.1 per cent - the best result in four years for this category. The increase in occupancy in the three-star sector was of two per cent, while it was marginal - only 0.4 per cent - in the five-star sector.

The survey indicated that the average achieved room rates (AARR) decreased in the five-star and three-star sectors but increased slightly in the four-star properties due to the Easter supplement falling in March.

Combined with the increase in occupancy, it led to an eight per cent rise in the income generated by four-star hotels. In the three-star sector, income increased by four per cent but in the five-star category it fell by 0.6 per cent.

Payroll costs tended to be static in relation to income generated but other costs tended to rise, meaning that operating losses were experienced across the industry at a higher rate than the same period last year.

The Deloitte survey found that in the four-star industry, the losses were contained to a five per cent increase but in the five-star level, losses were 19 per cent higher than last year.

The survey also found that if Malta's performance is compared to four other resorts abroad - Cyprus, Costa del Sol, Mallorca and the Canary Islands - using data from Deloitte's international HotelBenchmark survey, Malta has the lowest occupancy and the lowest room rate.

Commenting on these findings, MHRA president Justin Zammit Tabona expressed his disappointment "to see that operating losses have increased in all hotel categories, given that Easter was early and occupancy was up.

"We are also disappointed to see that, internationally, Malta is at the bottom of the league table. We feel we should be able to compete head on and win. It proves that much remains to be done to improve product Malta and its marketing overseas."

The MHRA was committed to work with the government and the Malta Tourism Authority and would pile pressure, where necessary, to make things happen. "We cannot afford to sit still," Mr Zammit Tabona said.

According to Deloitte partner Nick Captur, who presented the results to hoteliers at the Capua Palace, part of the Victoria Hotel, some of the results, such as those concerning four-star business, were "encouraging" and showed that "after years of decline, a recovery may be coming through".

However, Mr Captur continued, the five-star sector, which involved major investment and "some very good hotels", had performed disappointingly.

"It would appear that there was less conference business, possibly due to the early Easter, and this impacted results negatively."

MHRA senior vice-president Walter Cassar said the survey "shows quite clearly that we are, more or less, in the same waters as last year and that the slight increase in the first quarter was due to the fact that Easter came in March, which is usually a weak month".

The prospects for the six months ahead showed that there would probably be no major changes between the performance of last year and this year's, except for the important Commonwealth summit at the end of November, usually a very quiet month.

Mr Cassar considered it to be "the cherry on the cake and I think it is important to take maximum advantage of the many journalists coming to Malta to cover the event and grab the opportunity to re-launch Malta and its tourist industry".

The Deloitte survey also found that in the five-star sector, the majority of hoteliers felt that the national target of increasing tourist arrivals by 50,000 would not be achievable, whereas in the three-star and four-star sectors, some 60 per cent of respondents felt the increase would be achieved.

Deloitte and MHRA invited more hotels to join the survey. Participation in the January-March edition reached 55 hotels, covering 9,672 rooms and Lm12 million worth of revenue.