MHRA commissions reports on impact of EU

The Malta Hotels and Restaurants Association, which represents the majority of hotel and restaurant owners in Malta, has commissioned three reports about the impact on the industry of EU membership and of staying out of the Union.

The association has studied the issue for three years.

The recently elected association president Winston Zahra Jnr said the association would be announcing the conclusions of the reports, as well as its official position on EU membership, on February 4 at a national conference.

He said the association would also like to comment on the Labour Party's partnership proposals if they are given an opportunity to analyse any documents as part of the overall study.

The MHRA represents over 120 hotels and 300 restaurants. The collective investment made by the association's members is over Lm450 million, Mr Zahra said.

In his first interview since he took over the leadership of MHRA, Mr Zahra said the reports would include a cost-benefit analysis.

One report covers the impact of VAT and the euro while the second deals with the effect of the social charter. The third concentrates on the effects of standards, air traffic deregulation and other aspects of membership.

Mr Zahra said the MHRA had been unable to study the Labour Party's partnership option: "I am not aware of any concrete documents explaining the option that we can actually study. If they are made available to us, we will definitely analyse that option in great detail."

When asked, he said that the EU had been discussed with Alfred Sant during their last meeting, and further meetings were planned to ensure that the association takes the opportunity to understand every proposal.

"We want to be realistic and objective in our eventual stand as an association. Partisan politics does not interest us, the success of our industry is what will take precedence in our eventual position," remarked Mr Zahra.

Referring to the situation of the industry, he said there was no doubt that it has been a tough year for everyone.

"The tough year was expected because of various international factors which were out of our control, particularly the international economic climate and the aftermath of the tragic September 11 events.

"The industry had been bracing itself for a downturn. With hindsight the downturn could have been worse. The drop over the first eight months of this year was of just under seven per cent."

Mr Zahra said that indications were that the slowdown would continue and indicative figures suggested that the industry should end the year with an overall five per cent decline in tourist numbers.

"However, the year ahead is still quite unstable as far as hotel bookings are concerned. The bookings are soft and the situation is still unpredictable and very volatile."

The international economic situation was still unstable and the threat of military action against Iraq was still there. The effect of globalisation on tour operators and rumours in the press that one of the largest tour operators might be running into financial difficulties had made the industry a bit nervous.

"In a nutshell I would say I am encouraged by the slowdown in the drop in year-on-year figures, but we are far from being out of the woods."

Besides the external factors, he said, there were local variables affecting the industry: "The biggest problem internally is the overall environmental and infrastructural situation of the island. Malta has to be upgraded for our own sake as Maltese citizens and also for the strengthening of the tourism sector in general. We need to have our product up to scratch in good times, let alone in the present international situation where different variables have all been on the negative side."

He said that the industry was feeling let down and frustrated by the state of the environment and the infrastructure: "You hear the comment that we have five-star hotels and a one-star product.

"First of all, our industry is made up of much more than five-star hotels and restaurants. The total number of people employed directly by our members is over 7,000. If one had to add the indirect element as well, the number would be over 20,000. Our membership base involves all types of hotels and complexes and a full range of restaurants. Each one of our members has invested considerable sums of money and taken measured risks. Each one of our members contributes to the generation of wealth within our economy.

"A lot has been invested and a lot is being done by the private sector to raise the standard of our product but we feel let down by the infrastructure and the overall environment of the islands. Things have been done over the years, like the airport and the reverse osmosis plants, but we have a long way to go in this respect, especially in the areas of road maintenance, waste management and general upkeep and cleanliness of the island."

Mr Zahra also criticised the political parties for politicising the tourism sector: "The politicisation of our industry cannot continue. Politicians should stop using tourism as one of their political footballs. Parties quote figures; they misquote figures. Did Labour get more? Did the Nationalists get more?

"We need to snap out of this once and for all. We need a clear national strategy for our industry in which we agree where we need to be in the short, medium and long term. Whoever happens to be in government has to work towards the same goal. We must only use past figures to learn from and not to throw mud at each other."

He stressed that the MHRA was determined to play a role in exercising pressure on the political parties to depoliticise the issue.

"One of the clear objectives set by our new council is to lobby strongly for a national strategy and the depoliticisation of our industry. We meet Tourism Minister Michael Refalo on a monthly basis and Labour Party leader Alfred Sant regularly - at least quarterly. We will be stressing this point with both sides.

"We cannot afford to risk the future of this industry or to waste time and energy on which party in government had the best figures in the past. The only thing we need the past for is to look at it and learn from it. Nothing else. What we need to do collectively is to decide where we want to be in five years' time and 10 years' time and then go hell for leather to make sure we get there - together as a nation."

He also said that the Malta Tourism Authority was now leaving its mark: "The setting up of MTA was a milestone and a step towards the possibility of having a long-term national strategy, especially since it was set up with the support of both sides of the House.

"The MTA does various jobs but most of its budget - as it should be - goes towards marketing. One can only judge the success of their marketing efforts by the figures. If we look at this year, the drop so far has been a substantial seven per cent. But the drop would have been much worse had MTA not moved quickly immediately after the September 11 events.

"The finance minister allocated an extra Lm1 million for marketing - and had that extra Lm1 million not been spent on advertising especially in the UK market, then we would be looking at different figures today. Could it have been done better? Could we have perhaps promoted the safety aspects of the island more? Everyone can do better with hindsight but objectively I would say that the marketing campaign was effective in minimising the downturn this year."

Mr Zahra also said that the association was concerned by the increasing number of beds on the market: a recent report in parliament listed 41 pending applications for hotel development.

"Today, for the hotels in existence to be financially sustainable with the number of beds there are, we need over 1.5 million tourists annually.

"This is just to maintain sustainability, not to get high profits. We are short of over 300,000 tourists a year.

"We cannot continue to increase the number of hotels and we feel that the government should take a decision that no virgin land should be taken for the development of new hotels. We cannot continue building, building and building. If someone wants to own a hotel, then they should buy an old one and redevelop it. In this way the standards of local properties will continue to increase and the bed stock will remain at a stable figure."

When asked whether the approach was selfish, considering the association was run by hotel owners, he was adamant that it was just business sense.

"I can assure you that in today's market, if someone not involved in this sector does his homework properly, they would not invest in new hotels.

"Unless you have an existing infrastructure and a known and established name in the industry it is very difficult to do well. On the other hand the purchase of old properties for redevelopment makes sense as by doing this one does not cannibalise the existing supply by increasing the overall bed stock. On the contrary, the bed stock remains static but the standard is improved, therefore enhancing the chances of doing well.

"At the end of the day tourism in Malta accounts for just under 25 per cent of GNP, it employs over 30,000 people and generates over Lm300 million worth of revenue for the island annually.

"It is true that we have no control over the external factors such as international economies, terrorism and globalisation, however we have a great deal of control over our internal resources - our environment, our heritage and our culture.

"There is no more time for excuses and no more time for report writing and political games - we have to act now before it is too late. Then we have to do our utmost to market Malta as widely and intelligently as possible to ensure we get the numbers and type of tourists that we need to keep our industry, indeed our island, sustainable.

"Moreover once we attract these visitors we have to ensure we give them the experience they deserve - only in this way will they become part of our marketing machine," he said.