One per cent drop in tourism likely for 2003

The official figures for 2003 are expected to show a one per cent drop in tourist arrivals over the previous year but Tourism Minister Francis Zammit Dimech is optimistic of a turnaround in the second quarter of this year.

In an interview with The Times, Dr Zammit Dimech denied that the hotel industry was facing a crisis, dismissing comments that a number of establishments were closing down as "mere speculation".

Demand for tourism around the world did not show signs of recovery in 2003 as several tourist destinations, including Malta, fought against all odds to boost tourism.

As things stand now, the situation remains rather depressed, as evidenced by a telephone survey carried out by the Malta Hotels and Restaurants Association last week, which showed that occupancies in December did not compare well with last year's.

Tourist arrivals figures have been on a downward trend since 2001 (three per cent down from 2000); in 2002 arrivals were down by four per cent and now an expected one per cent drop for 2003.

Dr Zammit Dimech admitted that indications for the first quarter this year were not healthy though he believed in a recovery by the end of the year, starting from the second quarter.

"In this sector you have to speak very cautiously as the situation can literally change overnight. The recent news that airlines are actually cancelling flights for security reasons is not very encouraging," he said.

Although the terrorist attacks on the US took place over two years ago, their effects on world travel were still very visible. That event, Dr Zammit Dimech said, contributed in more ways than one to an economic downturn in many countries, as many people kept a tight hold on their purse strings. More terrorist attacks and the war in Iraq only served to exacerbate the problem.

People in general have travelled less and many of those that did changed their travelling patterns, opting for road transport.

Dr Zammit Dimech is pinning his hopes on the encouraging economic forecasts in Europe - the German economy is projected to grow by 1.5 per cent, the French by two per cent and the Italian by 1.7 per cent.

The minister is also optimistic of a U-turn in the German market, from where arrivals are down by 12 per cent over the previous year. The new management of tour operators FTI "knew" Malta very well and this augured well.

Dr Zammit Dimech said the tourism authorities needed to predict market trends as early as possible and to adjust marketing plans accordingly.

Additional marketing funds would be more than welcome, he said, but what was equally important was to make better use of the funds available.

The budget for the Malta Tourism Authority has been set at Lm8.5 million, with about Lm6 million actually being directed towards marketing, the minister explained. On a per capita basis, the money given to the MTA compared well with other destinations.

"We also need to be much closer to the tour operators, especially since a big segment of our arrivals still depends on them."

Destinations like Tunisia and Croatia were offering ultra-low prices, which were making it difficult to compete, the minister admitted.

Asked to comment about claims that Malta was becoming pricey and that several operators fleeced tourists, Dr Zammit Dimech admitted that the island needed to offer more value for money. "But at the end of the day we can never price Malta at the same levels as some destinations where wages are much lower and where the unit price is also low. Unfortunately, you still find people who want to get rich quickly when they see a tourist."

He said the MTA's enforcement unit was responsible to ensure the tourism product was sustained and kept up to scratch but it did not have any authority to act, for example, against taxi drivers.

"What we're trying to do is liaise with other authorities to ensure they too take action against defaulters. It would be a mistake for the MTA to assume a super-police role."

Dr Zammit Dimech said the ministry would this week be announcing a change of chairmen in most of the authority's directorates as well as some changes in a number of boards.

The minister is unimpressed by recent claims made by the General Workers' Union that seven hotels would be closing down shortly. "Rumours are much wider than facts and, no, I am not informed that any of the large hotels will be closing down," he said.

He said the GWU should not take into consideration hotels such as Les Lapins, which is to undergo a Lm10 million facelift, or The Galaxy Hotel, whose fate has long been known.

"We have no difficulty with hotels which are at the lower end of the scale, and which are not operating efficiently, to move to residential or old people's homes as an option.

"We hear so much about an oversupply of bed-stock that when we have an adjustment of the market it could actually have a positive effect.

"Even if some are feeling the pinch, there's no crisis. On the contrary there is massive investment in the industry."

One has to take into account the reopening of the Cavallieri Hotel in St Julians, the opening of the Le Meridien Hotel, in Balluta and the final negotiations on the White Rocks Project, he said.

Dr Zammit Dimech cautioned hoteliers against pressure to cut prices and instead to collectively maintain and improve on present room rates.

Turning to low-cost flights, the minister said the introduction of such services should prove a very welcoming boost for tourism. Scandinavian airline Snowflake is to start services between Malta, Copenhagen and Stockholm in March and Air Malta is also offering low-cost flights to Stansted airport. The minister said two other low-cost airlines, including "a very big name", are also expected to start operating by autumn.

Low-cost airlines are a segment Malta cannot afford to lose out on, the minister insisted.

"It would be a mistake to equate low-cost airlines with the charter system. More people are opting for frequent but fewer city day-breaks and so it's a fact of life that more people would prefer to save the money on the flight and then spend it on better hotel accommodation," he added.