Seasonality clouds and their bronze linings

The influential Malta Hotels and Restaurants Association (MHRA) is doing a sterling service to the tourism industry. The association's quarterly surveys are an excellent snapshot of current realities, allowing operators to gauge their individual performances when compared to the national or regional average by category. Their professional approach to forecast the main trends also assists public and private sector operators as part of their decision-making process.

The April-June 2002 Survey results, as reported in The Times (September 19) portray a realistic picture of relevant tourism issues, indicators and trends. Tourist arrival figures for this quarter were the lowest in six years, while we are told that overall arrivals for 2002 are scheduled to be down by around 10 per cent when compared with 2001.

The overall weak results are also confirmed by a considerable decline in occupancy in the three-, four- and five-star markets (11% and 6% in the latter two categories), lower turnover for the January-June 2002 period (10% less in the four-star category, which hosts the bulk of Malta's tourism beds), a general decline in room rates (nearly 10% in the three-star hotels) and a decrease in arrivals from all main markets except Italy.

Conference and incentive travel was the only niche that has been unaffected by the slump, with even better prospects for next year.

Nick Captur, from MHRA's consultants Deloitte and Touche, is reported as saying that the hotel industry "was clearly not finding the recovery which perhaps it was eagerly anticipating earlier this year. Guest nights are down, airlift capacity is down and tourist arrivals are down, so hotel performance suffers as a result and operating profits are lower across the industry. At the same time, the supply of hotel rooms is increasing".

The silver lining, according to Mr Captur, was that the decline is slowing down, with preliminary indications showing that there were 4% fewer tourists in August compared to the same month last year, while in April the decline was of 14%.

I tend to disagree with this perceived silver lining. It may be of partial consolation to the hotel industry that the decline in arrivals will this summer be contained, but from a strategic perspective this trend indicated by MHRA confirms yet again that Malta is still perceived as a summer destination.

It would be opportune to clarify this point further. Over the years, the Malta Tourism Authority and its predecessor the National Tourism Organisation have listed the need to improve Malta s seasonality spread as one of their key strategic objectives.

Notwithstanding their efforts, the seasonality mix has broadly remained stable throughout the 1990s, even though the number of tourists (and hence pressure on resources in the peak months) has grown.

What is happening this year is that we are feeling the pinch mainly in those shoulder months which hypothetically should guarantee quality tourists of a better socio-economic profile. The 14% decline in April took place when the fruits of MTA's aggressive marketing campaign geared to highlight history and culture alongside the traditional ingredients should have been reaped.

MHRA on the other hand chooses to project a brighter picture by indicating that arrival patterns will improve in the peak season, albeit not to last year's levels. Yet this is the period when the destination traditionally sells itself at much lower direct marketing costs.

Suffice to say that the MTA hardly ever conducts any marketing campaigns in the July-September period, since promotional endeavours are rightly geared to attract traffic when we really need it. Therefore I see no particular silver lining within this context, except the fact that in spite of the not-too-rosy scenario, the lucrative conference and incentive market is likely to grow further.

This does not mean that I am contradicting MHRA's other statements that Malta is outperforming our competitors for the UK and German markets, and that the MTA's advertising campaigns are money well spent.

It is certainly heartening to note that Malta has managed to weather September 11 and recessionary conditions in source markets better than competing destinations, as also confirmed by Minister for Tourism Michael Refalo as part of the same write-up.

Moreover, MTA's campaigns surely served to limit the damage caused by the September 11 storm while also allowing for possible longer-term marketing benefits.

It is clear however that notwithstanding the regular costly marketing campaigns, the yearly efforts aimed at improving seasonality have only marginally produced results.

The trick could be to tackle the problem from a different angle by boosting product development initiatives to complement the marketing campaigns, thus enhancing the qualitative environment to improve its appeal to the winter and shoulder month tourists.

Existing budgetary allocations within the MTA structure however do not seem to support such a stance since its Product Development Directorate has a relatively poor Lm346,000 yearly budget compared to the Lm9 million received by its marketing cousin for advertising, promotion, tour operator support and other marketing expenditure (MTA Annual Report 2001).

MHRA acknowledges this need too. President Tony Chircop stresses in the same article that "the importance of competitive pricing and good all-round facilities for visitors remains very important. The MHRA urges the government to support the investment made by the private sector by taking initiatives to improve the overall environment for visitors. This, together with a strong promotional and advertising budget, are important for the stability of the industry".

Thank goodness that every cloud has a silver lining. Bronze is not a nice colour for the seasonality clouds.

E-mail: alanvella@keyworld.net