• Facebook
  • LinkedIn
  • Twitter

maltawinds.comLogo

The Economy's Voice

Menu

Skip to content
  • Home
  • About
  • Local News
  • International News
  • Opinion
  • Demia on Sundays
  • Demeter
  • Business
  • Satire on Sunday
  • Fondazzjoni Kreattività launches ŻiguŻajg Season 2020-2021 under the auspices of Dr Lydia Abela
  • Woman who allegedly stole laptop from Nancy Pelosi’s office to sell it to Russia investigated by FBI

Profitability of hotels, restaurants under threat – report

Posted by Vento on 3rd June 2019 in Local News

The drastic increase in hotels and restaurants on the island was posing a risk to the sectors’ profitability, the author of a nationwide study warned on Friday.

Conducted by ‘big four’ accounting firm Deloitte, the study found that while tourist arrival trends were still positive, the increases were less pronounced than in previous years and the sector was now facing “a number of challenges”.

“Results aren’t what we got used to. We had a number of years when the graphs kept going up,” Raphael Aloisio, from Deloitte, said.

Why was the sector facing a tougher reality today? While the study gives a variety of reasons, Mr Aloisio gave a blunt explanation of his own: if supply (of hotels and restaurants) continued to increase at a faster rate than the demand for rooms and tables, then the results would keep going down.

The number of permits for hotels being issued had shot up from 15 in 2012 to 119 in 2017, he said, describing this as “alarming”.

His warning prompted grunts from the hoteliers and restauranteurs gathered for the presentation and was quickly followed by a slight change of tone on Mr Aloisio’s part for industry players not to take any drastic decisions in reaction to these findings.

Tourism Minister Konrad Mizzi took the opportunity to announced that an agreement with alternative accommodation giant Booking.com had just been reached which would ensure that private accommodation providers in Malta would have to register with the Malta Tourism Authority before putting their property on the international website.

The authorities, Dr Mizzi said, were also holding talks with Trip Advisor, he said.

Dr Mizzi said new forms of accommodation were a reality that the country could not ignore. In this spirit, the government was developing a 2025 strategy document to help identify ways to help the sector.

MHRA president Tony Zahra said that “for every up there is a down”.

The island was not going to get any bigger, and perhaps it was time to start directing investors to consider alternative ways of making money than building new hotels.

He urged future planning to ensure there were more ups than downs going forward, and said that while land reclamation could double the island’s landmass, the sector had to keep its feet on the ground.

What did the Deloitte study find? Mr Aloisio said tourist spending across the board had gone up in the first quarter this year, but only “marginally”, by 0.3%.

During the first quarter this year, the number of tourists staying in hotels remained at par with the previous year, although the number of guest nights spent in hotels had dropped by 5.5% – with more tourists opting for accommodation alternatives.

This shift in accommodation patterns was having a negative effect on the hotel industry, the survey found, with bottom-line profitability now at stake.

Both four-star and five-star hotels in Malta were reporting dips in gross operating profits.

Tourists opting for non-traditional accommodation stayed in Malta on average for 9.31 days, up 8.% and almost four days longer than those staying in hotels. 

The dip in tourists opting for hotels naturally impacted occupancy rates, with the average occupancy dropping from 56.9% to 53.6%.

Average room rates were also down, by around 1%, resulting in an overall drop in revenue per room of some 6.3%.

On average, hotels registered a significant drop in gross operating profit per available room.

In this quarter that profitability figure had hit €918, that was €528 lower than in the same period last year, and €986 lower than in 2017.

Alternative accommodation, the report says, was hitting the four-star hotel sector the hardest. Room rates for this sector dropped by 2%.

Restaurants also experience tougher winter

The MHRA conducted a survey among 64 Maltese and Gozitan restaurant owners in collaboration with Deloitte to evaluate their performance during the last winter season, which they said was a “mixed bag”.

Mr Aloisio again gave a warning saying that 52 permits for new restaurants had been issued in 2012, but by 2017 this had shot up to 343.

According to the MHRA, participants reported varying results, with nearly half saying they had declining revenues when compared to the previous winter.

Despite this drop, some areas in Malta managed to register a positive performance. Restaurants in the north central part of Malta and Gozo managed a 3% increase in revenue overall.

On the other hand, coastal areas, Valletta, and southern areas registered a negative trend of 4%, 2%, and 6% respectively.

The MHRA estimates a slight growth in operating costs of 2.3%.

Payroll costs climbed by 5.7%, which the association believes could be linked to the recruitment challenges faced by operators in the sector.

Around 60% of employees in the catering sector are foreigners, the MHRA estimated.

Overall, some 56% claimed to have had an unsatisfactory winter performance. However, almost all participating restaurants remained “upbeat” and were expecting good business for the upcoming summer season.

Source: www.timesofmalta.com
Posted in Local News | Tagged hotels, Malta, Tourism

About the Author

Avatar

Vento

Related Posts

Habitat restoration projects in Comino→

Scottish court upholds Libyan Lockerbie bomber’s conviction→

Hundreds unite to save Dingli trees→

HSBC sparks outrage over newly launched bank charges→

advertisement
  • Posts
  • Comments
  • Tag Cloud
  • Fondazzjoni Kreattività launches ŻiguŻajg Season 2020-2021 under the auspices of Dr Lydia Abela

    21st January 2021 / Vento
  • Woman who allegedly stole laptop from Nancy Pelosi’s office to sell it to Russia investigated by FBI

    21st January 2021 / Vento
  • British to face ban on entering EU under German plan to shut borders – The Times

    21st January 2021 / Vento
  • The Transport Foundation board meets for the first time – Prospective plans for the transport sector discussed

    21st January 2021 / Vento
  • Tension rises between the EU and BioNTech/Pfizer over cuts in vaccine deliveries

    21st January 2021 / Vento
  • Avatar
    Joseph Gatt on The government is committed to supporting Malta’s…Both the Business Start (B…
  • Avatar
    Hindi Lyrics on Nurse death toll from COVID-19 hits the…I have been looking for…
  • Avatar
    Mehfooz Roy on US Presidential Elections: Biden leads polls in…You really think sleepy Joe…
  • Avatar
    Peter Buckley on "It is wrong. It is oppressive of…What she says is patently…
  • Avatar
    Carlos on Hungary and Poland to form rule-of-law institute…The article deals with something…
aviation banking Bitcoin blockchain Boris Johnson BOV brexit business China climate change COVID-19 cryptocurrency Donald Trump ECB economy Education environment EU euro area Europe European Commission European Parliament European Union Eurostat eurozone finance France Germany Government Infrastructure Malta investment Italy lockdown Malta maritime pandemic politics restrictions technology travel UK United States US vaccine WHO

News Calendar

June 2019
M T W T F S S
 12
3456789
10111213141516
17181920212223
24252627282930
« May   Jul »
Footer logo
  • Facebook
  • LinkedIn
  • Twitter
 




 
 
 

Copyright © 2016 MaltaWinds.com

Menu

  • About
  • Home