In a recent Times of Malta Business Breakfast, Mr Alfred Pisani, Corinthia’s Executive Chairman, delivered a talk about how Malta should respond holistically to the present challenges within the tourism industry and the Island’s need to concentrate on and attract higher spending tourists.
Insider Plus felt it important to reproduce his well-articulated and convincing speech for our readers, who, I am sure, will appreciate the clear arguments put forward.
“The challenges the tourist industry is facing today are different from those faced over the past two years. This is quite ironic. Then, we did not have the guests; on the other hand, today, we have a shortage of personnel seeking to work in our industry, a shortage of connectivity flights to Malta plus lack of regulations for the tourist rental business competing with our hotels, and last but most important, lack of quality tourism. These challenges need to be addressed through a holistic strategic approach. Both the tourism industry and Government have the important role to face these challenges and find solutions.
I am not one who normally expresses my opinions publicly as I have spent my whole life totally dedicated to building the Corinthia Group, giving me very little time for anything else. I suppose I can say with confidence that I am the longest serving person in the hotel industry. Corinthia started with the opening of the Corinthia Restaurant in 1962, leading to the opening of our first hotel in 1968. This gives me an overview that spreads over 60 years, experiencing how tourism has developed in Malta.
Following independence in 1964, the Island went all out to diversify its economy from one totally dependent on the British services to a drive to develop industry, commerce and tourism which was the beginning of Malta’s growth as an independent nation, a growth that has developed over these many years to a platform that we see around us today.
The plan at the time, that is in 1964 when we acquired independence, was to attract the higher spending tourist and I remember so well when several hotels opened in 1967 and 1968, namely the Hilton, the Cavalieri and the Dragonara together with the Corinthia Hotel in Attard. Malta at the time was featured as a new discovery, selling its charm and the hospitality of its people whilst also enjoying a number of special attractions like Valletta, Mdina, our beautiful natural harbour and a number of historical sites like the Neolithic temples, the Hypogeum and more, all set on a small island in the beautiful Mediterranean.
One must remember that in those days, at the beginning of our tourist industry, our visitors were exclusively British, having been a colony for 164 years. Also, it used to take people some 6/7 hours to travel to Malta, having to make a stop for refuelling at either Nice, Sardinia or Rome. In a fashion, Malta was looked at as a faraway destination, no less than what the Far East is looked at today. I must say that at that time we were attracting the upper strata tourist, which in my view had more than just a financial benefit in that we were seeing people of certain standards which was undoubtedly an added benefit to our education.
Much water has passed beneath the bridge since those days, and with the introduction of chartered flights, which eventually became budget airlines, we experienced a big surge in numbers, no less to what was happening in other destinations in the Mediterranean, particularly in Spain.
However, over the years, the tourism impact on the big destinations, the likes of Spain and others, one will note that these countries, took a strategic direction by allocating dedicated areas for the different budgets of the visiting tourist. What’s appropriate and possible for large countries like France, Spain and Italy is not necessarily applicable for Malta as we always remain limited by the size of this Island and the capacity of the number of visitors we can take at any one time.
So to my mind, if one went shopping and had the choice of taking only one handful of three available products, gold, silver or bronze, I am sure that being limited to one handful, we would all go for the gold. This is not different to what I believe should be the direction of our tourism in Malta, where because of our size and limited resources, we should aim for the higher spending clients and in turn limit the number of tourist coming to Malta.
However, and most important, we should give priority to the quality of our service and product, and ultimately the general environment of our island. It is not merely an issue of charging higher rates, but concurrently providing the best service and product which the high net-worth tourist will expect. We must aim to raise the image of our Island and the all-round standards of our hotels, our restaurants and all the supporting services to a level that still gives value for money.
It must be recognised that over the years many improvements have been carried out to our island. This can be seen in how our capital city Valletta has improved over the years to the jewel that we see today, no less to what was done to Mdina some years back. Two towns which are quite unique in the world. We also have the Grand Harbour, the Three Cities and the wealth of other historical and cultural jewels which can be found on our island. It is quite unique that in Malta one can travel through 7,000 years of history from our neolithic temples to the Knights of St John to today’s culture in just one day. This is not necessarily found elsewhere within Europe. Furthermore, of great importance, is that this wealth of heritage is all enshrined in a destination that is safe and with a population that traditionally has been very welcoming and hospitable.
In parallel, it is important for us to note what’s happening around us in the Mediterranean, where several destinations have, for some years now, succeeded in improving their product and in turn attracting the higher spending visitors, where the rate of their 3-star hotels is higher than the present rate of our 5-star hotels in Malta. This to me is saddening and unacceptable. We are not valuing what we have and what we need to provide to achieve an image of a special destination, offering a top product within an island of cleanliness, placing us as the best in the Mediterranean. We must, over a period of 5 to 7 years, plan out a road map how to reach this target when ultimately, the interest to visit our island is based on the high standard provided all round, together with our unique attractions.
I do not think we need a mathematician to appreciate that we would rather have a 100 people spending €500 a day, than having 500 people spending a €100 a day. The more numbers we have, the bigger the pressure on our infrastructure, creating more congestion and lowering the quality of life as a result of all this overcrowding.
Another very important consideration is that Malta has overemployment which means that in order to service a higher number of visitors, we would likewise need to bring in additional labour, which in this case can only come from abroad. I calculate that for every 100,000 additional tourists, we need at least 10,000 employees to support the additional services we must give in our hotels, restaurants, the airport and all that goes with it.
An additional 10,000 workers need accommodation and all the supporting services of electricity, water etc, creating further pressure on our infrastructure together with congestion. Likewise, the additional tourists, whether spending €500 or €100 a night, are both consuming the same amount of water and electricity, which, with higher number of tourists, will likewise increase additional pressure on our infrastructure. We need to seriously understand these concerns and implications and change our direction to improve our product all round, allowing us to charge higher rates, be it in our 3-star, 4-star and 5-star, whilst limiting further increase of tourists to our island. Higher rates will in turn give us higher revenues and profitability, enabling us to support better wages and salaries in our industry. Only by offering higher wages can the tourist industry be able to attract local employees rather than having to always resort elsewhere.
We must also acknowledge the reality of rising costs. Such increase in costs will stay with us for a long time and surely, we will never return to previous levels. We may ask ourselves how is it that our electricity bills and fuel have not increased. The answer is simple: currently, such increases in cost are being absorbed by the Nation through a growing deficit. Eventually, we will need to face reality and accept the true cost for energy and in turn pass these additional costs to the visiting tourist. Without raising our room rates, more so if the energy costs are increased, it would not be possible for our industry to operate profitably.
I wonder for how long it will be possible for the Nation to continue subsidising the fuel and electricity, as sooner or later this becomes unsustainable and we will be forced to face reality. The present subsidies in fuel and electricity are in turn subsidising the cost of a holiday for the tourist visiting our island. We must keepin mid that the future for the lower-spending tourist, in the light of rising costs, will mean less visitors of this category. This impact will surely be visible within a year. On the other hand, the high-net income visitor will still become more affluent and continue to travel with the same frequency, immaterial of the cost of the holiday. The primary consideration of the high net-income tourist is quality, and more quality in the products and the services being offered.
To many, the afore-mentioned induced changes in our tourism markets might appear as a challenge or even a risk. To me, such changes could be an opportunity to go upmarket. We need to embrace a new upmarket vision and strategy for our industry. And an action plan that will take us there. In this regard, positive action and timely decisions on the way forward are required.
My closing thought on this matter is that it is becoming even more urgent that we shape our future with a slogan that ‘we must be the best’, offering the highest standards in all the services we provide, and ultimately take our rightful share of the higher spending visitor, aiming to achieve average rates of at least €500 and more for the 5-star, €350 for the 4-star and so on.
The result of achieving these targets will mean higher profitability, higher wages and higher salaries and a much lesser pressure on our infrastructure. This is within our reach, and it is all of us, who have to make it happen. We must set a plan to improve all our standards, which can undoubtdly be achieved once the industry, together with Government, sets out a plan over a period of time, aiming to achieve such goals. No matter what, we must do what it takes. Every member of the community must give his share of effort, be it the housekeeper or the manager and all enshrined within the Maltese character of hospitality, ultimately placing Malta on a pedestal where no other country could possibly compete.
We must believe in ourselves, open our eyes, and move forward on this plan. We must take charge of our future, act strategically and implement the actions necessary to achieve our goals. Together we will succeed. We, at Corinthia, are determined to contribute positively to this way forward. As a perennial leader in our sector, we are once again prepared to take the lead to contribute to and implement this strategy. Therefore, a first roundtable discussion for industry stakeholders could be organised to develop further our thinking on the matter. It could be the first step to formulate an action plan to turn Malta as a “best in class” destination.
It is a wonder how an island with no natural resources has succeeded in reaching where we have reached today, giving us the strength and belief in ourselves to further continue on the road of upgrading our attitudes and our product and making our island the jewel of the Mediterranean.
Our country is a success story. Let’s continue to aim high and invest further in our continued success. Together we can and will make it. “