Hotel bed occupancy shows a significant drop

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Malta's tourism industry struggling - MHRAThe Malta Hotels and Restaurants Association have announced the details in the BOV MHRA Hotel Survey by Deloitte for the first quarter of the year. MHRA President, Mr Kevin De Cesare’s reported that the results for the first quarter of 2009 were very poor and were even worse than the negative results registered in the last quarter of 2008.

Mr De Cesare believes that the industry’s performance was adversely impacted by both the international slow down in international demand as a result of the global economic crises and the drop in available seat capacity to the island over the winter months.

The decrease in arrivals and guest nights led to a significant drop in achieved occupancy rates in all the three main category of hotels, with the 3 and 5 star categories being worst hit.

In addition to the impact of an 8.7% increase in room-stock availability, 5 star hotel occupancy levels were also negatively impacted by a 34.8% drop in CIT business which is usually a major source of business for 5 star hotels in the winter and shoulder months. The lower occupancy levels in the 3 and 4 star category are closely linked to the 28.7% decrease in package and tour operator holidays. Lower demand and an evidently shorter lead time have both contributed to increased pressure on room rates and all three hotel categories registered a decline in average achieved room rate.

The combined impact of the lower occupancy rates and lower achieved room rates resulted in substantial reductions in total revenue per available room in both the 3 and 5 star categories. The reduction in revenue would have been significantly greater had it not been for an improved food and beverage spend.

Notwithstanding the evident desperate cost cutting initiatives undertaken by most hotels, Gross Operating Losses for the quarter increased significantly in all 3 hotel categories.

Mr De Cesare concluded that, “I believe that it would be foolish to console ourselves by the fact that the decline in tourism performance in many other countries has been much worse than ours or to accept that against a backdrop of a severe global economic recession we should be limited to a ‘damage limitation’ strategy.”

The MHRA said that they believe that a significant part of the decline in Q1 was attributable to the 10.7% decline in available seat capacity and that the negative trend cannot be improved unless seat capacity is increased in a structured and sustainable manner which reflects the changes in travelling patterns.

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