Island’s image has to improve

by David Kelleher

Five-star hotels could benefit from increased room rates of up to 25 per cent for conference and incentive visitors without losing occupancy levels if the hotel surroundings were improved. Then again, unless the island is upgraded to a compatible standard as five-star hotels, there is a risk that the same room rates will go down by the same percentage.
Speaking to The Malta Business Weekly, Mr Winston Zahra Jr, Operations Director of Island Hotels Group, said that although the island offered excellent accommodation, the country as a whole was lacking in standards.
“We have some of the best hotel facilities in the region, but very little to boast of when it comes to the surrounding areas outside the five-star hotels. Unfortunately, these areas have been neglected and this is having an effect on conference and incentive business,” Mr Zahra said.
More than 250 conferences were held this year in the various five-star hotels and the size of the conferences resulted in the hotels reaching an agreement to host the participants together. Yet, one common complaint is that the surrounding areas look more like a dump.
“Some top businessmen and companies came to Malta this year. They have praised the hotels and the facilities but constantly complained about the surrounding areas. We had conference guests staying at the Radisson and at the Hilton. One guest told me that he would have loved to walk from one hotel to the another but the walk would have been far from pleasant.” Mr Zahra said.
He added that these high profile businessmen frequently met others and discussed the venue for their meetings and conferences.
“One negative comment and we risk losing out. If the surroundings were improved, the five-star hotels would be able to increase their room rates for conference and incentive guests by up to 25 per cent, without going down on occupancy levels. A long as you give someone an excellent product, he/she is willing to pay,”
He said that Malta will win many more conferences on its own merits if it deserved to win them – if Malta is upgraded.
“Without the current five-star bed stock these conferences would not have been attracted to the island. Indeed in the past five years, private industry has invested no less than Lm80m in five-star hotels just in the St George’s Bay area. This figure includes only the open properties and does not include the current expenditure of projects currently being completed, which will total a further estimated Lm30m.
“In addition to this capital investment, these properties inject close to Lm2m a year into the national coffers in the way of VAT, a further Lm8m a year into the economy in the way of wages and salaries and a further Lm7.5m in the way of working capital. The multiplier effect of these figures throughout the economy is substantial to say the least,” Mr Zahra said.
Yet, to what extent has the government encouraged this private investment by looking after the environment in the area? Does St George’s Bay look like the “special product that these special breed of visitors” come to expect? Will these conferences and “special breed of visitors” keep coming back to Malta in the future?
“The answer is simple – definitely not. All the five star hotels in the area get numerous complaints about the shabby state of St George’s Bay and many visitors, of the special breed and otherwise, state that they will not return due to this reason. All the five-star hotels in the area are seriously concerned about the current prevailing situation,” Mr Zahra said.
He said the government needs to do its bit on the upgrading of the environment without further delay.
“All the government needs to allocate to this area in around Lm2m to surface the roads, plant attractive and extensive vegetation, do up the walkways, put in proper street lighting and furniture and then keep the area clean 24 hours a day. If the government does not invest this amount the five star properties could end up with a rate depletion of the same proportion leading to the negative impact on incomes collected through VAT and other downward spiralling effects on rates within all of the hotel segments, five-star and others,” Mr Zahra said.
The private sector, he said, was willing to the work itself if the government did not have the money, but did its part and gave a return through tax incentives, for example.
“Whatever the system used, we cannot delay this work any further,” Mr Zahra said.