Friday, 24 March 2006

Tourism Washout

24th March 2006
The Malta Independent - Friday Wisdom

This week, operators in the tourism industry could take it no more. Suffering under the pain of a very bad winter, the meeting called by the Malta Hotels and Restaurants Association to announce the results of the quarterly research study exploded into a chorus of complaints against the complacency of the authorities in the faces of a crisis developing in our major industry.

Tourism is our bread and butter. It is difficult for statistical reports regarding economic growth to impress public opinion, unless tourism is a major participant and contributor to such growth. Tourism has the advantage of not only generating growth, but it distributes such growth widely so that the benefits are instantly felt. Per contra stagnation or outright contraction produce gloom and despair by express delivery.

The editor will permit me to re-produce the bulk of a contribution I had penned in this column just six months ago, exactly on 23 September, under the title “Re-inventing our tourism”. Given the events of this week, I feel it is worth re-reading and some further reflection.

“Just examine the following two facts. Firstly, we have what it takes to make a success in tourism and it should remain our major economic pillar generating growth capturing 50 per cent of our entire GDP.

Secondly, we have not been going anywhere with tourism for the last 10 years being jammed in terms of number of visitors, bed nights and earnings in spite of huge investment in hotel configuration made by the private sector.

So what are we doing wrong? It is quintessentially important to get a correct answer to this question before making big strategic decisions both regarding re-branding which the MTA is in the course of doing and before deciding on the terms being demanded by the low-cost airlines in order to generate the volume growth we are missing.

What we have been doing wrong is that we have been trying to be everything to everybody rather than accept who we really are and then research and access the markets that can be expected to buy into what we are and what we can offer.

The latest fad of the golf course is yet just another example of our determination to deform ourselves to ensure we have something to offer to everybody lest we miss out on anything. End result is that we are missing on most.

I have been saying it with increasing conviction that our most promising role in tourism is to position ourselves as the ideal location for a short break, three, maybe four-day holiday. Our marketing message should be “nowhere else in the world can you see what you see in
Malta in three days”.

This marketing strategy builds on the three advantages, which nature and history have endowed us with. It builds on our geographical location in the centre of the Mediterranean not more than three hours flight away from most European cities – so near and yet, so different. It builds on our small size, which enables tourists to make the most from a short break visit. And it builds on our rich and varied history left behind over the millennia by the various civilisations that found it in their interest to occupy these islands.

Would such a strategy fit with international trends in tourism? Obviously, it would be much more difficult to go against the grain than it would be if the strategy can have a tailwind from international tourism fashion trends. There is no doubt that the strategy I propose is moving along the grain.

Many people would choose more exotic locations for their long main holiday. So much to see in the world, it hardly makes sense to be trapped for some two weeks on a densely populated island without any hinterland to go to. But apart from their main holiday, people are taking a series of shorter breaks. Working life has become too stressful to wait 12 months between one holiday and another.

And it is here where we have a comparative advantage. If we succeed in this market we can have all-year-round tourism with visitors here on short breaks whom it should be fairly easy to impress.

Our pre-historic temples, our harbours and the unique architecture of Valletta and the three cities, the mystic feeling of Mdina and the heart-warming scenery of Gozo are ingredients rich enough to make a short break holiday more memorable than any other location within a three-hour flight radius from most European cities.

This strategy can only succeed however if there is the necessary flight infrastructure. Firstly, there must be regular direct flights from a wide array of regional airports. Modern travellers tend to avoid major city airports for regional flights, as they are inconvenient, expensive and over-crowded. Regional airports are often closer to home, cheaper to go through and cheaper to fly from.

Secondly, the flight infrastructure must include low cost no frills flight content in the overall package. The shorter the holiday, the higher the relative content of the travelling cost and therefore the more important to provide low cost no frills airline services.

One should not run away with the idea that only “no frills” airlines are being sought only by low-class tourists. The business model is changing. The internet is giving the consumer the power and facility to compare prices with relative ease and in a flash following a few mouse clicks. Nobody likes to spend more if the same or sometimes better service is available for less.

The internet is changing customers’ behaviour and those companies that do not adjust their business model to take account of it are heading for extinction.

It is no longer the case that Malta tourism is dependent on Air Malta. That was 30 years ago, 20 years ago and maybe 10 years ago – but now it’s different. Air Malta does not have what it takes to operate a wide array of regular services from regional airports and its cost structures do not permit it to make an economic return by competing in the no frills sector.”

Tourism has great potential and so does Air
Malta if it can re-design its business model. But it is no longer the case that what is good for Air Malta is good for tourism and sacrificing the wider interest of such an important sector to defend the narrow interest of the national airline makes as much sense as including Maradona in Argentina’s world cup team.

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