Tourism Patchwork

16^th April 2006

The Malta Independent on Sunday

Government seemed rather surprised that following a top level meeting with the MHRA and other key operators in the tourism industry where the Prime Minister announced a set of measures meant to give an immediate lift to the tourism industry, the business associations concerned soon issued a statement claiming the measures were too little too late.

In a way this typifies the difference between the vantage point of politicians and business managers.

Politicians generally seek quick fix solutions. All decisions are meant to deliver their benefits within a specified time frame and as the election start getting visible on the horizon such time frames tend shorten unrealistically. It is one reason why I maintain that in a country like ours where the political schools are divided right down the middle, a government can only do what’s right and what’s necessary in the first half of a legislature. In the second half what is politically convenient gains overall priority.

Business managers on the other hand are free from such pressures – although in case of publicly quoted companies who report their financial fortunes on a regular basis such short term-ism to keep on the good side of investors is not unknown – and can take business decisions that are expected to deliver what’s good and what’s necessary within realistic time frames. They also realize that in applying curative measures to address identified problems, things may have to get worse before they can get better.

So whilst politicians seem to expect gratitude and praise for first aid measures which could give some temporary respite to tourism operators but cannot be expected to address the real underlying problems, business managers in tourism cannot but see such measures for the temporary respite they really are.

In a way this is the same problem that Berlusconi has in coming to terms with the election defeat he suffered in the Italian general elections of April 9^th and 10^th. Berlusconi is a hybrid businessman turned politician and he himself has problems in distinguishing between the two roles. His trying to run the country like a business fiefdom has not delivered for his political fortunes. He lost the elections even though he has to be credited with giving Italy its first full term government bringing political stability. He also deserves some credit for having started to address Italy’s real underlying problems even though at best the results are still in the pipeline.

Belusconi spent precious time in government trying to protect his personal interests with legislation that on more than one occasion had to be returned for parliament’s reconsideration by the President of the Italian Republic. He spent too much of the political capital from his 2001 election victory on personal agenda matters in the first half of the legislature when he really needed to spend such capital on restructuring measures he started taking in the second half and are still works-in-progress.

In refusing to accept the verdict of the Italian electorate Berlusconi is making the biggest mistake that politicians quite often make, i.e. that of expecting gratitude from their electorate. His behaviour in the election campaign as opinion polls showed him consistently trailing the centre-left grouping led by Professor Prodi was one of disbelieve and frustration. This made him loose the cool that politicians should preserve at all cost. In the election campaign Berlusconi behaved more like a short-tempered business leader rather than a statesman seeking a mandate to take the country forward. Given the narrow margin of his loss this temperamental behavior could well have made the difference.

If he can set personal ego aside Berlusconi should feel proud that his stint in politics has started a process of change which if continued will render the Italian economy flexible and competitive. He ought to move back with pride to the business world that is much more suited for his characteristics. He can turn his business empire in a global leader.

Reverting to our home problems with our core tourism industry, politicians need to understand that patchwork will be short-lived and nothing short of a re-invention of our tourist industry can guarantee growth at rates we have last seen in the nineties.

We need to decide in which market segment we have what it takes to compete successfully and then prepare a total solution to re-position ourselves to exploit the identified segment. There is no single issue which can fix our tourism industry. Golf courses on their own will not work. No frills airlines on their own will not deliver. Not even if we double or treble our advertising budget, it will not solve our problems.

On the contrary if we go by the business maxim that good advertising kills a bad product faster then we should perhaps be wary of too much advertising before we can bring our product up to scratch.

What we need is a holistic solution premised on the absolute necessity to offer a quality value-laden product to our tourists. We cannot have five-star hotel accommodation co-existing with two star hard and soft infrastructures.

When I see true liberalization in areas that are still suffocating our tourism, like our taxi and transport services than I will start believing we really mean business. When I can walk into Valletta without having to negotiate my life with a handful of bus drivers then I will start believing that we really care about our tourism.

Until then we seem condemned for quick fixes which are neither here nor there and which constrain to continue reducing our price in order to continue competing in a market segment where we no longer have what it takes to compete. Result is unsatisfied tourists who are not likely to return or to encourage others to visit, low profits for operators and little or no growth for the industry in general which will have to continue relying on students packed