Hotels in Malta losing out on tourist nights to rented accommodations

(source: Erick Palacio on Unsplash)

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The number of inbound tourists has been on a steady rise in the first half of 2019 — albeit the growth showing a slowing tendency in the past years — yet taking a thorough look at the number of nights spent by holidaymakers in Malta reveals that hotels are likely to be losing customers to rented accommodations increasingly by the month.

The growing number of inbound tourists, and figures suggesting that holidaymakers are spending more when in Malta paint a rosy picture for the tourism industry as a whole. Nevertheless, a hotelier in Malta will spend more time analysing the number of nights inbound tourists spend in the island nation, which figure might have been of elevating concern for hotel managers lately.

Although the overall number of nights spent by inbound tourists has grown every month in the first half of 2019 as compared to the respective corresponding month in 2018 — with the exception of May where a slight fall was recorded —, according to figures published by the National Statistics Office (NSO), the number of nights spent at rented accommodations — such as Airbnb — have been cutting an increasingly bigger slice of the pie, quite possibly making collective accommodation establishments — in their common name: hotels — losing out on consumers.

The number of nights spent by inbound tourists in collective and rented accommodation establishments. The percentages are rounded and are calculated by Business Malta based on NSO statistics.

The first glimpse taken at the chart above outlines the summer peak season very well. The blue lines stand for collective accommodation establishments, while the red lines stand for rented accommodation establishments, showing the number of nights spent each month in 2019, based on figures published by the NSO in its monthly reports.

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The percentages show the year-on-year changes per month, calculated by Business Malta, as NSO did not calculate changes in some of its monthly reports due to “absolute and percentage changes between one survey estimate and another based on less than 1,500 tourists should be treated with caution.” As such, the figures above might not be exact, but the tendency they signal is an intriguing one.

Rented accommodations cutting bigger night pie

Calculations by Business Malta based on NSO figures show that while hotels have been struggling to increase the number of nights spent by tourists at their premises in the first half of 2019, rented accommodations have been able to sharply increase their take up. Hotels have seen numbers of spent nights falling year-on-year by 10.4% (January), 7% (February), 1% (March), 10.3% (May) and 3% (July), hardly off-set by the growth of 1.1% and 1.98% in April and June, respectively.

Meanwhile, rented accommodations appeared to be striving during the first half of the year. The beginning of the year saw year-on-year growths of 56.4% and 34.7% in January and February, respectively, according to calculations by Business Malta using the figures of NSO, only to be followed by further growths of 12.5% (March), 17% (April), 6.3% (May), 15.3% (June) and 0.04% (July).

Such trends in Malta signalled by the most recent figures appear to be in synchrony with international tendencies. End-2016 research by Morgan Stanley showed that 36% of travellers having loyalty programme membership to established hotels said they had tried Airbnb, compared to 15% of non-loyalty holidaymakers, according to a Quartz report.

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“This is yet another sign of Airbnb’s success in commanding the travel space, as it rolls out additional offerings in order to keep users engaged with the platform beyond one-off bookings. Airbnb is stealing hotel chains’ most valuable customers,” the Business Insider concluded in its report at the end of 2016.

Upon quick research into accommodations available in Malta on Airbnb’s platform — although the significant majority of the availabilities range from €9 to €262 per night with an average of €91 — one can find luxury villas with private swimming pools in picturesque settings available for €300-€1,000+ per night for 4-16 guests in October, maintaining the probability of stealing consumers from luxury or other high-end hotels.

Whether the figures above signal the beginning of changing consumer habits or just a haphazard fad is hard to tell for the time being. Nevertheless, with Malta seeing new boutique hotels recently added to and renovations being carried out at its shores, collective accommodation establishments might well feel disruption by the so-called sharing economy — a system where assets or services are shared between private individuals utilising the internet, and increasingly: quickly responding and easy-to-use mobile applications.

More tourists spending more money

During the first half of the year, the number of inbound tourists arriving in Malta was on an increase, albeit the peak season not appearing to stand out as compared to March and April. Still, the number of inbound tourists has been on the increase in recent years, up by 14.3% to 2.6 million in 2018, as compared to the preceding year.

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Starting from an estimated 127,723 in January, in July 305,588 holidaymakers are thought to have arrived in Malta. Both June and July saw the biggest year-on-year increase; more than 5%, respectively.

The estimated number of inbound tourists totals slightly more than 1.5 million by the end of July. All eyes are on the second half of the year in anticipation whether last year’s 2.6 million can be topped, nearing the glass ceiling of 3 million. These figures compare to the approximately 460,000 population of Malta.

Expenditures by tourists arriving in the island nation have been on a steep climb in the first half of the year, too, with July peaking the per month expenditure in 2019 so far.

January’s estimated monthly expenditure of €84.7m reached €285.0m in July. This spurred the total estimated amount of expenditures in Malta in the first half of the year to peak above €1.2b.

As expenditures by inbound tourists exceeded €2.1b in 2018, the H1 figures for this year appear to be strong enough to fuel further optimism in the tourism sector as 2019 readies for the second half of the year and the post-summer season.

EDITORIAL NOTE: The present article is based on figures published by Malta’s National Statistic Office (NSO). Publications used in the present article are of Inbound Tourism in 2019 for January, February, March, April, May, June and July.