Transcript Tourisim - E-Cubed Consultants

The Contribution of the
Tourism Industry to the
Maltese Economy in 2014
Report Prepared for the
Ministry for Tourism
April 2015
Dr Gordon Cordina
The Maltese Economy in 2014
189,000 Full-Time Equivalent Jobs
Recreation incl.
gaming
3%
Other
5%
Agriculture
2%
Sectors with a major direct impact
from Tourism Expenditure account
for 31% of total employment
Manufacturing
11%
Construction
5%
Whole and Retail
15%
Tourism
Public Admin, Educ
expenditure has
& Health
minor (as
26%
measured
statistically) direct
impacts on other
sectors such as
education, health
and real estate
Transport
5%
Professional
Services
12%
Accom and Food
8%
Financial Services ICT
3%
5%
Direct Effects of €1.5bn Tourism Expenditure
Transport
Sector
Turnover:
€1.3bn
Wholesale
and
Retail
Sector
Turnover:
Recreation
Gaming
Sector
Turnover:
Accom
andincl.
Food
Sector
Turnover:
€0.9bn
€1.2bn
€2.2bn
Tourism
5%
Other
26%
Other
Other
Other
77%
75%
95%
Tourism
Tourism
23%
25%
Tourism
74%
Direct Effects of €1.5bn Tourism Expenditure
Contribution to Job Creation
FTE Jobs Directly Created by Tourism
Expenditure
Total: 20,500 jobs
12,000
10,895
10,000
8,000
6,963
Tourism
(Direct)
, 11%
Other, 89%
6,000
4,000
2,366
2,000
Whole and Retail
Transport
Every €10m tourism expenditure
sustains 137 jobs
333
Every 10,000 tourists sustain 121
Accom and Foodjobs
Recreation incl.
Potential of furthergaming
job creation
through input-output effects
An illustration of Potential Input-Output Effects with
other economic sectors
Intermediate
Consumption
Sectors with
(Purchases of
important Tourism
goods and
contribution
services from
other firms, net of
utilities)* (€m)
Estimated
An estimated 7,300 jobs are created
Intermediate
Net expenditure through
by tourism
Consumption
Estimated Job
purchases of operators, in addition
Attributable to
Creation*
to the(€m)
20,500 estimated direct jobs
Tourism*
This can be extrapolated through
further expenditure rounds
Accommodation
and Food
550
Transport
800
Wholesale and
Retail
450
110
1,200
Total
1,800
700
7,300
410
4,200
Further
is required for
180 detailed data
1,900
more precise estimates
*author’s estimates
Growth in International Tourists in 2014
1,800,000
1,600,000,000
Expenditure by International Tourists
International Tourist Arrivals
International tourist arrivals
increased by 107,656 (7%)
1,700,000
1,500,000,000
1,600,000
Euro (€)
Persons
1,400,000,000
1,500,000
1,300,000,000
1,400,000
1,300,000
Expenditure
1,200,000,000
by international
tourists rose by €88.4 million
1,200,000
1,100,000,000 (6.1%)
1,100,000
This was the main driver for
2013
growth of the industry in2013
2014
1,000,000,000
1,000,000
2014
2014
Effects of 6.1% growth in Tourist Expenditure in 2014
Total: 500 jobs
Around 10% of growth
in private sector jobs 600
Recreation
Accom & Food
Additional Job
Creation in 2014
Every €10m increase in
tourism expenditure
created 67 additional jobs
500
400
261
Every 10,000 extra tourists
created 57 additional jobs
300
Transport
Whole and Retail
200
100
0
185
Potential of further job
creation through
multiplier effects
Summary Benchmark
Indicators over the Medium
Term
A Medium Term Perspective of Growth
Headline Indicators
(2010=100)
140
135
130
125
120
Indicators of activity show
sustained growth in excess of
that of the overall economy
Expenditure
Employment growth staged a
recovery in 2014
Arrivals
Nights
115
Real GDP
110
Employment
105
100
2010
2011
2012
2013
2014
Headline Performance Benchmark Against Other
Mediterranean Destinations
Growth in Tourist Arrivals (2014)
8.0%
7.0%
6.0%
Malta gained market
share in 2014 relative
to other Med
destinations in peak
and off-peak business
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Malta
Peak Growth
Other Med Destinations
Off-Peak Growth
Headline Benchmarks of Share in Source Markets
Developments in Shares in Selected Main Source Markets (2014)
15.0%
Outbound
tourism in major
selected source
markets was on
average flat in
2014…
10.0%
5.0%
0.0%
…but arrivals to
Malta from these
markets rose by
an average of 6%
-5.0%
-10.0%
-15.0%
UK
DE
IT
Outbound Tourism Growth
AU
IE
Growth in Malta Arrivals
Average
A Snapshot of Nights and Expenditure by Market
AnalysisAnalysis
of Nights
of and
Nights
Growth
and Expenditure
in Number of
per
Nights
Night
4,500,000
4,500,000
25.0 170
4,000,000
4,000,000
20.0
2,500,000
2,500,000
Nights
Nights
3,000,000
3,000,000
2,000,000
2,000,000
1,500,000
1,500,000
1,000,000
1,000,000
500,000500,000
0
0
Expenditure per night
Growth in Number of nights (2014)
15.0
160
Growth in Number of Nights
Expenditure per night (€)
3,500,000
3,500,000
Number of Nights
10.0 150
5.0
0.0
140
-5.0 130
-10.0120
Number of nights
-15.0
-20.0110
-25.0100
Expenditure per
night tends to be
lower for the
larger tourism
markets…
…while growth
potential is
concentrated in
the smallest and
largest source
markets
Drivers of Tourism Activity in
Malta in 2014
Definitions
Inbound Tourism: Activities of non-resident
visitors within the country of reference on inbound
tourism trips
Visitors: tourist or same day visitor, on a trip to a
place other than the usual environment, thus
including cruise line passengers and crew
Domestic tourism: particularly with respect to stays
by Maltese residents in collective or private rented
accommodation, especially in Gozo
Performance Indicators – Nights and Expenditure 2014
Total nights
14,000,000
13,500,000
Total nights spent by international
tourists increased by 5%
13,000,000
The average
length of stay remained
12,500,000 stable at around 8 days
Per capita expenditure
12,000,000
dropped
marginally to €904
11,500,000
Expenditure per night increased by
11,000,000
1.2% to €113
10,500,000
10,000,000
2013
2014
Composition of Expenditure - 2014
TOTAL EXPENDITURE BY TOURISTS IN 2014
Shopping Other
2%
6%
Recreation
5%
Transport
4%
Total Package
37%
Food and drink
18%
Accommodation
15%
Flight
13%
Package
expenditure
maintained its
share within
total activity in
2014
Seasonality of Tourism Activity - 2014
Total Expenditure by International Tourists
300,000
82.8% 87.2%
250,000
Hotel
Occupancy
2013 2014
€'000
200,000
150,000
52.3% 55.5%
100,000
50,000
-
Season
Peak
Off-peak
Per Capita Expenditure
2013
2014
981.50
969.78 2.4% reduction in length of stay
762.65
769.78 Better room rates/spending
2013
2014
Seasonality of Tourism Activity - 2014
Tourist
TotalExpenditure
Nights
Tourist
Arrivals
1,800,000
16,000,000
1,800,000
indicating progress in overcoming
seasonality
32.5%
27.7%
30.6%
32.5%
27.2%
30.1%
Number
Persons
€'000
1,600,000
1,600,000
14,000,000
1,400,000
1,400,000
12,000,000
1,200,000
1,200,000
10,000,000
1,000,000
1,000,000
8,000,000
800,000
800,000
6,000,000
600,000
600,000
4,000,000
400,000
400,000
200,000
2,000,000
200,000
-
But the share of nights and spend
increased in the off-peak season
The share of off-peak arrivals
was unchanged in 2014
2013
2013
2013
Peak
Peak
Peak
Off-peak
Off-peak
Off-peak
2014
2014
2014
Drivers of tourism activity in 2014 – the Med context
Growth
in Mediterranean
Destinations 2014
Changes in Tourist
Arrivals
(2014)
14%
Other
United Kingdom
Italy
12%
France
Scandinavia
10%
Netherlands
Switzerland
USA
8%
Belgium
Austria
6%
Ireland
Libya
Germany
4%
Russia
Spain
2%
-20,000
0%
…and a significant diversification into other
markets (longer haul/stay/expenditure)
…compensated by growth in
traditional markets
…but was affected by shocks to Libyan,
Russian and specific EU markets
0
20,000
40,000
Malta performed well in a Mediterranean context…
60,000
Drivers of tourism activity in 2014 – Connectivity
Distribution of 2014 Increase in Tourists by
Distribution of Arrivals by Airport
Airport
60000
5%
Gatwick
Frankfurt
Fiumicino
Heathrow
Manchester
50000
27%
and for 80% of the
increase in 2014
40000
Top 5
Next 5
30000
Next 5
20000
Next 60
46%
Others
10000
13%
0
Top 5
Next 5
Next 59%
All Others
15
account for
Asairports
top airports
approach
50% of passenger
flight
capacity limits,
movements
further diversification
could be needed
Cruise Visitors
Country
France
Germany
Italy
Spain
United Kingdom
Australia
Canada
Japan
United States
Other
Total/Average
Total Spend (€m)
2014
2.94
4.36
2.73
0.36
2.33
0.84
0.79
0.10
3.00
4.22
21.67
2013
1.95
5.11
3.26
0.82
2.46
0.62
0.56
0.13
2.83
3.41
21.16
Visitors include an estimate for crew members
Source: Valletta Cruise Port
Visitors
Change
0.99
(0.75)
(0.53)
(0.46)
(0.13)
0.22
0.23
(0.03)
0.17
0.82
0.51
2014
80,815
123,916
80,815
10,775
75,427
16,163
16,163
5,388
48,489
80,815
538,766
2013
48,485
96,971
77,577
24,243
96,971
9,697
14,546
4,849
48,485
72,728
494,551
Per capita Spend
(€)
(€m)
2014
2013
36.33
40.19
35.19
52.66
33.82
42.06
33.26
33.91
30.95
25.40
51.82
63.89
48.87
38.78
18.81
27.50
61.88
58.44
52.25
46.84
40.23 43.64
It is estimated
that cruise line
operators in
addition
spend
between
€40m and
€60m on
supplies and
services
Potential for
home-porting
and overnight
stays by cruise
passengers
can be further
exploited
Domestic Tourism: Maltese Tourists and Visitors to Gozo
Outbound (Maltese)
2.3 million Passengers on Ferry Crossings (2014) tourists /visitors
amounted to 430,000 in
The expenditure by
377,630
2014- up by 5% over 2013
377,630 Maltese
tourists and visitors in
Gozo is estimated at
944,290
€28 million in 2014
520,000
As passengers increased by 124,000 of
which one half were international,
domestic tourism is estimated to have
grown by around 5%479,600
in 2014
International tourists/visitors
Gozitans (Other)
Domestic tourism has
Gozitans (Work)
other facets which may
Maltese tourists/visitors
further develop in future
The Regional Perspective: The Contribution of Tourism
Industry to the Economy of Gozo
Estimated Expenditure in
Gozo (2014)
200
180
Domestic
27.94
160
Tourism industry expenditure
is estimated to amount to just
under 50% of Gozo GDP
6,900 Private Sector Jobs in Gozo
International Longer Stay
€million
140
120
100
80
Other private sector
122.22
International Day Trippers
Real Estate
40
20
-
Transport
Food & Accom
60
International One Night Stay
Whole and Retail
33.28
Recreation
The tourism industry
is
This is close
to 20% of30%
totalof
estimated
to generate
employment
in Gozo
private
sector employment
Selected Aspects of the
Contribution of Tourism to the
Maltese Economy in 2014
Accommodation Sector Profitability and Wages
Change in Gross operating profit per available room (2014)
Improved profitability
permeated the entire
sector, including lower
categories, indicating
better quality tourism
2500
Average Annual Salary by Economic Sector (2014)
+17%
Information and
communication
+17%
2000 Public administration, education…
Average wages in
the industry are
among lowest in
economy…
Euro (€)
Professional activities
1500
Manufacturing
Construction
1000
…but they
increased by 3.4%
in 2014 compared
to 2.3% overall
Other services
Agriculture
500
W&R, Tranport, Accom & Food
0
0
5 star
+47%
5000 10000 15000 20000 25000
4 star
3 star
Source: MHRA and author estimates
Enhancing Human Capital
A large
18% proportion of
part-time workers
16%
within the sector
14%
in comparison to
12%
the other sectors
10%
of the economy
8%Relatively high
number of
expatriates in
4%
lower-skilled jobs
6%
Student enrolled
as % of
Proportion
of FTE
Full-time to Full-time equivalent employees
The majority of
100%
students are less
than 20 years of age
90%
80%
70%
More males at
vocational level –
trend reversed for
higher level courses
60%
50%
40%
30%
20%
Only 27% of
students at MQF
level 5 or higher
10%
0%
2%
0%
Economy (Total)
Source: Education Statistics, NSO
Number of Tourism
Studies students is
Accommodation and Food
low compared to
Source: Gainfully Occupied Population
workforce
Source: National Statistics Office
Hotel Bedstock and Non-Collective Accommodation
Nights Spent by Type of
Accommodation
Average Bed Places
Bed Places
The
availability of Occupancy Rates
16,000,000 45,000
44000
hotel bed-stock
62.8%
14,000,000 40,000 59.6% 42000
followed seasonal
4,347
12,000,000
patterns35,000
for
40000
refurbishment
10,000,000
30,000
38000 10,936
and
reinvestment
8,000,000
25,000
6,000,000 20,000
4,000,000 15,000
4,408
11,092
36000
34000
17,034
32000
34.4%
2,000,000 10,000 33.1%
30000
0 5,000
Jan Feb Mar
6,972
2013
2014
Collective accommodation
2013
Private accommodation
Apr
Other
3 star
Growth of
private4 star
5 star
16,410 accommodation
is creating
opportunities
May Jun
Jul
Aug Sep Oct
6,786
for better
2013
2014
regulation and
2014
compliance
2014 saw
consolidation in
lower categories
of bedstock with
restructuring and
Nov Dec
investment
potential in the
upper categories
EU Funds 2007-2013
Operational Objectives – OP 1 PA 2
Initiatives
PA 2 Projects
Financial allocation: €120 m of which €102 m are Community Funding
Beneficiary
€ Committed
of
Restoration Department
Support the upgrading of the tourism Restoration
Product& Rehab
Development
Historical Fortifications
product
Fort St. Elmo Heritage Grand Harbour Regeneration Corporation
Niche
Market Development and Branding
Experience
Promote the Maltese Islands as a
Tourism Zone Upgrade
Malta Tourism Authority
prime and diverse tourist destination Aid
Schemes to Tourism
/ Cultural
Undertakings
Grant Scheme for
Various
Sustainable Tourism
Improve the competitiveness of
Projects by Enterprises
tourism and culture operators
€ 34,435,454
€ 15,345,000
€ 14,004,463
€ 8,945,209
97% of funds allocated have been
committed, for a total of €116.4m
Other
Various
€ 43,702,949
PA 2 is absorbing 14% of OP1 funds
Total
Various
€ 116,433,075
New opportunities need to be reaped (Blue Economy, Social Funds, etc)
Tourist Arrivals in 2015 and
2016: Indications of Demand
Potential
Main Determinants of International Tourist Arrivals
Economic Growth/Spending Power in Source Countries
Price Competitiveness/Exchange Rates
This factor is less relevant in
the context of the weak euro
Connectivity: availability of flights
Market specific conditions/actions of tour operators
International marketing/promotional efforts by Malta
Political developments in source countries
Perceptions regarding security in Mediterranean
Scenario Analyses
The Importance of Economic Growth in the Short Run
Arrivals from UK, FR, BE,NL
and CH have a strong
positive correlation with
economic growth
IT, ES, IE, AU, DE and
Scandinavian arrivals show
Correlations show balance of probabilities regarding effects relevant
term with
littleinorthe
noshort
correlation
economic
growth
Weak correlations to economic growth indicate other more relevant factors
in the
short term
Tourist Arrivals and Economic Growth
Tourist
(2014)
Libya,
RussiaArrivals
and Other
Markets
350,000
43% of arrivals have
strong positive correlation
300,000
with economic growth
Strong growth in other 250,000
36% are of arrivals are
markets can continue
more strongly influenced
200,000
due to economic,
by other factors in the
market and
150,000
short term
connectivity factors
100,000
Arrivals from Libya, Russia
Tourism from Libya
and other markets cannot
and Russia is expected 50,000
be correlated to economic
to be affected by
growth in the short run
0
political developments
2010
17%
29%
4%
6%
12%
20%
10%
2011
2012
Libya
Russia
2%
Others
2013
UK
FR, BE, NL
Switz
AU, DE
IT, ES, IE
Scand
LB, RU
Others
2014
Outlook for Tourist Arrivals – 2015 and 2016
Arrivals from UK, FR, BE, NL, CH are modelled on basis of economic growth forecasts
Arrivals from IT, ES, IE, DE, AU are prudently expected to remain at 2014 levels
Projections
Economic
Growth
for Growth
in Tourist
Arrivals
Arrivals from Libya and Russia areProjections
assumedfor
at
5-year historic
low
of 29,000
Tourist Arrivals
50,000
400,000
Arrivals from Scandinavia,
Other Markets
Arrivals from Scandinavia and
45,000
2.5%
40,000
Other Markets are expected
350,000
35,000
to maintain historic trend
300,000
2.0%
11%p.a.
30,000
growth
250,000
25,000
1.5%
200,000
Bases of outlook are generally
20,000
1.0%
15,000
conservative but will require
150,000
10,000
efforts to:
4%p.a.
0.5%
100,000
5,000
• sustain expected growth in
50,000
0
0.0%
UK
FR,BE,NL
SWITZ
UK
FR,BE,NL
SWITZOther Markets
0
• 2013
consolidate
2010 2016
2011
2012 2016
2014 growth
2015* in2016*
2015
2015
2010
2011
2012
2013
2014
2015*
2016*
shoulder
months
AU, DE
IT ES IE
Source: EU Commission
Other Markets
Scandinavia
3.0%
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Outlook for Potential Tourist Arrivals – 2015 and 2016
Tourist Arrivals
2,000,000
+70,000
(4.1%)
1,800,000
+135,000
(7.5%)
Others
LB, RU
1,600,000
Scand
1,400,000
1,200,000
IT, ES,
IE
1,000,000
AU, DE
800,000
Switz
600,000
400,000
FR, BE,
NL
200,000
UK
0
2010
2011
2012
2013
2014
2015*
2016*
Outlook for Potential Tourist Arrivals – 2015 and 2016
Tourist Arrivals
International Tourism Growth Forecast
2,000,000
UNWTO estimates European tourism
increase between 3% and 4%
in 2015
Others
12.0
1,800,000
1,600,000
Oxford Tourism Economics estimate
LB, RU
Mediterranean tourism to increase
by 3.8% and 3.3% in 2015 and
Scand2016
10.0
Percentage (%)
1,400,000
8.0
1,200,000
The
outlook Malta for 2015 is
6.0
1,000,000
comparable
to these forecasts…the
potential
for demand may be even
4.0
800,000
higher for 2016, everything else
600,000
remaining2.0unchanged
IT, ES,
Southern/
IE
Mediterranean
AU, DE
Malta
Switz
400,000
FR, BE,
NL
0.0
200,000
2013
2014
2015*
2016*
UK
* Forecast0
2010
2011
2012
2013
2014
2015*
2016*
Risks to the Outlook
Upside Risks
Downside Risks
Improvements in connectivity from
established and new sources
Increase in collective and other forms
of good quality accommodation
Enhanced exposure on social media
Specific niches/events (business,
gaming, medical, cruise, culture, etc..)
Perceived international security risks
Improved marketing and
competiveness of competitors
Slowdown in growth of “Other
Markets”
Short term disruption due to
investment/refurbishment
Marketing activities by foreign tour operators
Specific events in source markets and competitor destinations
Conclusions
Some Key Facts and Figures
Economic
27,800 jobs = 1 in every
7 in MALTA, 1 in every 5 in Gozo
€1.5bn expenditure = €3,750 for every
person in the Maltese population every year
Importance
Nights up by 5%Performance
Total Expenditure up by 6%
€88 million increase in expenditure
In 2014 generated 500 new jobs
Gains
in 1.7 million
Arrivals up by
7% reaching
Arrivals in Med Destinations up by Market
5.5%
Departures
Share from major source countries: flat
UK/Italy (€750/person): 50% of growthMarket
Non-traditional markets (€1,030/person): 40%
Top 15 airports account for
50% of all arrivals and 80% of 2014 increase
Diversification
Some Key Facts and Figures
Tourism
Expenditure in off-peak season
rose from 27.2% to 27.7% of year total
Per capita expenditure inSesonality
off-peak season rose from €762 to €769
Cruise
540,000 visitors in
2014 (+9%) 303 ship calls
Total spending
at around €80 million
Visitors
944,000 international Gozo
visitors, spending €158 million
377,000 Maltese Tourism
visitors, spending €28 million
EU million of 2007-2013 EU funds
Tourism sector absorbed for €120
Investment largelyfunding
used in product improvement
Maximising Economic Potential and Contribution
Increasing Arrivals (2015/16: +4%/+7.5%)
Improving Expenditure per Arrival
Increase Malta’s connectivity from
established and new destinations
Carefully diversify away from lower
yielding activities
Invest in quality and diversified
collective and other accommodation
Sustain 3-star category as a quality
product offering
Focus on markets with higher potentials and spending power (DE, Asia, etc)
Focus growth on off-peak tourism based on niches/events
Invest in distinct destinations to diversify product offer
Develop the potential of domestic tourism
Invest in skilling, multi-skilling and re-skilling
Identify alternative methods of investment financing
Final Thoughts…
There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Shakespeare, Julius Caesar
An investment in knowledge pays the best interest.
Benjamin Franklin
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