Occupancy levels at Malta's five-star hotels took a hit in the final months of 2023, a survey commissioned by the Malta Hotels & Restaurants Association (MHRA) and carried out by Deloitte Malta shows. 

The information was presented at a conference on Friday, which was co-hosted by Bank of Valletta at the Radisson Blu Resort in St Julian's.

Presenting the report, Deloitte Malta Director of Financial Advisory Services Michael Zarb highlighted that arrivals and guest nights exceeded 2019 levels, noting that 2023 was arguably the first full year without any COVID-19 pandemic restrictions whatsoever.

This comes against the backdrop of record tourism arrivals registered in 2023, with the inbound tourist figure surpassing the three million mark and with record spending from tourists in the local economy. More specifically, the MHRA’s survey found that tourist arrivals for Q4 reached 762,000, surpassing the figure registered in 2019 by around 218,000 arrivals. Tourism expenditure during the quarter stood at €597 million, 28 per cent higher than the comparable period in 2019, and significantly higher than the years in between.

In terms of guest nights, there was an increase of 389,000 nights in Q4 2023, when compared to the same quarter in 2019. The increase is in line with increased arrivals, as was registered both in collective accommodation and private accommodation.

Despite this, occupancy levels in four-star and five-star collective accommodation in Q4 still experienced a drop when compared to the same quarter in 2019.

Deloitte Malta Director of Financial Advisory Services Michael Zarb / Deloitte Malta

Five-star hotels’ occupancy decreased to 63.7 per cent, a drop of 6.8 per cent against 2019’s Q4 result (70.5 per cent). October and November saw significant drops, with decreases of 10.2 per cent from October 2019 and 8.3 per cent from November 2019, respectively. There was a slight improvement (0.2 per cent) from December 2019 to the same month in 2023, yet occupancy levels were still quite low at 48.9 per cent.

A similar drop off in five-star occupancy levels was noted at year-to-date (YTD) level, with it going from 72.6 per cent in 2019 to 67.2 per cent in 2023.

Four-star hotels registered occupancy levels of 73.5 per cent during Q4 in 2023, 3.6 per cent below 2019 levels. Levels for October and December were relatively similar to those in 2019, but there was a decrease in occupancy levels during November 2023, with this coming in at 74.4 per cent, eight per cent lower than the same month in 2019.

On a year-to-date level, there was an upturn in performance, with four-star hotels in 2023 maintaining an 82.3 per cent occupancy level, slightly higher than 2019’s figure (80.7 per cent).

When it comes to three-star hotels, occupancy rates reached 69.2 per cent in Q4 2023, an increase of 6.1 per cent over Q4 2019. November and December experienced particularly sharp increases in occupancy levels, registering levels of 74.2 per cent and 48.9 per cent, respectively (November 2019: 61.5 per cent; December 2019: 41 per cent).

Occupancy levels in this category remained healthy on a YTD level at 79.4 per cent, rising gradually (2019: 73 per cent; 2022: 77.9 per cent).

Additionally, Mr Zarb also remarked that the St Julian’s and Sliema areas, both well known for their extensive range of hotels and accommodation, performed better than other regions in Malta, particularly when it comes to the five-star category. He explained that this is a consistent trend since Deloitte Malta started producing analysis in this area.

Average daily rates (ADR), the average revenue generated from rooms, increased on a YTD basis in five-star accommodation, going up to €202.4 in 2023 from 2019’s €165.7. Looking at Q4 more specifically, this came in at €190, much higher than Q4 2019’s €147.7.

For the four-star category, ADR were also markedly healthy, with €86.2 per room being recorded in Q4 2023, 17.1 per cent higher than 2019 levels. At YTD level, this was also significantly higher, with €104.8 being recorded in 2023, compared to 2019’s €91 per room.

Three-star hotels maintained similar levels when it comes to ADR, with €57.1 per room being registered in Q4 2023, the same as the same quarter in 2019. At a YTD level, this category of accommodation increased by around seven per cent over 2019.

In terms of payroll costs, Mr Zarb explained that five-star and four-star accommodation experienced increases of 9.4 per cent and 28.8 per cent respectively in Q4 2023.

Looking ahead, he said that there has been a notable increase in booking pace for the next three months, with the outlook for the quarter being much more positive than it was at the same time last year. Sliema, St Julian’s and Valletta seem to be having a more positive outlook in the opening stages of 2024 than other areas in the country.