Feltom report shows Malta's growth and agent usage

06 May, 2015

The annual ELT industry survey by Malta’s school association Feltom highlights a nine per cent growth in total commission payments, amid a general picture of record levels of sector income tempered by increasing costs.

Feltom CEO Genevieve Abela unveils the 2014 report into the industry growth, profits and costs of Malta's ELT industry. Credit - Feltom

The 2014 Feltom ELT Industry Survey Report, conducted by Deloitte, examines costs and profit among Feltom’s 20 member schools, and found that total revenue increased by 4.4 per cent to a peak of €66,994,000, but total revenue per student week dropped slightly by 0.6 per cent to €272.80 – the lowest level since 2010.

Deloitte notes in the survey, “The continued trend towards longer courses is a factor that impacts average prices as it is customary for language schools to offer discounted prices for longer bookings.”

The previously reported data release from Malta’s National Statistics Office for 2014 recorded a 3.4 per cent increase in ELT students to 77,550 and a five per cent rise in student weeks to 245,587.

While the total number of students in 2014 was below the peak level of 81,911 achieved in 2012, last year’s student weeks total was the highest ever recorded. The average length of stay also reached a new high of 3.2 weeks.

In a recent interview with StudyTravel Magazine (STM) examining market trends in 2014, Genevieve Abela, CEO of Feltom, said, “Due to a change in how we are marketing our product, we now see mature students coming to Malta. Most schools see a large cohort of students arriving during their gap year, as some European countries require students to spend three-to-six months in an English speaking country before they can receive their degree. Other students from non-EU countries like Brazil, China and those in the Far East, naturally tend to come for longer stays of three, six or even nine months.”

Total agency commission payments to agents totalled €10,423,000 in 2014, a record high for the destination, although agency commission per student week increased by just €1 to €42. Agency commission accounted for 27.8 per cent of total direct costs (excluding payroll costs). In StudyTravel Magazine’s most recent Malta market Analysis feature, 72 per cent of ELT students were recruited via agents.

Total tuition revenue increased by 6.1 per cent to €35,377,000 and tuition revenue rose slightly to €144.10 per week, while total accommodation revenue climbed 2.5 per cent to €25,306,000. Meanwhile, there was a 9.3 per cent jump in total payroll costs in 2014 to €14,609,000, with both teaching and non-teaching costs notably increasing, and a 6.6 per cent rise in total accommodation costs.

As a result of the increased costs, Deloitte calculated a 4.3 per cent decrease in total gross operating profit to €7,327,000 and an 8.9 per cent fall in gross operating profit per student week to €29.80.

Despite the increasing student numbers and commission payments, total market spend by Feltom schools decreased to €1,448,000, well below the peak of €1,960,000 spent in 2012, while marketing spend per student week was a five-year low of €5.90, possibly indicating prior efforts to market Malta beyond its traditional European client base are now paying dividends. This has also been reflected in StudyTravel Magazine’s annual surveys of Malta’s ELT industry, in which average marketing spend as a percentage of total income has fallen from 19.4 per cent in 2011 to 12.2 per cent in 2013.  

Picking up on individual market trends, the Deloitte survey notes an 8,000-strong increase in student weeks from Libya last year, but states, “During the earlier part of the year, language schools reported significant growth from the Libyan market which unfortunately came to a sudden halt in the third quarter as a result of the civil unrest in the country.” STM reported earlier this year on how Libya’s political troubles have impacted on agency business in the country.  

The 2014 Deloitte report underlines the significance of language tourism within the wider tourism industry by showing that the ELT industry accounted for 4.4 per cent of all tourist arrivals in 2014 and 12.7 of all guest nights. In the peak ELT month of July, students accounted for almost one in five guest nights.

At the time of writing €1 = US$1.12

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