MHRA : Tourism will remain a Winner

The Malta Hotels and Restaurants Association (MHRA) refers to the article “Virus impact on tourism ‘could cost economy €3bn’” published today by The Times of Malta.

MHRA states that the measures to mitigate the economic crises caused by the COVID-19 global pandemic announced this week by the Maltese Government in agreement with MHRA and social partners are in sync with other measures announced by other countries. MHRA President Tony Zahra asserts that “These were previously unthinkable and their global impact is unprecedented. Tourism is particularly affected by the consequences of the pandemic and travel restrictions have been imposed in almost every country in the world. Tourism in Malta last year accounted for 2.1 billion euro out of a total GDP of 12 million euro and despite that we are expecting significant losses over the course of this year, it’s not 3 billion euro as The Times of Malta is stating in its cover story today.” Indeed, the tourism sector in the first months of the year marked record performance levels and as soon as travel restrictions will start to be relaxed, MHRA is confident that the tourism sector will gradually be picking up before the end of this year. Undoubtedly, weeks of uncertainty lie ahead of us and no one can really foretell the future – that’s why claims made today by the Times of Malta that there can be a loss of 50,000 jobs may sound too sensational and cause unnecessary and unfounded alarms during such sensitive times.

MHRA President Tony Zahra emphasizes that, “If anything, MHRA is working closely with the social partners and Government to safeguard the 50,000 jobs and more.”

Mr Zahra further explains that “Significantly, measures of support to the tourism sector which MHRA together with Government have devised aim to maintain work processes and systems in place as much as possible, hence ensuring job security and consequently enough capacity to relaunch operations at the right moment. Now it’s not the time to travel the world. But one thing is for sure: people’s desire to travel and dine out will always be strong. As soon as the crisis situation returns to normal, Malta needs to be ready – and this is what the agreed measures aim to achieve. Then we can do what we do best: Hosting guests and offering our customers a unique tourism experience.”

MHRA : Government measures far from what is required. Hospitality industry at cross roads.

The Hotels, Restaurants and other hospitality stakeholders are at a standstill. The airport is closed, restaurants are closed, all hospitality events cancelled and hotels are ghost hotels with near zero occupancy. In the last days MHRA has stressed that there is zero income and only massive expenditure, a situation that cannot be sustained for more than a few weeks. This is a reality even for the most frugal of companies let alone those that in the last years have re-invested tremendous sums of money in upgrading their products. These capital intensive investments have resulted in increased employment in the sector contributing further to the economy.

By its nature the hospitality is a labour intensive sector, and therefore the payroll is the major expenditure and in the past years this has contributed very significantly towards the government revenue and produced income for Malta 2.2 billion euros a year.

The COVID-19 global outbreak and the consequential economic disaster was unpredictable and therefore no contingency plans could possibly be envisioned. It is truly the Unknown Unknown hitting the whole world economy with a might like that of a nuclear device.

Operators in the tourism sector are now faced with having to carry the payroll cost every single day without any income being generated for an indefinite period of time. Clearly this can only be sustained for a small number of weeks but this period can be extended substantially with better government assistance and some help from employees. Without both of these the ability to stay operational is very limited. This has been stressed by MHRA over and over again over the last days.

In this light the MHRA and other stakeholders in the sector find the measures announced yesterday by Government surprising and disappointing. Simply put, they are not going to be enough for most stakeholders to retain fulltime employees and remain open.

The future for the tourism sector in Malta is at the moment bleak as a full recovery from this crises is unlikely to happeninthenextweekstocomeanditcantakemonthsbeforesomeformofbusinessreturns. Acontribution of 320 euro per employee per month towards the payroll costs is a far cry from what was expected to help. Some operators will find themselves in dire economic state.

Whilst proposed measures for unsecured loans aiming to complement the announced grants are welcome, each operator will have to calculate how these will assist their business and if the whole package of measures shall give them some breathing space in the hope that this economic crisis will recede in the next 4 months.

MHRA is indeed disappointed that the measures announced fell short from addressing the business needs at present and cannot view the outlook as positive. Without support of payroll costs, by a minimum of €800 per month per employee, the situation will effectively turn very difficult, very quickly.