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Goodbye 2020? Here’s What Malta’s Tourism Industry Thinks About Our COVID-19 Future

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Every imaginable industry has had to adapt or take a hit during the largest pandemic this side of the century, but nowhere has this been so powerfully felt than tourism. And for an island that relies so heavily on tourism, Malta is now faced with an uphill struggle.

After speaking to some of the sector’s experts and leaders “to obtain a realistic shared sense of their sentiments and expectations of this crisis”, EY has released a report on Malta’s current situation with tourism. 

Besides detailing how COVID-19 has impacted tourism and suggesting actions which could limit the impact for tourism and its ecosystem, the report also sheds a light on the industry’s sentiment and the perception of the current situation from some key players.

Carrying out a survey between the end of April and the beginning of May, EY managed to for example get a snapshot of what some of the largest hotels and hotel chains on the island have to say of this global predicament… and when they predict a return to relative normality.

Most participants don’t expect to resume operations before September 2020… at the earliest.

With mass cancellations and refund requests coming in for the summer months – and in some cases even the last quarter of 2020 – it’s not looking too good for the rest of the year.

“Large conferences and group booking are being postponed to 2021 or cancelled entirely, and the great majority of participants expect 2020 to be significantly loss-masking with no meaningful revenue generation potential irrespective of whether borders reopen in the coming months,” the report reads.

Recovery – albeit at a slow pace – is expected to start in 2021, with cautious caveats of uncertainty being placed here due to “lower disposable income and health risks posed by persisting COVID-19 considerations”.

And while some participants said they’re gearing up for a “possible partial reopening of facilities in summer”, most are expecting “very limited to no revenues for the remaining months of 2020”.

Malta’s 2019 visitor numbers are not expected to return anytime before “two to five years from now”.

“There is also growing concern as to whether these levels will be attained,” the report continues, going on to highlight how everything from persisting social distancing legislation to “incoming visitors expectations/requirements” may further drop the island’s annual tourism numbers.

While some said they do intend on tapping into the domestic market, the situation there isn’t looking too great, since the drastically lower volumes would not be nearly enough to cover fixed overheads.

“There is unanimity that the pandemic will change Malta’s tourism model and that all operators need to adapt to these new realities.”

“The dependency of Malta’ tourism sector on the ability and willingness of airlines to fly to Malta, and operate cost-effective flights under social distancing regulations, is also of concern to most participants,” it continues. “Many believe that flights will generally become more expensive for all.”

“Visitor demand is ultimately dependent on the development and successful rollout of an effective COVID-19 vaccine,” the report succinctly puts it.

In the midst of a mass cost-reduction exercise, staff redundancies are still not quite off the table…

“All participants are monitoring their short term cashflow and working capital management and minimised their non-essential expenditure,” the report states. “Most hotels have introduced reduced wages and working hours to try to reduce cash flow challenges.”

Beyond that, however, the vast majority or survey participants aid they “will. actively consider staff redundancies if current assistance schemes expire prematurely.”

“Some participants are also seeking liquidity and moratorium support from the commercial banks and augur that the banks understand the major challenges they are facing and improve their service offering further,” the report continues, with a number of participants pointing at the need for banks to “consider lower interest rates on facilities as further support to sector stakeholders”.

A new breed of tourist with different demands will probably arrive in 2021, making business even tougher… but the government’s existing support measures seem to have gone down relatively well.

“All participants believe that incoming visitors will increasingly demand social distance spacing, as well as prefer venues which are less crowded, offer better cleaning services and set aside rooms and facilities between different patrons,” the survey report states. “They will also be increasingly aware of their environmental footprint and hence reduce their demand for travelling or opt for shorter trips than before.”

Delving even deeper to what the island’s visitors (and indeed, tourists all over the world) might expect or even demand, the report says they “may also not accept certain food presentations such as buffet arrangements”.

As a result of this, secluded or more standalone forms of accommodation are expected to increase, with tourists erring on the side of caution for at least their first couple of holidays.

Besides all this, however, the Maltese Government’s support measures have been mostly positively received, scoring just between Neutral and Positive.

“All participants were positive about Government funding support, although payment delays and the lack of in-depth information on the different schemes were also expressed,” the report elaborated. “The schemes have stopped the sector from witnessing major redundancies to date.”

From the number of measures that have been recently rolled out, it appears that The Malta Enterprise wage supplement and Malta Development Bank-supported schemes were the clear favourites.

“Additional fiscal and administrative incentives have been identified as potentially important to keep on supporting the tourism sector at this time,” the feedback concludes. “Incentives such as tax breaks, VAT rate reductions, suspension of NI payments, utility/ rental payments and legislation of furlough regulations have been noted as possible measures.”

The full report, which is over 25 pages long, can be read in full here

In it, everything from the current impact on Malta’s tourism sector to possible predictions of what a post-COVID tourist would look like is detailed.

Fully aware that their sector will be the last to fully open, operators are insisting on a clear medium-to-long-term road map on lockdown reversal (which also includes clearly defined social distancing regulations and requirements).

Malta’s tourism sector has a long way to go, but key stakeholders in the sector have already started eyeing the uphill struggle and thinking of how to tackle it all.

What do you make of this report? When do you think Malta’s tourism sector can go back to “normal”?

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