The Malta Independent 8 April 2020, Wednesday

Government measures far from what is required; hospitality industry at crossroads - MHRA

Thursday, 19 March 2020, 10:00 Last update: about 19 days ago

What the government offered as financial aid falls short of the requirements of the hospitality industry, hit hard by the Coronavirus effect, the Malta Hotels and Restaurants Association said in a statement.

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.

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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 MHRA said.

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 association said.

The future for the tourism sector in Malta is at the moment bleak as a full recovery from this crises is unlikely to happen in the next weeks to come and it can take months before some form of business returns.  A contribution 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 said it 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.

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