‘Businesses must prepare to restart from ground zero once coronavirus crisis abates

Businesses must ready themselves for an uphill struggle to regain ground once the COVID-19 crisis abates, Chamber of SMEs deputy president Philip Fenech has stressed.

Fenech told BusinessToday that, before the time comes for coronavirus measures to be relaxed, local companies must realise that they will be starting out from a low point, and that it will take time until things get going at the levels at which they were before the pandemic hit.

Fenech said that businesses should not "get burned on the journey before they arrive at the destination" and that they should pay close attention to maintaining certain levels of reserve funds for the longer-term, since, when the economy is switched back on, things would take time to get back to normal.

One of the clearest examples of this he said, was the tourism sector, which, before COVID-19, was attracting around 2.7 million annual visitors to the island. "The tourism industry won't automatically go from a standstill to having 2.7 million tourists again. Things will get going again slowly - right after restarting, the island might attract, for instance, a few tens of thousands of tourists, and this will increase gradually."

"We will basically be starting again from ground zero," Fenech highlighted.

Underlining that health considerations would be key insofar as determining when local economic engines would be reignited, he said that while Malta's domestic economy would eventually re-open, the country would still be dependent on the international situation.

"Malta is an island economy and people come here primarily by air, and also by sea. We depend on external factors, such as whether other airports are functioning or not. Our key markets are the UK, Germany, France, Italy and Spain - amongst the countries worst hit by COVID-19. Therefore we depend on the economic performance of these countries, amongst other factors, such as the COVID-19 situation within them" he said.

The situation in the airline industry would also have an impact, Fenech said, since several of the different airlines linking to Malta had been reducing their capacity in response to COVID-19.

Moreover, he said Air Malta would also be facing its particular challenges.

Malta would be facing competition from other destinations when it comes to which airports the planes would start re-opening their flights to.

Chamber of SMEs deputy president Philip Fenech

"The country should have a war chest to incentivise market support for certain routes. Within the context of fierce competition from other tourism destinations, funds should go towards incentivising loyal airlines which had been serving Malta to carry on building upon where they had left before the crisis struck. We need to look at this situation as if we are starting from scratch, with the economy needing to be kickstarted."

Fenech pointed out that European Commission boss Ursula von der Leyen had last week urged people to avoid booking summer holidays, while some countries, such as France, had announced their intentions to keep their borders closed beyond summer.

"In light of this, we need to prepare ourselves because we will have excess capacity when we reopen our own borders. Our hotels, restaurants and so on were ready to cater for 2.7 million tourists, but we won't have that number, so enterprises have to cut costs as much as possible and build things up slowly to their previous levels of profit."

The wider ecosystem, which depends on the derived demand of tourism - such as is the case of outlets and other services, such as ferry cruises, based in areas like Buġibba or Qawra whose sales depend on customers staying at hotels and self-catering apartments - would also be affected by this, he underscored.

Tweaking Malta's product

Rather than just aiming to return to business as usual, Malta should do its best to learn from the current situation and tweak its product, Fenech said.

"The big question is what changes will we put in place when we start getting back to what is being called the new normal. Will we just build up slowly to where we were before, or should we be more conscientious about focusing on health aspects, greenery, open spaces, and so on - especially in view of the increased awareness about environmental issues? We might need to tweak our product, and our leisure offerings could change from what they traditionally were."

Fenech praised the work the Cleansing Department was doing during this quiet period to improve the look of key tourist areas

An opportunity to undertake infrastructural improvements in the downtime

Fenech also noted that the current lull in activity was a good opportunity for the government to invest in the country's infrastructural needs to a greater degree - something which it couldn't do before because of the great economic growth the island was experiencing.

"The SMEs Chamber urges the government to undertake the infrastructural improvement required in touristic areas. In fact, it has already started to do so, as evidence for instance by the laying of new power cables in Paceville's main arterial road, which would have been a logistical nightmare previously."

He added that this was also taking place in the private sector, with many establishments seizing the chance to carry out refurbishments.

"Of course this is only possible if such businesses had put money aside in the past for this. But all establishments are doing their best, and a lot of staff members are cooperating and going beyond their normal duties in this respect. This is the positive way of dealing with the COVID-19 situation."

He also said that the Cleansing Department's efforts in the past days to improve the upkeep of key tourist areas - such as by removing old posters from walls - was a step in the right direction in terms of taking advantage of this quiet period.

Fenech went on to praise the Malta Tourism Authority's "Dream Malta Now... Visit Later" campaign, which aims to promote Malta post-COVID-19.

He added that the SMEs Chamber had met with the MTA and the Foundation for Tourism Zones Development (FTZD) to discuss other tourism zones which needed tending, with work in this respect having already started.