INTERVIEW | Philip Fenech: Leisure and tourism sectors' optimistic forward strides in a post-COVID world

BusinessToday spoke with Philip Fenech, chairperson for the Town-Centre Management Project in Paceville/St Julian’s and a veteran in the leisure and tourism industry, on how the sector is reviving after the COVID-19 crisis


As part of the €900 million recovery package announced last week, the government will be giving every resident in Malta aged 16 and over a €100 voucher, €80 of which can be spent on MTA licensed enterprises, such as restaurants and hotels, and €20 of which can be spent on other businesses which had been forced to close, such as clothes shops and hairdressers. Will this be sufficient to boost local demand, and are things looking up in this area?

Slowly but surely, every day since businesses reopened after the lockdown, consumer confidence has been rebuilding, as has people’s confidence in terms of feeling that it is safe to go out. Last weekend proved to be the busiest since restrictions started being lifted. I obviously acknowledge that it will take more than this to bring the industry back up to sustainable levels – at the moment, most businesses are starting to get by, and we’re not yet at the stage where they’ve started being profitable again, while some haven’t even started at all.

The vouchers the government will give to consumers are definitely positive. They will act as a second push to demand, by encouraging people to go out and use them and by boosting the value for money which consumers spend. In total, the government will be investing €34 million in the economy through the vouchers, and, when you factor in the multiplier effect in terms of what people will be spending to top up on the vouchers, the scheme will give a good kick, in the immediate, to the economy.

Since the vouchers have to be spent by September, the aim is that in the next three months there will be an increase in economic activity which will start reigniting the economy’s engines, one by one.

The next step will be welcoming tourists. The airport will reopen on 1 July, and at this point we should start seeing our first tourists. On 15 July, all remaining flight restrictions will be lifted.

Therefore, the process can be seen in three stages: the first was the reopening of the domestic market and the building of consumer confidence, the second was the vouchers to boost further the domestic market following the lockdown, and the third is the opening of our airport in two stages, after which we’ll slowly start rebuilding as confidence is regained when it comes to international demand for travelling.

At the same time, the country is keeping its eyes open from a health perspective, in order to be able to tweak accordingly if any change in the number of COVID-19 cases is noted. In this regard, the Tourism Ministry will be introducing international protocols applying to the arrival of tourists at the airport.

What kind of summer is the leisure industry expecting in terms of foreign visitors?

The reopening of the airport was foreseen, from a strategic perspective, by the Tourism Ministry and the MTA. This is why, proactively, the “Dream Malta Now, Visit Later” campaign had been launched in April - the goal was to stir people’s emotions during the lockdown, so that they could use that period to increase their interest in Malta, and plan to visit when the time comes to start going on holiday again.

In the meantime, there are incentives being devised for different airlines to restart flying to Malta, and, hand in hand with this, an aggressive marketing campaign is being implemented which aims to put the island back in the strong position it previously held in the tourism market. We have to keep in mind that ITB Berlin - the world’s largest tourism fair - wasn’t held this year. Since we have, like everyone else, lost this exposure opportunity, a local campaign is being set up to bring visibility to our tourism market once more. The private sector is also doing their own bit by marketing their product independently.

The statistics we have so far indicate that demand for flying and people going on holiday at the moment is between 20% and 30%. Obviously, the situation should improve as the virus is controlled further and more people gain the necessary confidence to fly.

I had also explained in a previous article in BusinessToday that there is the issue of airline companies’ retrenchment, whereby airlines are reducing their fleet, with the missing planes resulting in less linkage routes to Malta. When our airport reopens, we won’t restart with all the routes we had in 2019, when we were bringing in 2.7 million tourists a year. However, it is expected that those airlines which are still servicing Malta will be able to deal with the levels of demand which we will initially have. And such flights will keep increasing as demand picks up. Any airline companies which notice there is demand will obviously top up its fleet to what it originally was.

We must also consider our tourism supply side, that is our bed content in its capacity (including hotels, guesthouses, Airbnbs, etc.) and our leisure in all its diverse forms (including casinos, diving schools, restaurants, language schools, etc.). Since we won’t immediately have the same number of tourists we had previously, hotels and so on will have to wait until demand builds up. Businesses are constantly competing, and that competition will result in efforts to offer a better price and service. This will be a challenge in terms of businesses keeping their cost base under control while re-positioning themselves at the forefront in the market. The reality is certain fixed costs are inevitable, and it will not be easy until demand reaches their break-even point. But the situation is very fluid, and there are both positive scenarios and others which are challenging. It all depends on how this virus is going to pan out. It could either die a natural death, or we could learn to live with it with the necessary controls in place, as we adapt to a new norm. In a worst-case scenario, we have to also consider the possibility that the world, including Malta, could experience spikes which would require immediate attention.

In comments to this newspaper a few weeks ago, you had proposed ways in which the bar and nightclub industry could reignite while still abiding by measures meant to prevent the spread the virus. Now that the public health emergency has been lifted, bars and nightclubs have been given the green light to open. What is the feedback you have been receiving from the sector?

We always knew that the leisure industry - bars and clubs mostly - was not an easy one when it comes to adhering to protocols. But I was in fact quite impressed that, as evidenced during the inspections we’ve been carrying out, the majority of bars and clubs have abided by the coronavirus protection measures, in an industry which depends on social intimacy, not social distancing. We found that the majority of outlets were compliant, and the few which weren’t were reprimanded by the MTA and police. There were also several others that had a system in place which wasn’t foolproof when it came to the one or two hours when every business peaks - this resulted in customers impatiently choosing not to wait for their drinks to be served at their table, and instead going over to the bar, or clients moving tables together which were clearly marked as needing to stay separate.

One major issue, which was encountered by all in the sector, was that it is quite difficult to prevent people from automatically going to the bar, which is the main attraction. So, it depends, to a certain extent, on customers’ willingness to adapt. We had foreseen this issue, which is why we have asked such businesses to lower their levels of music, to avoid hyping up their customers. We’ve also asked that customers cooperate and carry their own responsibility.

Another problem relates to the maximum number of people which are currently allowed to group together. Right now, the maximum remains 75, which makes it unsustainable for businesses which can host hundreds of people to operate. The Prime Minister last week said that Malta was no longer in an emergency situation, however certain people misunderstood this to mean that all restrictions have been wavered immediately. In effect, the Prime Minister did not imply this - our understanding is that the limit on mass events will be increased by the end of June. However, we are waiting further instructions in the coming days or weeks to clarify the situation.

Last weekend was also the best performing weekend bars, clubs and restaurants since they reopened, and we expect that promoters will be able to move greater crowds towards these venues as the leisure industry gains speed.

Malta is known for its summer events. With the 75-person limit on public gatherings having been lifted, these can be organised, to an extent. Will we likely see a return of the island’s annual summer events, or will private organisers face a challenge in terms of obtaining private sponsoring?

We have yet to see whether very large mass events, involving thousands - such as music festivals - will be permitted or not. The indications are that they could be, but it’s not certain yet. I am also aware that there are concerns from private organisers, who finance their events through private resources, that obtaining sponsorships might be difficult. Needless to say, private sponsorship is a real issue, since many businesses are cutting down their costs.

In the past years, there was much discussion about a masterplan for Paceville. Do you envisage that such plans will be put back in motion as the COVID-19 crisis abates, and will they have to be adapted to tackle the new post-coronavirus reality?

At the moment a lot of big projects are in motion in Paceville. Many of them have reached a reasonably advanced stage of shell form, others have their development application in place but have not yet started, and a few more still have their applications pending before the Planning Authority.

These were all projects which were planned during the height of our economic boom, when we were seeing the optimum levels of tourism, and envisaging increases. Despite this, the majority of the projects are ongoing, and new ones have also been planned to commence. Very few have actually been put on hold, and those that were are mainly minor ones. It is consoling that some of the bigger projects will take a couple of years to fully complete, because hopefully the industry will have recovered by then.

In terms of a masterplan, discussions have already started - and these will be amplified - about how to manage the Paceville/St Julian’s area better, build on its strengths and identify and tweak its shortcomings. This includes the pedestrianisation of certain areas, organising delivery hours and refuse collection, cleansing, beefing up maintenance programmes, improving street furniture, greening open spaces, adapting police patrols according to the immediate needs while clamping down on those who don’t abide by the law, and providing better signage and street lighting. Moreover, millions of euro are being invested in high quality edifices, by the private sector, to continue upgrading our tourism products.

The lockdown period has been positive in the sense that many establishments, especially the bigger ones, have had the chance to do the long-postponed refurbishments and alterations which they had been unable to do during the high periods of the previous years. And some of the smaller establishments have also done their upgrading, and have opened in the last few days, while others will be opening in the next weeks.

You are also the chairperson for the Town-Centre Management Project. How is this progressing?

We now find ourselves in the second year of the project. We are working with the Tourism Ministry, MTA, Foundation for Tourism Zones Development, the police, local councils and stakeholders to manage the Paceville/St Julian’s area in its totality. In other words, on a daily basis, we observe movements in the area, take stock of shortcomings and liaise with all those involved, through, for instance, regular meetings with the police on crime management, raising licensing standards and controlling irregularities hand in hand with the MTA’s enforcement unit. We also put forward our observations on maintenance work together with the government’s cleansing department. An important aspect of our work is our cooperation with St Julian’s local council to look out for the interests of residents, with a view towards minimising the inconvenience which such a vibrant area can cause.

Some people think Paceville is all about nightlife. In fact, nightlife constitutes only 15% of services in the area, with the rest made up of bed content, gyms, language schools, casinos, diving services, retail in its diverse forms and a shopping mall selling various products, a yacht marina, cinemas, bowling, restaurants, health and wellbeing, numerous business towers and offices, and taxi services’ headquarters.

And as the area is expanding, our challenges are also increasing. The area is becoming more intense, but there are exciting times ahead for someone like me, who started out in the area many decades ago, and saw Paceville develop from a humble beginning to the multitude of retail, goods and services offerings which such a relatively small area provides to the domestic and international client.

I feel the whole community in the area is one big family, and together we’ve gone through daily challenges, living the high and lows throughout years.

I had established BJs in the late 1970s, during which time there were only a handful of establishments. I saw the full gamut expand. Looking back, it’s been a very exciting run. And that excitement remains as we enter into this phase of having higher buildings with penthouse apartments. When I walk through the streets of Paceville, in my role managing the area, the energy I experience is unexplainable as I visualise its vibrance through the years and look forward to what is to come.

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