Guesthouse owners pinning survival on vaccine and government assistance

Government will continue offering its support to the tourism sector with the aim of returning to more normal levels of operation in the shortest possible term, tourism minister Clayton Bartolo told BusinessToday.

With most operators in the industry suffering heavy financial losses due to the COVID-19 pandemic, many depend solely on government assistance to avoid shutting down permanently or firing staff.

Amongst the hardest hit are guesthouses, which have suffered irreperable losses despite creative attempts to realign business in order to attract guests.

The complete lack of tourists visiting Malta at the moment – and in the foreseeable future – means that guesthouses are struggling to fill their rooms, with many shutting their doors until the pandemic is over.

And the exodus of foreign workers back to their home countries means that the very little demand for rental units there is at the moment, is being fulfilled by the over-supply of apartments available, these having rents reduced drastically in a bid to attract at least a modicum of income.

Bartolo acknowledged the problem many operators are facing.

“By its very nature, tourism depends on the movement of people, and so, the ban on international travel imposed by many countries had a massive effect on the tourist industry on a global scale,” he said.

Like all other countries in Europe and beyond, Malta also suffered the effects of the drastic drop in travellers experienced worldwide and this affected all the hospitality sector, from the biggest to the smallest establishment.

“Right from the beginning, the Maltese Government has provided its full support including financial assistance in the form of wage supplements and vouchers that were aimed at sustaining the sector through these challenging times,” Bartolo said.

“It will continue to offer its support to the whole sector with the aim of returning to more normal levels of operation in the shortest possible term.”

The owner of Tarona Guesthouse in St Paul’s Bay agreed that filling a room was an impossible task at the moment

Wage subsidies a lifeline

The minister’s words will go down well with many guesthouse owners who hope business will start flowing in once people feel comfortable travelling again with the widespread availability of a vaccine.

Robert, owner of the five star-rated White Star guesthouse in Salina told BusinessToday that he had decided to shut down operations as he could not fill any rooms, whatever he tried.

“The bottom line is there is no demand whatsoever and it did not make sense for us to remain open,” he said. “No is even booking for next year, as everyone seems to be waiting to see what will happen, whether a Covid vaccine will be found.”

Robert is hedging his bets on a vaccine being available around the beginning of the year, and is hoping therefore to be able to reopen in mid-February.

That would give him enough time to ramp up interest and bookings to cover the profitable spring and summer months through October.

“Hopefully foreign workers will start returning too, as they too are important for our business,” Robert said.

As to the staff, Robert said they are still being paid, even while shut down.

“The government’s wage subsidy has been a godsend in these hard times, and we have been able to keep our staff on the payroll, complementing the government’s subsidy with our own contribution, and thus paying the staff the full wages due.”

Robert explained that his family owned a number of apartments that they also rented out. Those too remain empty at the moment and the family is counting on the return of the foreign workers to Malta to start seeing some income from those rental units once again.

The owner of Tarona Guesthouse in St Paul’s Bay agreed that filling a room was an impossible task at the moment.

He said he had tried discounting prices and offering incentives, but the utter lack of incoming tourists had dealt a deadly blow to his business, and many others like him.

“We even tried offering our rooms at very competitive rates on a long-let basis, in a bid to attract some of the remaining foreign workers on the island,” he said.

In fact, the guesthouse was offering rooms at rates starting from €220 per month. A €450 monthly rate included daily breakfast and dinner, free wifi, and weekly laundry service.

“We had a lot of feedback, but these workers were practically all insisting on a one-year lease contract, which I could not do, as that would have overlapped next year’s spring and summer seasons,” the owner said.

Of course, rates in peak season would be much higher than those offered as incentives at the moment, so the owner felt he could not jeopardise next year’s potential profit.

Key word here is ‘potential’ as none of the owners or operators know what to expect next, though most appear to be hoping that a vaccine will be available in the beginning of next year.

Sandro, manager owner of a large guesthouse in Swieqi, told BusinessToday that they remained nominally open for businesses, though they have no guests registered for the past three months

Tentative bookings for summer

Sandro, manager owner of a large guesthouse in Swieqi, told BusinessToday that they remained nominally open for businesses, though they have no guests registered for the past three months.

“We had some long-term residents who have since also returned to their countries to be with their families,” Sandro said. “We are still paying our staff’s wages, thanks to the wage subsidy, but we are currently operating a very relaxed work schedule, with the staff only coming in once or twice a week to help maintain the common areas.”

He said that they had some tentative provisional booking for next Summer, and those were only from returning clients who visited Malta and stayed at the guesthouse every year.

“So far, we are not even accepting deposits on bookings for next year, as we still do not know where we’ll be at,” Sandro said. “I hope we’ll be over Covid by then because otherwise many of us would not be able to continue, especially if government stops its subsidies and incentives.”

He said the owners had already informed staff that if the bookings remained non-existent and if the government subsidies ended at March, they would possibly need to readdress the operational value of the business.

And that, for many of the owners as well as the staff, is what it’s all about. Because the business cannot survive on government assistance alone for long. And with plane after plane reaching Malta empty, the only hope for guesthouse operators is for a Covid vaccine becoming available in the next few months.

Otherwise, it might come too late to save many of them.