The impact of COVID-19 on the hospitality sector was the theme of a recent episode of MHRA Reports, hosted by Andrew Agius Muscat, Chief Executive Officer at the Malta Hotels and Restaurants Association (MHRA). Guest speaker Albert Frendo, Chief Business Banking Officer at Bank of Valletta, elaborated on the in-depth role of local banks in supporting the hospitality sector in reinforcing itself during the pandemic.
Albert Frendo pointed out that Malta was among the countries deeply hit by the pandemic, as it has a relatively high dependency on tourism. “Malta has managed to contain the situation till now, but the fear of a slow summer still remains. Going forward, a more articulated national strategy and strategic objectives will help businesses prepare better for the demand and provide a clearer direction to potential investors. A well-defined national strategy will drive the needed investment projects in the right direction.”
“The role of local banks in the recovery of the hospitality sector is not to provide equity but to provide liquidity needs and support investment.” Albert Frendo outlined how Bank of Valletta partnered with an audit firm to better understand the dynamics of hotels during these challenging times, their income patterns, monitoring changes in their business models, identifying shifts in consumer preferences, so that the Bank can help in providing financial solutions to reflect the realities of the new normal. “We have witnessed marked changes in the way the sector has been transforming its business model and logistics, banks will be in a better position to propel such change as it better understands changing industry patterns and the derived value.”
The MHRA CEO questioned the approach of banks during these COVID times. What will convince banks to support local entities?
Banks are expected to act with caution to ensure they protects customers’ deposits. Nevertheless, it is also the time for Banks to make a difference and provide support to ensure the sector overcomes the short-term challenges, promotes change and incentivises innovation. “We have once again reaffirmed our commitment to help businesses remain in sound financial stability. We are the leading Bank, by making available the BOV-MDB COVID-19 Assist in actively supporting the impacted sectors to ensure that short term liquidity gaps will not threaten long term sustainability. Nevertheless, sound business fundamentals are critical for entities to overcome this rough patch and it is expected that businesses seek to take well thought decisions to ensure sound, sustainable and forward-looking business models”.
Moving forward, the hospitality sector is expected to go through massive changes. Adequate financial management, adherence to business fundamentals and space for innovation were marked as pivotal for this industry in upcoming years. “This continues to remain very evident during the COVID period, digital solutions have the ability to cushion the crisis and turn it into an opportunity for businesses”. Frendo emphasised that “Digitisation, continuity of remote working, stricter health and safety protocols, and also the involvement of an ESG vision in finance evaluations are all trends to look out for. From a bank perspective we are looking at transformational aspects to encourage digitisation in all industries,” stated Frendo. He concluded that the coming months will be crucial for the hospitality sector to find quick and effective solutions, but he also believes that Malta has a very particular way to innovate and adapt in the near- and medium-term future.
Watch this MHRA Report episode on https://youtu.be/oDKhEhGC5nU.