Speech by Philip Fenech – Paceville – Reviving Malta’s Entertainment Capital

Your Excellency, Hon Ministers, Parliamentary Secretaries, Shadow Ministers, ladies and gentlemen Good Morning.

In nightlife we say ‘What’s so good about the morning?’ and I thank those who, like myself, are dedicating a lump amount of your sleeping time to this morning’s venue. The revival of Paceville is directly important to us, but also to many small and larger businesses who supply our area with their goods and services.

26 years ago when I started operating in the area there were only some six establishments, a few major hotels including the Sheraton and the Hilton, a Casino and a number of holiday apartments, the majority of which were frequented by the prevailing British services occupying this geographical zone at the time. This was the birth of the zone we now know as Paceville – a zone which offered relaxation and entertainment to the then resident and visiting British community.

Today, the St. Julians area has about 250 entertainment outlets inclusive of wine and spirit bars, catering establishments, from take-aways to restaurants offering local and international cuisine, discothèques, coffee shops, karaoke bars, jazz bars, salsa bars, late night bars equipped with the most sophisticated technology. It also has shopping areas, a yacht marina, cinemas, bowling alley as well as a range of hotels including the top classified on the island.
How much investment are we talking about? By comparison… We estimate that the private investment made in the area over the last ten to fifteen years is more than Enemalta’s total book value (end 2004), or if you prefer; more than two Smart-city equivalents; more than twice the book value of Airmalta (end 2004); and much more than that being made by Government in the new hospital!

[Paceville the meeting point]

All this investment provides a multitude of diverse outlets making Paceville the 24 hour zone of Malta attracting tourists and local population of different ages and cultural backgrounds. This has developed Paceville into the meeting point for the Maltese with the tourist community, during day and night, but perhaps we associate Paceville more with nightlife activities.

Nightlife is a good barometer of what is happening in Maltese society such as economic, political and social patterns; as much as an indicator of the volumes, quality and seasonal patterns of tourist inflows. What these indicators are showing is not pleasing, at all!

[The downward trend]

I have seen the business pattern of Paceville fluctuating over the long years that I’ve dedicated to this entertainment area. However, the downward trend we have been experiencing over the last four years has never been so drastic and difficult in its history unfortunately. This can be testified by local operators present in this audience.

This is happening concurrently when our operating costs have been inflated sky high. It is fair to say that this pattern is not an experience exclusive to Paceville but is also a general pattern that extends to other entertainment areas on our islands such as Bugibba, Marsascala and Gozo.

Of course there are pockets in our leisure economy that may not be included in this pattern since there are establishments which, for one or more reasons, seem to be immune to this downward trend. However this is a small minority. The majority is bleeding profusely.

Like with all other investments, shareholders, management and the banks, want to see a return on capital employed. This requires us all to do what is strategically right, even if it may not be immediately profitable.

[The economy]

I believe that this situation has evolved out of a number of reasons. However, the irrefutable reasons are two: our sharp seasonal fluctuations coupled with lower volumes in tourism, which has resulted in an uneven distributed occupancy rate, and, two; the lack of local consumers’ confidence and their lack of disposable income due to the overall static economic situation and rising cost of living.

Other reasons have contributed to both and I will mention just a few:

[The Smoking ban]

The smoking ban also had its effect, which though we believe is positive from a health point of view had negative effects on the entertainment structures in our community as it changed the dynamics of how business is done in this area.

[The opening of discounting bars]

On top of it, the opening of bottle shops doing business as bottle bars and the hefty discounting and special offers has certainly not been a bonus to the sustainability of the area. It has also resulted in attracting a younger generation of consumers to the area with less spending potential which gives a misperception that the area is attracting a very young and boisterous market. This, in my view, has deterred the frequency of visits of the real market that matters to Paceville, the market that has spending power which frequented the various outlets of the neighbourhood and which allowed a level playing field to all alike in Paceville.

[A structural approach for the future]

Well, I don’t want to be boring and keep on nagging on the unfortunate results we are drenched in. We live and survive in a dynamic sector and we know that given the necessary political and economic will to support us, we are able to pull ourselves out of this drench.

So I will immediately delve briefly into a few issues that I am sure will help us move ahead and turn our situation into an economically viable one for all alike, as tenders of Paceville outlets. We have to identify the means of harmonization and market regeneration of this major entertainment zone which is our bread and butter and of hundreds that work in the area or related sectors.

Security in Paceville

We all believe in the security offered to Paceville and the sterling work that the Police force provides. However, this is not a militant base but an entertainment area and therefore it does not warrant a militant welcome at the forefront access of the area. We believe that the Police Force should position themselves in strategic locations but not be in full force the welcome hosts of Paceville.

Opening hours

The police force, by the authority convened to them by the prevailing legislation, enforce that outlets have to switch off music by 4 o’clock, even in sound-proof establishments. Unfortunately this law is not evenly enforced, which results in unfair competition in the market. Moreover, we maintain that the previous time of a 6 o’clock music phase off should be re-introduced and this is being lobbied with the local authorities by GRTU on our behalf.

Curfew of underage youths

The law prohibits the sale of alcohol to minors. However, it does not address its distribution resulting in abundant examples of alcohol abuse by minors on our streets leading to more notorious gossip and the degenerating ambience of Paceville. This regulatory system is too frail and it is not rendering objective results. GRTU is continuing to lobby for the curfew of underage youths in the area.

Inspections by the Police

Again, while we appreciate the work of the Police, prudence and a degree of proportionality are crucial when enforcing the law within our establishments. For example inspections/offences relating to nicotine are minor compared to incidents of violence or drug abuse which may occasionally prevail in the area.

Rendering our streets more civic

Drinking from glass containers is illegal whereas from plastic it isn’t. This measure defeated the whole scope of trying to render our streets more civic and concentrate drinking to the establishment confines. Legislation in this respect needs to be amended if we are to realistically implement our initiatives and enhance the viability of our investments.

Appropriate street signage

As you are all aware, there are a number of varied outlets in every street of Paceville. The importance of appropriate signage which clearly indicates the establishments and entertainment offered in the different streets is growing and I believe we should implement it without further delay.

Refuse collection

Refuse collection is presently done by a number of private collectors in the area which may come at different times. We believe that for hygienic and logistic reasons, the system should be centralized. This may even be more economical.

Parking
Parking has always been a handicap in Paceville although it is fair to say that more parking areas have been created especially through Pender Place, athough we are all aware that it’s fate is ambiguous at best.
The introduction of the Paceville residents’ parking scheme is against GRTU’s proposals as it has given residents priority over entrepreneurs in this area which in itself is limiting parking space in the centre of the Paceville and St. Julian’s area.

Innovation

It is essential that we maintain diversity which may be both cultural and economically enriching. We should therefore be more innovative in our business ideas and continue to create more themed novelties instead of the copy-cat syndrome taking into consideration the multi-diversity of clients the area attracts.

Policy Makers Listen

The Maltese entrepreneur/investor has confidence in the potential of the Paceville economy and this is reflected in the hundreds of millions that are invested in the area. We therefore urge politicians and policy makers to take head of our ailments, ideas, proposals, and enthusiasm to help us bring Paceville back on its feet.

(administration of the area)
These are only a few of the issues that we are facing at present.

We believe that it is high time to set up a single point of contact (SPC) through which we can channel all our day to day issues to the respective authorities. This was on our agenda a few years back and needs to be re-activated and brought to life now. Such an administrative body would save a lot of time and frustration, and be more effective, rather than having me running and calling from one authority to the other, even if I have always done this whole heartedly.

May I take this opportunity to thank the authorities concerned for the project undertaken two years ago to embellish the area. I believe that this positive move should be maintained by regular upkeep of the whole zone and a maintenance plan needs to be adopted for the short and long term. There is so much that can be done to upgrade the general and common infrastructure.

[Sustainability]

Earlier on I mentioned that what the indicators are showing is not pleasing at all – Highly seasonal and lower tourist inflows and low spending power by the locals.

These issues crystallize the root of the state of affairs in Paceville and the urgent need of a continuous and increased flow of locals as well as tourists.

I strongly believe that if our area is better managed and we create some novelty to our business, instead of copy-cat strategies and price wars, we will succeed in attracting the locals to the area. But we have always known that the local market is not enough to sustain us. We are geared for higher volumes and therefore the flow of tourists needed to be ensured before and more so now, that the supply side is growing in all areas of the leisure industry while demand remains sluggish. So, while the supply and demand gap is widening, our operational costs have rocketed with energy and water bills that have been increased by more than 17 times the rate of inflation. (and by 20 times by year end)

Increasing the number of tourists

A constant flow of tourists and the smoothing off of seasonality is essential to start to counterbalance these effects. Presently tour operators to Malta are downsizing their operations, or worse still pulling out. It is crucial to do our utmost to keep the tour operators from abandoning Malta. AirMalta’s restructuring is very important for it to retain its position in the market or to re-position itself and to be competitive in the airline cut-throat business.
But we cannot ignore or even neglect the potential new growth in our tourism numbers generated by low cost airlines. Every new business entry calls for re-positioning by other players in the same market, but not exit. The Low Cost Airline issue is now long overdue and we cannot leave them out. This reminds me of when we were afraid of computers because they will take our jobs and therefore we delayed their entry. We know much much better today as Malta has become a major ICT hub because we embraced and exploited the technology and our systems to our advantage.

GRTU is lobbying strongly for Government to facilitate the introduction of major Low Cost Airlines to Malta. This will aide not only Paceville but the Maltese economy in its entirety.

This has been brief, but I believe it provides some ground for our way ahead. Paceville merits once more to become Malta’s central-hub of entertainment, buzzing with energy and activities. Our capital investment is there, Government needs to listen to us more and decide where necessary and as necessary – we need to trust in our future and invest more effort into making it happen! It can happen!

THANK YOU