Investment in the local tourism industry

Investor appetite for local tourism related investments is healthy. This can be seen through the strong take-up of new bonds issued by hoteliers during the last year accompanied by a significant demand for shares of companies related to the tourism industry on the Malta Stock Exchange.

This was stated by Steve Ellul, Head at BOV Asset Management Limited during the announcement of results of the MHRA BOV Deloitte survey for the second quarter of 2019 that showed a significant increase in bed nights over 2018.

Investors tend to look for sustainable growth in this industry’ continued Ellul. ‘This is particularly true for equity investors, whilst bond investors generally consider interest coverage as one of the main driver for the investment decisions.’ In his intervention, Ellul also argued that given its importance to the local economy, the Maltese tourism industry benefits from a very supportive government policy. This is being reflected by a recent World Economic Forum report which ranks Malta as 1st globally for the prioritisation of travel and tourism.

The main benefits for industry players when accessing the Maltese capital markets include the monetisation on otherwise locked wealth on the balance sheet without any loss of control by the owners on the business. This is also coupled by taxation benefits on shares listed on the stock exchange along with the real possibility to pursue growth prospects through a diversified element of financing.

‘The financial industry needs to continue in its endeavours to inform and educate potential issuers about such opportunities’ proceeded Mr Ellul. ‘On their part, industry participants would need to allow for a change in corporate culture towards more open and transparent communication with capital markets which would allow potential investors to make a well-informed decision.’