Turning Malta into Palma
A Mediterranean brand
With its high standard facilities, quality service, and a consistently polished reputation on the international yachting circuit, Malta could easily be the next Palma de Mallorca, according to Melita Marine Group chairman Pierre Balzan.
It is a vision he has nurtured for years, firm in his belief that the islands have ample charm to lure the world's wealthiest owners to berth their super yachts in Malta permanently. That vision could pump millions into the economy.
"We want the bigger boats to berth here permanently," he stressed in an interview with The Sunday Times. "The bigger ones are the ones that leave economical benefits, not only in the yachting sector, but also in the local economy. A 50-metre boat would have a dozen crew members on board, earning monthly salaries of between €3,000 and €8,000. They would spend much more than the average tourist. A boat's annual budget for maintenance, supplies, and salaries is around 10 per cent of its worth. Imagine if we managed to attract around 30 boats of this kind. That is the type of business we want. Melita Marine has been aiming for that kind of business for 15 years since it began participating in the Monaco Boat Show and other international exhibitions."
Mr Balzan maintained that local rates for maintenance are "very fair" and quality of services, personnel and craftsmanship were of good standard.
If charges were maintained at this level, Malta should have a very good future in the yachting industry. The government's return on these kinds of transactions and fuel is considerable: A 50-metre yacht would take between 30,000 to 50,000 litres.
The concentration of a designer district that would appeal to big spending owners and crew was of little concern to Mr Balzan. He pointed out that apart from destinations like the south of France or Monaco and other major locations, retail offering was very similar in settings that competed with Malta.
"Retail is a very small part of what you are offering to a high net worth customer," Mr Balzan emphasised. "We have a lot to offer when it comes to culture and tours, and our coast is spectacular, for the size of the island. My concern is that there is not enough entertainment in Malta for people between 30 and 50. Entertainment is more important than retail. There is very little for people to do after visiting any one of our finest restaurants.
"We have multi-billionaire visitors with serious sums to spend and nowhere to spend it. There is definitely a market for exclusive venues - it is a viable ancillary industry that is lacking. These are customers who would book an entire venue for a dozen people and who are ready to pay for it. We accommodate this type of customer very regularly."
Mr Balzan said the economic downturn had done little to hurt these customers. Owners of boats worth €50 million would think little of spending €3,000 on a night out. He conceded that the international yacht industry was in a terrible situation, but service companies had been in majority unaffected. Locally, the Maltese were still buying boats and although berth availability posed several problems, the industry worked together to accommodate a client as best possible. A fourth pontoon will be laid at Manoel Island Marina, managed by Melita Marine, by the end of this month to help alleviate the shortage for boats between 10 and 14 metres. In the case of super yachts, the marina was able to berth the largest to make Maltese waters - 140 metres-plus - comfortably.
With the government identifying locations for new marinas, agencies will hopefully spend less time juggling berths between boats visiting the islands within a few years. There are currently around 2,500 locally owned boats, including boats from six metres, in Maltese waters, and Mr Balzan calculates that at least 30 per cent of Malta's families can afford a boat of their own, small or large.
It was at Manoel Island where Mr Balzan's formidable voyage into the business began. In 1989, aged 20, while he was working with his grandfather, he ventured to Manoel Island and sat on a bollard to admire a 35-metre yacht. Mr Balzan recalled he felt the yachting industry was about to boom and decided that the family business would start taking yachts.
There were agents milling around and a car stopped behind him. A gentleman, who later turned out to be the owner of one of the largest Perini Navi yachts at the time, joined him in admiring the boat. The captain rowed over in a tender and ignored the agents, walking straight towards them. The gentleman firmly instructed him to deal with the young Mr Balzan.
"I turned round and told him I had no idea what to do," Mr Balzan recalled. "He took no notice and ordered: 'Captain, show him the ropes, will you?'"
A yachting agent was born. Over the next few years, Melita Marine - as the company was named - flew its flag at international boat shows, marketing and building the brand, promoting Malta as a destination. Mr Balzan studied foreign business models and took over companies. Melita Marine also introduced specialised yachting services that were lacking in Malta, like specialised mechanical engineering and professional yacht painting services. At the Manoel Island Marina, which the company took over management in 2002, any kind of service across the spectrum, from registration and berthing to tours and hosting, is offered in-house, together with some preferred sub-contractors.
Melita Power Diesel Ltd represents some of the top brands in the business like Scania, MTU, and Detroit Diesel. The company also boasts of a specialised engineering workshop, situated in Bulebel. Heavy investment in this arm of the business has paid off and personnel often travel to yards overseas at the request of foreign boat owners.
Melita Yacht Painters Ltd started out with a team of five and now has 22 specialists on its books. Some of its personnel are currently at the Benetti yard in Livorno working on a 55-metre yacht complete paint job.
Much to Melita Marine's surprise, the local chartering business is healthy for boats up to 24 metres. The company has a portfolio of yachts available for charter from 12 metres to over 100 metres.
"We thought we would have a replica of what happened abroad," Mr Balzan explained. "Overseas, the 50-metre plus sector is well in demand. In Malta, it is the reverse. People can afford to charter but sometimes shy away from it. A boat like the 24-metre Sundene fits in the right bracket - it is not too expense but it is a good-looking yacht. We are really pleased with the way it has been received."
Today, Melita Marine Group encompasses a number of companies employing around 150 (and currently recruiting) across the Mediterranean with an annual turnover running into several million. The secret behind the rapid expansion lies in Mr Balzan pursuing constant investment and resisting the temptation to chase mindless extravagance at a young age - and the support of a team of "very good" managers.
After consolidating Melita Marine's service offering at home, the company began to venture overseas, planting the brand in the most competitive locations in the Mediterranean. The first of the satellite offices was opened in Viareggio, on the corner with Via Coppino, in 1999. Defying the doomsayers who said it would last a week, Melita Marine Italia Ltd is now the group's best operation after Malta. Other offices were progressively opened in Antibes, Croatia, Tunisia, Sicily, Sardinia and Spain. After establishing the brand's presence, each office's portfolio is being expanded to replicate the Malta set-up to varying degrees.
Melita Marine, one of the bidders in the government's marina privatisation drive, is one of the few companies in the Mediterranean to offer all services under one brand around the entire region. Mr Balzan now intends to incorporate all operations within the EU under the umbrella of a single, streamlined company, Melita Marine International.
"We are never going to stop expanding - not even now in these supposedly bad times," Mr Balzan, now a father of two teenagers, said. "We see a very profitable future, the opportunities are there for the taking. We are working very hard on our international reputation. If we only stay in Malta, we would not manage to achieve our goals. I see Melita Marine venturing to the US and other continents eventually."