University subsidiary eyes running of boutique hotels

Malta University Residence (MUR), a subsidiary company of the University, is planning a number of new ventures, including the construction of a new residence and commercial centre just outside the Msida campus; the running of a boutique hotel in Valletta close to the Valletta campus; the running of a boutique residence in Kappara close to the Msida campus, University Rector Prof Juanito Camilleri says in his document 2020 Vision or Optical Illusion? published by the university.

The rector explains that the University is constrained until 2013 to operate a residence leased under very unfavourable conditions. The residence requires significant maintenance on an ongoing basis making it virtually impossible to operate at a healthy profit.

However the planned ventures have very interesting prospects.

The University, he says, has set its eyes on two adjacent buildings which are owned by government just in front of the main entrance to the Valletta Campus on St. Paul’s Street. These buildings can be interconnected and turned into a charming boutique hotel which can be run by MUHC as an exclusive University of Malta facility.

"The idea here is to collaborate with ITS using the premises as a training ground for young trainees in catering and the hospitality business. Indeed, this hotel can complement the conference activities of the Valletta Campus and will provide the right old-world charm and character in which the University can host visiting professors, scholars, and academics.

"The hotel, moreover, will have restaurant and catering facilities which can support the conference activity across the road and allow the Valletta Campus to be a serious venue for banquets."

At present, MUHC is compiling a detailed business plan for this venture and if deemed viable will raise the capital necessary through a bank loan.

In an overview of the University’s companies, Prof Camilleri explains that in the past four years the various companies of the University were rationalised and restructured to fall under a single holding company – MUHC Ltd.

In this restructuring, much of the direct and indirect subsidy which the University used to pass on to the companies was ironed out and the administration of the companies was streamlined.

TAX DISADVANTAGE

“Admittedly,” the Rector says “the University companies are working against a serious obstacle which hampers their progress somewhat.

“Any academic of the University who provides a service through MUHC or any of its subsidiaries is expected to pay tax at 35%. Unfortunately, the Government considers the University and all of its companies as a single Group.

“Ironically, if University of Malta employees work on a part-time basis with third-parties, they pay tax at 15% on that additional income. So our academics are at a disadvantage when rendering an additional service through their employer!”

This notwithstanding, the Rector said, the University companies should have the potential to create significant revenue streams for the .

SCHOOL OF LANGUAGES

Prof Camilleri said that despite the fact that it does not own its own facilities, if managed properly, the University’s School of Languages can leverage the University of Malta brand to attract significant niche business.

At present, most of the revenue of the School of Languages comes from the Kuwaiti students which the University of Malta has managed to attract.

“The School of Languages must continue to diversify its business. The prospect of opening a branch of the School of Languages in another neighbouring country (Sicily, Tunisia, Libya, Turkey) is also worth investigating.”

MALTA UNIVERSITY CONSULTING

The Rector said that Malta University Consulting, rather than focusing exclusively on the local market, MUC ought to seek international and EU consultancy jobs which allow it to pay any academics at a premium thus mitigating the tax issue mentioned earlier.

SALE OF UNIVERSITY BRANDED ITEMS

Prof Camilleri said the he University of Malta can give MUHC a licence to sell a range of University of Malta branded items – from pens, caps, mugs, to sports and leisurewear, to serious gifts and collectors’ items.

“Admittedly, this venture comes with the risk of ‘dead-stock’ that is why the choice and quality of products, the choice of distribution channels, and the target market need to be properly researched.”

LABORATORY SERVICES

Turning to laboratory services, the Rector says that the University has learnt that it is not easy to offer significant commercial services from labs that are predominantly intended for teaching and research.

"For this reason, it is clear that any significant laboratory services that the University decides to provide, ought to be done in laboratories which are specifically set up outside the University.

"Apart from the lines-of-business mentioned above, the University is nurturing the context to stimulate the creation of start-ups based on technology and innovation being developed by its academics and students."

The setting up of the Technology and Knowledge Transfer Office and the Entrepreneurship Unit were steps in that direction.