As he celebrates 50 years at the helm of the Vassallo Group, Nazzareno Vassallo tells Anthony Manduca he wants his company to remain market leaders in construction and elderly care and to become number one in contract catering, student accommodation and the disability sector.

The Vassallo Group has without doubt played a major role in the country’s economic and social development over the past decades. Nazzareno Vassallo, who has headed the business for the last 50 years, says he is proud of the company’s many achievements over the years.

“Our greatest achievement is that we started from humble beginnings, from scratch, and looking back I am proud to say that we are one of the leaders in the construction industry in Malta,” he says.

Indeed, he points out, over the last 50 years the Vassallo Group has been associated with projects of major importance, such as the “landmark” Danish Village and the air terminal – which for the first time involved a consortium of Maltese contractors, a concept Mr Vassallo was encouraging.

“We won the international tender for the air terminal competing against foreign firms. I was appointed the chairman of the consortium, called Novita, and I think those two years of construction were the best two years of my life, as far as construction goes. I had about 700 employees for the project which was inaugurated in 1992,” he says with a sense of pride.

He says that after the building of the air terminal the concept of business consortia took root in Malta.

“We then set up a second consortium for the building of the Freeport Terminal, which was also a landmark project. The idea of a consortium caught on and there were other mega projects such as Midi. We are pleased to have introduced new concepts, such as consortia and turnkey projects which never existed before.”

Being involved in the construction of national projects is something he takes great pride in, such as the St Elmo Bridge and the Siege Bell Memorial, Valletta.  He has also built half the country’s hotels.

Does the group depend too much on the construction sector for its growth?

“We have been in the construction industry from the very beginning and it is without doubt one of our biggest contributors, both in terms of turnover and profitability. Today we have diversified, so we depend on no one particular sector. We love the property market, but we are very conscious about how we involve ourselves in this sector.

“We have a special link to property, I am well known for not selling property; I buy property. The sector is doing well, even though there are problems, such as a lack of workers, but at some stage the situation will inevitably level out. I don’t think this is imminent, however, unless something drastic happens.”

Does he believe there should be a better framework for the construction industry, involving better planning? Some people believe the situation is a ‘free for all’.

“It is a free for all, unfortunately, as everybody is getting involved in property, and while better planning is desirable, it is not easy. I have a theory that the market drives you, and this has always been the case in Malta,” he points out somewhat philosophically.

The Vassallo Group has indeed diversified and another major achievement was when 25 years ago the business entered the elderly care market.

“When I built our first home for the elderly, Casa Arkati in Mosta, people thought I was mad. However, I am very proud to say that we created a niche in the market and a lot of women who had left the labour market found employment in this new economic sector, which is without doubt a good thing. Today we employ over 1,000 people in the caring sector out of the 1,700 group employees, and we take care of 1,500 elderly people,” he says.

“For a long while we were the only group involved in the social sector, today many others are copying us. Somebody described us as social entrepreneurs. I was always interested in the social sector and had also done voluntary work in this area.”

He says that 25 years ago he had a choice to make regarding what to do with his Mosta property. The company conducted a study through the University and the choices were either to build a private school, a private hospital or a home for the elderly.

We are pleased to have introduced new concepts, such as consortia and turnkey projects which never existed before

“Through the study it emerged that the biggest need was for a home for the elderly, and we took a decision. It was the first home designed especially for the elderly [Casa Arkati]. We initially did not have the expertise in this area and we entered into a partnership with UK company Haven Services, which then became Care UK, and hence Care Malta.

“We set up a partnership with the aim of us eventually taking over, which was very successful, and we later bought their shares. The CEO of Care UK was deputy chairman of Care Malta for 22 years and their other director, Robert von Brockdorf, is still a director today.”

Mr Vassallo says he soon began promoting the idea of public private partnerships (PPP) and his first such PPP was the Żejtun Home for the elderly which opened in 1994.

“At that time the minister responsible for the elderly was Louis Galea. He had great vision for the sector and he told me: ‘Let’s carry out a pilot project’. The Żejtun home opened at the same time as the Msida home, the former managed by us, the latter by the government. For three years we met every three months to share our respective results. After three years I can happily say that the Żejtun home was 30 per cent more efficient and more cost-effective for the government.

“We take care of everything at the Zejtun home, from A to Z, and the government pays us for this. The government sends us the residents and we take care of them. The concept was then established and we won tenders for similar homes, such as the Cospicua home, Zammit Clapp Hospital and the biggest one was the Mellieħa home – where a dual management role is in place: us for the hotel side, the government for the caring side.”

He says the PPP system is a  “win-win situation” which can also be expanded to other areas in the social field and even beyond. The disability sector is a case in point, he explains, and the group recently set up HILA to offer services in this area, but there are others such as social housing where a PPP can be used.

HILA, he says, is doing well, andhas already expanded. A joint venture company, Hand in Hand, has been set up which offers a service for children with autism.

Why did he decide to venture in the disability sector?

“After the positive experience we had in the care of the elderly, where we are market leaders and have taken care of over 7,300 people in the last 25 years, we wanted to move ahead. We decided that the next in line is the disability sector, where there was a great need. This was to be our natural next step. We already had a number of people with special needs in our homes and after working on a business development plan we came out with the idea of HILA, which also means ‘homes to independence and limitless abilities’. Casa Apap Bologna in Mosta is our first such home where we offer respite services. Our vision is that we would also like to enter into a PPP with the government for the sector in order for it to grow.”

The Vassallo Group is also involved in tourism and catering. In 2009 Mr Vassallo sold the group’s 50 per cent shareholding in the Islands Hotel Group, which he co-founded, yet the hotel and catering sector is still one of the main pillars of his business.

“We have been involved in this area since 1982 – after we had built a number of hotels – when we opened our first hotel, the Buġibba Holiday Complex. I then entered into a partnership with Winston Zahra and we co-founded the Island Hotels Group. The group expanded to The Coastline, Radisson St Julian’s and Radisson Golden Sands.

“After 22 years it was time for a review of the partnership and we came to an agreement from us to withdraw from it.  We did not withdraw from the tourism sector, however, and we kept the 1,000-bed Buġibba Holiday Complex, which was ours in the first place. In 2010 we opened another hotel, The George, in Paceville, which is one of Malta’s most successful boutique hotels, in partnership with someone else.

“We are also involved in the Riviera Resort in Mellieħa which has been recently refurbished at a cost of about €12 million. With our partners in The George we are also building another boutique hotel, Land’s End, at the Sliema Strand, which should hopefully be opened by some time next year.”

Those two years of construction [of the air terminal] were the best two years of my life, as far as construction goes

When the company sold its shares in the Island Hotels Group in 2009 it opened its own catering arm, CaterEssence, which is involved in contract catering, and which produces 6,000 meals a day. The Cake Box concept was also launched, where the pastry department at CaterEssence caters for a high quality production of a wide variety of pastries.

“So catering is an important major sector within our group,” he stresses.

He says the Vassallo Group is very structured and each company has its own budget, board of directors and management accounts every month. Each company also has its own non-family members on the board of directors as well as non-executive directors.

“In December 2014 we launched a strategy and a five year plan until 2020, called ‘Strategy 2020’. We set three targets for the group: €100 million in sales per year, €100 million net assets and €10 million profit per year.

“Half way through I can say that our assets and profits targets have already been reached, and we are not far off in our turnover, we will get there. Probably by the end of this year we will review our strategy, which has proved successful,” he says.

He explains that the Group’s four main pillars are construction; elderly care; catering and hotels; and property, “where we rent out property”.

“Internally we have a joke that Care Malta and Vassallo Builders compete with each other, and in terms of sales healthcare contributes as much as the construction sector, although in the last few years sales from construction has increased, otherwise Care Malta would have surpassed it.”

Mr Vassallo explains what is behind the Campus Residence project which has been described as the group’s largest project ever.

“We have a strategy group that looks at where the group should be heading into the future. We believe education offers opportunities for our group and so do education-related projects such as a university residence for students. A tender was issued for a PPP type project, a prestigious and much needed project, which we were awarded, in partnership with the university.

“This is a residence to accommodate 800 students, mainly for foreign students but also for Gozitan or Maltese students who want to live on campus. This is a huge project and will create a hub for students, a residential area with a pool, underground parking and a commercial area.

“This will be a village between the University and Mater Dei. We are talking about an investment of €30 million and are awaiting planning permission and are ready to go. The project will take three years and will also be a popular entertainment hub not only for students but for youths.”

Looking ahead what is his vision for the company’s future? Will the group remain a family concern?

“My vision is for us to remain leaders in construction and in elderly care, and to become leaders in the disability sector, contract catering and student accommodation.”

He says that the company does have non-family members on the board of directors “and we intend to carry on moving in this trend”.

He is also very keen to stress that he considers company employees to be “part of our family” who participate in the success of the group through an employee participation scheme. The group also has a scheme by which every year a sum of money is given to its employees based on the number of years they have been with the company, “which shows our appreciation for our employees’ loyalty”.

He adds: “This year three employees retired after 42 years of service with the company and this is very satisfying to me. We are one of the largest private employers in the country and my wish is that the company continues to create numerous jobs in the market.”