One of Zaren Vassallo’s striking characteristics is that he doesn’t seem to have a bone of negativity in his body. Whatever he may be feeling on the inside, his cheerful exterior constantly radiates optimism and positivity.
But he is certainly no dreamer. The Vassallo Group chairman can see trouble brewing from many miles away. In a media interview last year, he had warned of clouds on the horizon while others were still intoxicated by the champagne bubbles of economic boom. “It won’t last forever,” he had said, “and the stakes are very high because when the slowdown arrives people will get hurt.”
If nobody heeded his words of caution then, they are certainly feeling the effects now. Zaren believes the slowdown had started early in 2019 even though some were keen to “maintain the hype”. It hit with full force earlier this year with the outbreak of the COVID-19 pandemic. “The hype to move forward switched to taking action to limit the damage.”
Zaren says lower rental rates have already become the rule rather than the exception and there is clearly an oversupply in the property market. “On paper, you won’t see prices going down but in practice they will – because people will accept lower offers, especially now that bank loan moratoriums are coming to an end. This will affect construction and I expect 2021 to be a difficult year.”
The Vassallo Group had started 2020 well – in line with the 2020 vision it has nurtured over the past five years – and financial results for January and February were “excellent”. Then COVID hit.
“During the first wave, we took several important measures at all our facilities including CaterEssence, HILA and, of course, CareMalta. Our staff were heroic. Care workers, for example, agreed to live-in at the premises for the sake of our residents. They had no idea how long it would last; they were there for 10 weeks. It was a really special effort.”
The chairman says he would never have imagined something of this nature would impact the business. “We have been affected in the past by certain issues but nothing on this scale. Care homes and in particular the catering and hospitality aspects of our business have been negatively impacted. Having said that, my father and grandfather endured war and Spanish Flu – so it seems that every so often the human race is called upon to go through extraordinary times.”
Zaren, himself considered in a vulnerable age category, did not leave his home for around three months during the initial onset of the pandemic, and is sad to have missed his traditional Easter visits to CareMalta’s residences. However, going forward he does not see such extreme measures as practical. “We cannot again ask our staff to be in such an environment – away from their families – for so long.”
Till now, he says the Group has contained the situation. But it is not immune. “The next six months will be critical.” However, he adds that the company placed itself in a good position to deal with a reshaped economy – taking a decision some years ago to diversify the business by investing in specialised care homes.
“I do not like to go with the trend, but prefer to identify new niches. That’s what we had done when we went into the care sector for the first time in 1990 by opening Casa Arkati. Taking that direction has been satisfying not because our homes provide a good dividend – though that matters – but because we have created 1,200 new jobs and now have 13 facilities with 1,700 residents after starting out with just six employees.
“As well as our homes, we are proceeding with two big projects: our business park in Burmarrad as well as the residence and community centre at the University of Malta. Thankfully, both these projects are not due to be completed for at least another year and we are hopeful the situation will return to some form of normality by then.
Ever the business mind, Zaren does, however, foresee that new opportunities will present themselves during the economic turmoil caused by the pandemic. “I remain positive. We are keeping our eyes fully wide open and are always on the lookout for something new that makes sense.
“It is those who have their eggs in one basket – and the wrong basket – who will suffer most. I feel for them because they have been caught out by this. Our Group will get through 2020 and is not too far away from the targets we set. Our diversification proved to be the best strategy we could have adopted.
He also maintains Malta should learn a lesson from this experience: “We cannot try and do everything in one go. All the roads were dug up at the same time, for example. We have been in too much of a rush to develop and should have thought harder about being more sustainable. Ghettos were also allowed to develop in certain areas without considering the social problems that were likely to arise when there was an economic slowdown.”
Zaren’s social conscience is a constant feature in a discussion with him. He says it’s something he felt from a young age and is a factor that drives him to continue to play a prominent role in his family business that involves his five children in different roles.
“Through our care facilities, we have changed people’s lives for the better and are now taking that one step further with specialised homes (dementia care, disability and ALS and other degenerative diseases). We have dealt with more people than the populations of Valletta and Floriana combined. But we view our residents as people not numbers. We have decided against building additional floors at our facilities to ensure that each person is treated as an individual.
“We have cared for everyone: from the first President of Malta (Sir Anthony Mamo) to the poorest in society. It’s not about how much money you have, but serving people’s needs. Operating in this sector has also made it possible to bring more women into the workforce. These achievements bring me great satisfaction.”
With a cheerful smile, he also enthuses about celebrating the Group’s 75th anniversary in 2021. “We are proud of where we came from – the construction industry – and very happy with the way we have developed.
“We hope to involve our employees in our celebrations – as long as the pandemic doesn’t stop us – and will publish a plan for the year. Not every company makes it as far as we have and I would like to thank everyone who has made a contribution in some form or other over the years.
It is no surprise that he counts among these contributors clients, partners, banks and, of course, the families who have entrusted the Group with caring for their loved ones.
“That’s the biggest success of all”.