News that Europe’s third-largest tour operator has filed for insolvency came as a shock for many of those whose livelihoods will be impacted, including employees of its subsidiaries and the many firms that are owned money from the company.

The firm’s link to Malta is substantial, with the Mediterranean country being the first destination offered by the tour operator upon its incorporation in 1983 – as per its website.

The local firm FTIAS – formerly known as Finserv – also handles all invoices for the group – employing as many as 250 people at one point.

WhosWho.mt spoke to company insiders, competitors, industry representatives and professional groups to understand what happened, why, and how the people touched by FTI Touristik’s many operations will be impacted.

With so many threads to unravel, let’s dive in.

FTIAS likely to get the chop

FTIAS, located in Smart City, provides back-office services to FTI Touristik. It was initially a small firm only handling invoices from local tourism operators, growing along with the group as the German management assigned the local English-speaking workforce the invoices from the US, then the English-speaking world, and then from everywhere else the group was operating in.

At a point, FTIAS had around 250 employees, though that number has since shrunken to around 100.

With its fortunes inextricably linked to those of its parent – no global operations mean no invoices, and therefore no work for the back-office firm – FTIAS is among the companies that are first in line to get the chop.

Job losses? No problem

An influx of 100 accountants looking for a job might have been a problem once, but in the current tight job market, these jobseekers are likely to be swept up right away.

“The demand for accountants is there,” says a representative for the Malta Institute of Accountants. “The main problem we face is the exact opposite – firms contact us to express their difficulty in finding enough people.”

While losing one’s job is never a pleasant experience, the shortage of qualified, experienced accountants means that any FTIAS workers are not likely to be unemployed for long.

The other local firm owned by FTI Touristik is Meeting Point Malta, which acts as the group’s local destination management company. An industry source believes it “will be very difficult” for the company to keep going, with much depending on just how much of its business was directed to it from FTI itself.

“Most likely, the local firm’s revenue from other tour operators is not enough to justify its continued operation, unfortunately.”

However, should the company be forced to fold, the country’s booming tourism sector is well-placed to absorb any job losses – which should be minimal, since much of the incoming operation was already hived off to Italy.

The Mellieħa hotel will remain open

The Labranda brand is owned by MP Hotels, an FTI Touristik subsidiary that has not – as of yet – filed for bankruptcy.

Nonetheless, the MP Hotels website redirects to a page informing clients of FTI’s insolvency proceedings, while the Labranda website is entirely offline, since all URLs are owned by the holding company that filed for bankruptcy.

New URLs are expected to come online in the coming days, but in the meantime, the Mellieħa hotel is still accepting bookings by phone, from tour operators, and on online booking agents like Booking.com.

Although the brand is owned by FTI, the property is not. Should Labranda file for insolvency, it is envisioned that the staff and the running of the Mellieħa hotel will be taken over by a different international marque or by its Maltese owners, according to a source close to the company.

Local operators are not too exposed …

As a tour operator, FTI Touristik would often collect money from its clients, who would then come to Malta and enjoy the accommodation, the sun and sand, and any other leisure experiences they might have booked.

The local operators – mainly hotels, but also car hire companies, coach operators, and any other suppliers on the ground – would typically receive their money from FTI in 30 to 90 days.

Assuming credit terms for 90 days across the board, that means that the local industry may see the last three months’ income from FTI go up in smoke.

Thankfully, the impact is likely to be minimal.

“Let’s say that local firms are awaiting payments for their services over the March, April May period,” says one competitor, who declined to be named. “These are not peak months, but they are not the lowest season either.”

FTI Touristik was largely a leisure tour operator, selling Malta’s sun, sea and sand to Europeans looking for a summer getaway. “So its business model was geared for the summer, making it unlikely to have any significant outstanding payments to make for the last few months.”

… but Gozo will feel it more

FTI’s business was more concentrated in the north of the island and in Gozo, and in fact, it seems to be Gozo that is bearing the brunt of the local impacts.

Gozo Tourism Association CEO Joe Muscat says that a number of the major hotels in Gozo were affected by the insolvency announcement.

“These hotels were affected first and foremost with thousands of euro in dues from previous accommodation bills,” he says.

Additionally, “hundreds of bed nights in these hotels for the coming season were also affected and will eventually be lost.”

Still, the timing is ‘a bit of a silver lining’

Malta Hotels and Restaurants Association President Tony Zahra says that the situation is a far cry from what it would have been if the firm were to enter administration after the summer.

“Typically, tour operator insolvencies come at the end of the season, because of a lack of cash flow when the money collected from clients fails to cover the money they owe the local operators.”

At the end of the season, such a collapse would have had considerably more far-reaching implications for the tourism sector.

"The reports we have are that hotels that used to host clients of FTI have invoices not paid going back some months but given it was winter, when the number of guests is less and the room rate is less, the amounts owed are not as large as they would have been had it been October.

"Hoteliers are now hard at work diverting allocated accommodation from FTI to other operators. This is taking time and of course will require effort to replace FTI with other operators at very short notice."

What about my holiday?

Germany’s Die Zeit estimated that 65,000 holidaymakers travelling with FTI Touristik could be affected. However, the German Government is not reportedly anticipating the need to repatriate people, since most of the package tours sold by the company were insured.

However, anyone who has not yet begun their holiday – that is, anyone travelling after 4th June – has already been notified that their booking has been cancelled.

Their travel agents are now frantically rebooking holidays – although prices would have increased markedly by now.

Ultimately, it was a long time coming

Founded in 1980 as a language travel specialist by Dietmar Gunz, an Austrian, FTI Touristik is now part of a group of around 700 brands.

In its 44 years of operation, it has had its fair share of corporate drama, with Mr Gunz leaving the firm in 2000 before rejoining in 2003.

Egyptian billionaire Samih Sawiris acquired a substantial portion of the company in 2014, and bought the rest in 2020, at the onset of the COVID-19 pandemic, at a time when the company “had its back to the wall,” according to a German industry source.

FTI was able to stay afloat thanks to €650 million in subsidised loans as part of the German Government’s relief for the industry, but now that it was time to start paying it back, it found that it could not do so.

Earlier this year, it was announced that a consortium led by US financial investors Certares would be taking over the entire group for a symbolic €1, promising to invest €125 million in FTI.

However, the firm filed for bankruptcy before the takeover obtained regulatory approval.