RSS Economy News

How Brexit threatens Falklands’ economy — and Spanish fishermen

A no-deal Brexit would deal a severe blow to the economy of Britain’s Falkland Islands which is heavily dependent on squid exports — and to Galicia in Spain where almost all of the molluscs are sent.

Fully 94 percent of the catch, mostly squid, exported from the contested South Atlantic archipelago known to Argentina as the Malvinas and occupied by Britain since 1833, is sent to the port of Vigo in northwestern Spain, some 13,000 kilometres (8,000 miles) away.

There the squid are processed or shipped directly to other European nations. About a third of the squid eaten in continental Europe comes from the Falklands, according to the archipelago’s government.

Fishing accounts for 40 percent of the economic output of the island group which was at the heart of two-month war between Britain and Argentina in 1982. And Galician trawlers staffed mainly with Spaniards dominate the sector.

This trade is profitable because no customs tariffs are slapped on the squid since both Britain and Spain belong to the European Union — but that would end if Britain leaves the bloc without any agreements in place about what their relationship would be in the future.

In that case World Trade Organization (WTO) custom tariff which range from six to 18 percent depending on the nature of the product would apply, according to Richard Hyslop, senior policy advisor to the Falkland Islands government.

“It’s critical that we retain our tariff-free access (with the EU),” Teslyn Barkman, who is in charge of managing natural resources and Brexit related issues with the archipelago’s government, told AFP by telephone, adding it was a “life or death” issue for the Falkland’s economy.

– Rush shipments –

Fearing a no-deal Brexit before an initial March 29 deadline for Britain to leave the EU, fishing firms rushed three ships with 21,000 tonnes of squid to Vigo to try to avoid paying hefty customs duties.

Galician trawlers also worry a no-deal Brexit would mean they lose access to Britain’s fishing waters.

But British Prime Minister Theresa May last week asked fellow EU leaders to postpone Brexit for a second time, from April 12 to October 31, giving London a chance to negotiate an exit deal — and the three trawlers loaded with squid more time to reach Galicia.

The first trawler to arrive began unloading its cargo in Vigo this weekend.

“We create jobs, wealth” but “there is total uncertainty, we don’t know what will happen to the Spanish fleet” if there is a no-deal Brexit,” said Javier Touza, the president of fishing vessel owners’ cooperative Arvi at the port of Vigo.

“What we ask is that we can continue to fish. We have the biggest ships in the Galician fleet over there,” he added.

– ‘Frustrating’ –

Forty-three trawlers which belong to Arvi currently operate in the waters of the Falklands Islands.

Twenty-four fly the Spanish flag while the rest use the flag of the Falklands even though “the majority of their crew is Spanish and 100 percent of their cargo ends up in the port of Vigo,” said Touza.

The regional government of Galicia estimates around 1,700 crew members of fishing trawlers could be affected if Britain crashes out of the EU without a divorce deal.

This figure combines crew deployed on ships in the waters of the Falklands as well as those on the 66 trawlers that operate in British waters in Europe.

Against this backdrop of uncertainty, fishermen who work in the waters of the Falklands are on track for another record haul of squid this year, after catching 78,913 tonnes in 2018.

The archipelago, which is also heavily dependent on sheep farming, is home to just 3,000 people — which is why it relies on Spanish fishing crews.

“Europe wants to buy, eat and enjoy our world quality premium calamari. It’s frustrating to be in that position but it makes sense to keep that relationship,” said Barkman.

Source: https://www.france24.com/en/20190418-how-brexit-threatens-falklands-economy-spanish-fishermen

How Innovation in Hospitality Financing Is Shaking up Commercial Real Estate

For a number of reasons, hospitality services have been very profitable lately. Wisely, the industry is using these times to invest in new technologies that improve processes and experiences. Some of these changes are obvious, personalization for valued guests and smart-room technologies with lobby integrations for example. However, it’s the less talked about advancements never seen by consumers that are making some of the most significant impacts on the growth and success of hotel real estate.

This is particularly true with hotel lending. Technology has streamlined the borrower application and underwriting process, a workflow that has remained largely unchanged up to this point. The new approach has been reimagined from a fresh perspective (rather than updating dated and broken workflows), and the implications of this change have the potential to radically impact the bigger world of commercial real estate.

The traditional loan application process has been by-and-large frustrating, time-consuming and oftentimes complicated. In most cases, borrowers have been required to submit sensitive and pertinent documentation either in-person or via email attachments. After submitting, the lender must double check to ensure the documents were received. And even if the documents have been received by the financial institution and are deemed complete and accurate, it isn’t always clear if every department within the same organization (such as business development and underwriting) have access to the same data and documents. As a result, many applications remain in a state of limbo for an unnecessary period of time and borrowers do not have any type of view into the status of their request. Naturally, tensions can run high.

The good news is that digital lending platforms seem to finally be making inroads. While online loan applications aren’t necessarily new, extending the automation of tasks through to underwriting and other areas of the lender’s back office are improving the speed and quality of loan decisions. Why does that matter? More borrowers are gaining quicker access to the capital they need to fund new projects with confidence.

Streamlining applications

Every lender’s policies are different, but there are ubiquitous commonalities to the borrower loan application process. So, it makes sense that a universal loan application exists to detail the criteria needed from prospective borrowers. When forms are standardized and presented in a digital, dynamic format, whereby questions are based on the borrower’s previous responses to things like loan type and purpose, lenders receive loan requests that are more complete and easier to decision.

Another emerging concept in hotel and real estate financing is leveraging a single, digital portal to streamline checklist activity such as uploading or accessing documentation and monitoring the status of an application. This is especially important when there is a borrower consortium for a loan, quite common in the hotel industry. Each person in the group can upload respective personal financial statements that are confidential and only accessible by the lender. Borrowers gain the efficiency to easily manage how this data gets contributed to the lender. And in turn, lenders can better manage their own custom due diligence checklists of what’s needed from the borrower, helping eliminate frustration and preserving the borrower-lender relationship.

With more lenders and borrowers uniting on mutually beneficial marketplaces, the manner in which loans are applied for and processed is changing for the better. It’s far less tedious and time-consuming; a loan decision that normally took 60 to 90 days can now be executed in well under 30 days.  

Simplifying negotiations

While many banks and some credit unions offer hospitality financing, it is a niche field and there are lending hurdles, especially for new builds or construction projects. For this reason, frustrated borrowers often look to private lenders. One such Dallas-based direct private lender closed nearly $400 million in hospitality loans in 2018. And while there is a host of reputable private lending firms for borrowers to consider, the interest rates on offered loans are usually higher than a traditional lending institution. This leaves borrowers in a pickle.

According to the American Bankers Association 2018 “The State of Digital Lending” report, banks are seeking to compete with non-bank lending firms by expanding digital lending channels. While the report noted that many traditional banks offer “some form of digital capabilities around lending,” such as loan status, loan payments and basic account information, “the majority of banks’ lending processes, including online applications, onboarding, processing, underwriting and funding, have yet to be overhauled through technology.”

Now, streamlined lending marketplaces offer borrowers the opportunity to negotiate the best loan terms from even the traditional lenders–all with one application. Recall the aforementioned digital loan portal. This represents a huge step forward in lending, especially given that in the past the borrower would fill out a loan application for every single lender, inputting the same data in the same required fields several times over. This can deter an otherwise well-qualified borrower who grows weary of the process to truly seek out the most competitive rate, agreeing possibly to an offer that’s merely the “best” within a limited scope. Or, the borrower gets careless with duplicative data entry and provides incorrect information or misses required fields altogether.

Alternatively, online lending platforms enable borrowers to simplify data entry by requesting it just once and submitting a standard application to multiple lenders with one click. Information is repurposed across requests and can be updated over time as needed for future loan requests. In a marketplace format, applicants can indicate what type of lenders they are seeking and which loan programs they are open to. The lenders, in turn, can target the type of borrower they would consider engaging and avoid needing to manually filter through hundreds of applications.

Lenders and borrowers share the same frustrations with the loan application process. Whereas a borrower may be overwhelmed by the process, a lending officer may also grow tired of triple-checking, for example, that all forms are completed and signed. These back-and-forth exchanges ultimately take a toll on the borrower-lender relationship. But by engaging a digital loan platform, the platform essentially becomes the application manager alerting both the lender and the borrower about the status of the loan application, what forms are required and when, or when the lender has made a loan decision.

Closing the deal

Digital lending platforms are an industry game changer for delivering that loan approval too. Deals can happen more quickly because all documentation related to the project is housed in one secure location. Critical loan data is current and always at the ready. As a result, informed decisions are made in real time about a project, be it an acquisition, new construction or refinancing.

Whether a borrower is experienced or inexperienced in hospitality, technology is leveling the playing field. And while industry experts have historically advised borrowers to allow at least three months for the loan discovery and selection process, tech tools, in many cases, have reduced the application process time by two thirds or more.

Hospitality is considered one of the more complicated and riskier commercial real estate loans. The evolution toward a more modern way of lending will translate to address the common challenges found across all commercial real estate. Technology has provided a way to streamline the borrower application and underwriting process, and its use is only going to grow.

Source:https://www.propmodo.com/how-innovation-in-hospitality-financing-is-shaking-up-commercial-real-estate/