LONDON - UK-based HalalBooking has secured a £1.6 million ($2 million) Coronavirus Business Interruption Loan (CBILS), a UK-government-backed facility for small and medium sized enterprises (SMEs) to cope with the economic disruption from the crisis.
“This loan is purely a short-term measure to ensure that we are fully prepared, even in the worst case scenario, over the next few months,” Elnur Seyidli, CEO of HalalBooking told Salaam Gateway.
He said the reason for taking the loan now is to ensure the business is prepared, even if travel does not return in 2020.
“It should not be necessary for us to seek further financial support at this time,” he said. “We might do a Series B financing round later in the year or next year but this would be for the purpose of our growth acceleration post-Coronavirus.”
The company raised $2.5 million in Series A funding in December.
The CBILS scheme allows affected SMEs to apply for funding up to £5 million from a participating lender. HalalBooking obtained the loan from HSBC. The UK government guarantees 80% of the finance to the lender and pays interest and any fees for the first 12 months. The main eligibility criteria to apply for the scheme, are that the business has to be UK-based and have an annual turnover of up to £45 million.
Seyidli explained that the application involved the bank reviewing HalalBooking’s latest accounts. The Muslim-friendly travel platform also had to prepare a five-year business plan taking into account three different scenarios in terms of projected sales and showing predicted costs for staffing and other expenses.
All bookings for April and May have had to be cancelled and the online travel agent has received very few bookings since mid-March.
The business has lost a minimum of 2-3 months of sales, according to Seyidli. He cautioned that if travel restrictions persist then more bookings will have to be cancelled.
“We do have a small number of bookings being made for later in the year,” he said.
“It is understandable that whilst we are in complete lockdown, most people will be reluctant to book, however, we do expect that bookings will increase once lockdown is eased and flight restrictions start to be lifted.”
Depending on when travel restrictions end, he estimates HalalBooking will lose around 40% to 80% of bookings compared to 2019.
However, he caveated this by saying because of the company’s 100% growth trajectory before the pandemic it expects to exceed its 2019 sales level in 2021 and continue growth.
“We hope that sales will resume quickly and have been working hard to extend our portfolio, doubling the number of properties which are available,” said Seyidli.
“One of the measures we have taken is to increase the number of properties offering ‘free cancellation’ rates, meaning that anyone booking now has complete flexibility to cancel their booking without charge if they decide nearer the time that they don’t wish to travel.”
As part of the UK pandemic strategy, SMEs can also apply for the Coronavirus Job Retention Scheme where the government will cover 80% of furloughed staff’s wages up to £2,500 per month.
“We have been able to place a number of non-essential staff on the furlough scheme,” said Seyidli. “This means that they will be able to return to work with us as soon as travel restrictions are lifted and bookings resume.”
He said that some staff have reduced working hours while others are still working full-time to ensure that customers, who need to make changes or cancel their bookings, are looked after.
“We currently have no plans to let go of staff, but, of course, we cannot rule this out completely as it depends hugely on the length of the travel restrictions and the continuation of government support schemes,” said the CEO.
POSITIVE OUTLOOK FOR RECOVERY
Looking ahead, Seyidli said outlook for recovery is positive.
“We have a very loyal customer base with more than 120,000 customers and we expect that once flight restrictions have been lifted, bookings will start to come in quickly,” he said.
“Over recent years, we have invested heavily in new customer acquisition and partnerships with partners such as Turkish Airlines, MuslimPro, Kuveyt Turk Bank and Mastercard, which will also help our recovery.”
He added that the company is also finalising a project which will allow it to increase its current property portfolio from 1,750 to more than 4,000 by the end of May.
Some destinations in Turkey, for example, announced measures to certify hotels which adapt their facilities and services for potential social distancing requirements.
As a result HalalBooking will encourage its most popular resorts and hotels to ensure that they comply with local regulations.
Seyidli also anticipates there will be an increase in demand for villa accommodation, allowing families complete privacy and the freedom to keep their distance from others.
“We expect that smaller and boutique hotels may become more popular for the same reason,” he said.
“We are expecting that the first phase of travel is likely to be resuming domestic travel, so we are working hard to increase the number of resorts and suitable accommodation in our main source markets i.e. Germany, the UK, France, Belgium, the Netherlands and Turkey.”
(Reporting by Hassan Jivraj; Editing by Emmy Abdul Alim [email protected])
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