The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A BISX-listed company yesterday said it remains "bullish" on a $1.2m travel agency investment that it believes can still target a Bahamian market worth up to $1bn post-COVID-19.

Julian Brown, pictured, Benchmark (Bahamas) president and chief executive, conceded to Tribune Business that "the timing might be off" with its Premier Travel outlay but argued that the pandemic had "actually been a blessing in disguise" by providing more time to adjust the company's business model.

Voicing confidence in the industry's ability to rebound despite its total COVID-19 shutdown, the Benchmark chief said Premier Travel intended to pursue a local travel market with an online booking engine he pledged will be "as powerful" as the likes of Travelocity and Expedia.

Arguing that Benchmark's first venture capital investment will be able to compete with global rivals on technology and price, Mr Brown said it will seek a competitive advantage on customer service and use the pandemic to persuade Bahamians about the value of keeping their spending in the local economy.

He added that Benchmark's ultimate goal is to take Premier Travel public via an initial public offering (IPO) "when it makes sense", although the BISX-listed firm is now unlikely to exercise its option to convert its investment in the company into a controlling 51 percent equity stake this year.

Benchmark's audited full-year 2019 financial statements show that its entry into the travel agency business in late 2018 was ill-timed, at least in the short-term, due to the economic fall-out from COVID-19. "The effects of the pandemic on the travel industry have had a significant effect on the business of an entity to whom loans and advances totalling $1.208m were extended by one of the company's subsidiaries," the statements revealed.

"Under the terms of a management and consultancy agreement, the subsidiary has the option to convert the loan to common shares in the entity. This option, once exercised, will permit the subsidiary to convert its loan into a controlling interest in the entity of up to 51 percent. It is anticipated that this option will be exercised towards the end of 2020. This convertible option is at the discretion of the subsidiary, and has no expiration date."

Mr Brown said this will no longer happen in 2020, but he reassured: "At the time we did it we were very positive on the investment, and we're still very positive on the investment. We don't believe the travel business is going to disappear.

"It's [COVID-19] given us an opportunity to rethink the business, and we have some strategies that we are going to utilise when the industry returns to normal. We're not worried at all about whether this is a business we should be investing in. The timing might be off with COVID-19, but we believe that Premier Travel - with 30 years of history - is going to put forward a business model that is going to be very interesting."

Mr Brown said the company's "deep" research suggested that the domestic travel market, involving outbound trips by Bahamians and residents, was worth between $250m to $1bn per year. Premier Travel, he added, will target this market and especially the share held by international booking engines.

"Expedia and Travelocity come into The Bahamas and provide services to Bahamians," he told Tribune Business. "That leaks significant amounts of capital and dollars out of the Bahamian economy through commissions paid by the likes of Bahamasair without them providing any local stimulus. They don't invest in The Bahamas, and we're going to attack that from several different perspectives."

Arguing that Premier Travel has the same online booking capacity, the Benchmark chief said the company was licensed to use the same Amadeus booking/ticketing platform employed by Bahamasair and other airlines. It was also a member of the International Air Transport Association (IATA), and enjoyed a line of credit with the major airlines that allowed it to book tickets on their dollar.

Besides keeping dollars at home, which will be critical to the Bahamian economy's recovery prospects pot-COVID-19, Mr Brown said Premier Travel will differentiate itself from rivals through service. Customers, he added, would be able to call the agency from anywhere in the world and have their problems resolved - something he said rival online booking engines do no offer.

Arguing that "the ability to have some recourse is almost non-existent" with competitors, Mr Brown pointed to what he said were thousands of dollars lost in cancelled COVID-19 ticket sales that were never refunded to customers.

"Our goal is to have Bahamians book hotels, airline tickets and rental cars in The Bahamas with the same efficiency as an online engine," Mr Brown said. "We want to show the Bahamian public there is an opportunity to book online because when we come out of the COVID-19 pandemic and start to re-energise the economy we're going to have a booking engine as perfect as Expedia and Travelocity offer.

"But what we can offer is someone to call if they run into a problem. The difference between their price and ours is none, and we have the same level of technology.... Bahamians need to understand that they need to invest in their country and that message is going to be sent to everyone when we begin to travel.

"We're bullish on our investment in Premier Travel. Premier Travel is going to be one of the future jewels in our crown. It's a huge business. We're looking to do some very out-of-the-box and aggressive things when we come back out of COVID-19."

Mr Brown said Premier Travel was looking at expanding its presence to other areas of The Bahamas via extra office locations, and added: "We have to get Bahamians involved in spending money at home when they're going abroad. We're putting together a model to challenge that."

He added that Premier Travel, which is currently based in Benchmark's Carmichael Road and Fire Trail Road office complex with a staff of eight, had not laid any workers off and was continuing to pay their salaries through the COVID-19 pandemic. Benchmark had also provided rent relief, and relaxed the consultancy and management fees it is due.