The online travel industry in the Middle East may still be in its infancy, but industry experts believe relevant factors such as active flight connectivity and availability of hotel rooms could help boost the region’s tourism sector.
Currently, the region proves to be a challenging market. With less than a quarter of its population having access to the internet, online travel bookings have been slow to pick up in the Middle East.
According to a June 2009 global survey conducted by InternetWorldStats.com, only 48 million or 23.7 per cent of the 203 million regional population have access to the internet. This represents a paltry figure when compared to the 73.9 per cent internet usage in North America, 60.1 per cent in Australia/Oceania, and 50.1 per cent in Europe.
In the Gulf, UAE has the highest internet penetration at nearly 60 per cent, followed by Qatar (52.3 per cent), Bahrain (34.3 per cent), Kuwait (33.4 per cent), Saudi Arabia (25.1 per cent) and Oman (13.7 per cent).
InternetWorldStats.com, however, noted that the Middle East has posted the highest internet usage growth rate at 1,360.2 per cent between 2000 and 2009, followed by Africa with 1,359.9 per cent.
Tourism industry’s challenges
Fernando Cuesta, Amadeus’ executive director for Middle East and Africa, says travel agency bookings have recently fallen by 5 per cent in the Middle East, which may not be as bad as the double-digit drop posted by other regions.
“The capacity [for] recovery is higher in the Middle East compared with other regions worldwide,” Cuesta said.
He attributes this positive outlook to regional governments’ keenness on investing in the development of infrastructure that supports the travel and tourism industry, as well as the strong commitment of Middle East carriers in competing on an international level.
The region, though, has not been spared the trauma of the global economic meltdown.
Nigel Pocklington, managing director, Hotels.com EMEA, told Alrroya.com that the crisis has affected Dubai, which saw its hotels slashing room rates to cope with waning demand.
“While Dubai is still one of the premium destinations in the region, it has not been immune from the downturn. The supply of hotel rooms in Dubai has been growing quickly while demand is decreasing,” says Pocklington.
In its most recent Hotel Price Index (HPI), Hotels.com revealed that Dubai hotel room rates declined by a minimal 4 per cent for visitors paying in sterling pounds from January to June. Abu Dhabi hotel room rates, however, increased by a substantial 15 per cent during the period.
Dubai has been posting an annual increase of 16 per cent in the number of hotel rooms, the HPI report said.
Catering to the Mideast market
In May 2009, Hotels.com launched its Arabic portal,
http://fanadeq.hotels.com, which features local currency pricing and payment methods for over 100,000 international hotels in its database.
Pocklington says the Middle East market has been responsive to this new facility.
“We are quite pleased at the speed with which the site has been picked up by search engines. The creation of the Arabic site signals to the hotel trade that we are serious about expanding in the Middle East, as we cater to both the English- and Arabic-speaking population,” he said.
He added that while the potentials of e-commerce have not been fully tapped in the region, the demand for online travel is growing.
The most prominent trend observed in the market, however, is what Hotels.com calls “currency tourism”.
“Basically, people choose to go to a destination based on the strength of their currency,” explained Pocklington.
In the first half of 2009, Dubai saw an influx of travellers from the US and Italy because of the appreciation of the dollar and euro.
Meanwhile, Amadeus, which offers reservations and booking solutions to the travel industry, recently added Lebanon to its network of operations in the Middle East. By next year, the Madrid-headquartered company with a Regional Office in Dubai plans to launch its operations in Iraq to complete its Mideast presence.
“The IT solutions we provide will be helpful in reviving the travel network and the tourism industry in Iraq. This shows how committed we are to this region,” Cuesta said
Amadeus also entered into a 10-year exclusive distribution agreement with 13 airlines from the Arab Air Carriers Organisation, namely: Air Algérie, Afriqiyah Airways, EgyptAir, Etihad Airways, Kuwait Airways, Libyan Airlines, Qatar Airways, Saudi Arabian Airlines, Sudan Airways, Syrian Arab Airlines, Tunisair, Yemen Airways and Royal Air Maroc. This agreement will account for 68 per cent of reservations made by travel agencies in the Middle East and North Africa region.
Travel 2.0 and consumer psychology
Social media has altered the tourism industry and created a new breed of travellers who seek more information about their preferred destinations. This requirement also fuelled a growing interest in the e-commerce industry as holidaymakers formulated their own travel plans.
Travel 2.0, an application branching from Web 2.0, has been developed to suit the needs of a dynamic travel and tourism industry while using the internet as a platform for online networking.
While consumer spending in the Middle East remains high at an annual increase of 19.7 per cent on purchase transactions and 29.3 per cent on cash transactions (according to a recent report by MasterCard as quoted by local media), online bookings and purchasing remain an untapped resource.
In early 2008, security solutions provider Symantec revealed in a survey that most Middle East internet users perceive shopping online as unsafe. In the UAE particularly, 75 per cent of subscribers say purchases made online are “too risky”.
Cuesta admitted that there is a barrier in as far as customer behaviour is concerned when it comes to using the internet to purchase tickets or hotel rooms.
“Amadeus has over 3,000 man-years of investment in technology to address the needs of the hospitality and travel sector. The technology that we provide in the Middle East is as highly sophisticated as we offer to other regions,” he said.
However, the market still needs re-assurance that their transactions online will be secured, he added.
“The good thing is, we are seeing now how customers are gradually evolving and accepting e-commerce,” he said.
Understanding the significance of the technology and the internet in promoting tourism, Amadeus launched in April 2008 a multi-lingual tour platform, TravelTainment, that provides tools for leisure distribution, catering to tourists who want a one-stop shop for their travel needs.
Hotels.com has been getting usage referrals and bookings from travel website TripAdvisor.com, says Pocklington.
It also introduced an interactive portal on its website called “doodlebox”, which features photos and handwritten-style notes of people who have gone on holidays and booked their hotel rooms through Hotels.com.
Aside from this, the site also features traveller reviews of hotels that their customers have stayed in – a useful tool, especially at a time when people experiment on social media with exchanging ideas.
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