Is the Middle East up to speed in terms of online development? Why are so many travel companies in the region facing failure when entering the online arena? These thorny questions were discussed recently at an executive roundtable held at ITB Berlin where I was asked to participate on behalf of Amadeus.
Moderated by Mona Faraj, PhoCusWright’s Research Analyst for the Middle East, the panel also included representatives from the e-commerce side of Marriott International, Cleartrip Travel Services and Google. At the background of the discussion, there was the Amadeus co-sponsored white paper “Middle East Online Travel Overview” by PhoCusWright, which revealed that online bookings grew by one third last year in this region.
During the discussion, it was asked why global companies outnumber regional start-ups, which do not always succeed in the mid/long term. At Amadeus, we power over 120 online travel websites in the Middle East, but their contribution to the real online world is limited. This is so because travel agencies in the Middle East need to understand that the business model of a purely Online Travel Agency (OTA) is quite different from that of a mixed business and leisure travel agency, the most extended type of agency in the region. And with that understanding they must also take action.
For instance, on average, less than 3 per cent of a large travel agency’s operating cost in MENA is dedicated to marketing, while in a pure OTA that percentage goes up to 45-55 per cent. Reality bites: having a website with excellent booking capabilities will not make the shift in business model.
There may not be any magic formula for global players and start-ups to secure success in the Middle East’s online universe. But from Amadeus’ experience, I suggested the following steps:
- Understand their prospective customer and their purchasing behaviour. We have the largest population of millennials (a term applied to people born in the early 80’s) and their needs have to be fully understood, predicted and met.
- Adapt their product offering, simply because one size doesn’t fit all.
- Influence the purchasing behaviour by getting to grips with the new ways of search that talks the natural language used by generation Y, beyond the limits of origin-destination searches and closer to the flexible, open, budget-dependent approach.
- Differentiate themselves from the crowd, looking at services beyond bookings as travel is moving to retailing and right tools are needed to upsell and cross sell products and services.
- Engage with customers throughout the travel journey (pre-booking, search and inspire during booking, after the booking process and also when the trip is over).
I would also add Arabic content as an important ingredient to this formula. According to Google, more than 40 per cent of searches in the Middle East are done in Arabic and this language is expected to become the fourth widest used language in the internet by 2015!