The Middle East business and leisure travel industry is ready for a major leap... and this growth spurt is largely because of the influence of online commerce. A predominantly young and increasingly well-educated population is comfortable with technology, while becoming more particular about obtaining options for a seamless travel experience.
Online purchases were well on course to hit 25 per cent of total travel and tourism revenues in the Middle East by the end of 2017, with online travel bookings accounting for 36 per cent of all bookings. Some 19 per cent of all online revenues, meanwhile, came via supplier-direct websites while 12 per cent came from online travel agencies (OTAs). The figures are impressive for what is now referred to as the “mobile generation” in more ways than one.
The rapid evolution of smartphone and tablet technology has resulted in a corresponding shift towards mobile-based internet browsing. Today we see 70 per cent of Middle Eastern travellers used smartphones or tablets to plan trips in 2017, whereas 48 per cent had used a smartphone during the previous 12 months to carry out travel-related research.
There is also a wide-ranging use of applications with half the total travellers from the UAE population falling back on the internet when planning or purchasing travel-related products. The rising use of mobile technology is also supporting online trends, with 50 per cent of travellers from the UAE and 35 per cent from Saudi Arabia leading in using their smartphones to make travel arrangements.
Google research indicates that 72 per cent of 18-35 year olds in Saudi Arabia start research a week or less prior to a trip, compared to 48 per cent in the US. As a result, many travel sites in the industry are now offering last-minute deals in a bid to generate on-the-go bookings. The booking window is very narrow and often see significant changes in pricing dynamics offered by various OTAs.
This is especially the case during holidays when people will often make spontaneous bookings just 24 hours before their travel. The younger generations have been largely responsible for driving the trend towards mobile usage for travel planning, especially in the region, which reflects the fact that 50 per cent of the population is below 25.
With mobile data traffic in the Middle East & North Africa (Mena) region projected to grow even faster, companies have recognised the need to “tech up” in order to attract customers from this crucial demographic. To not invest in creating infrastructure that enhances and simplifies the online user experience would be a major risk for any players — seeing how mobile’s role is only expected to grow in the coming years.
All indications confirm mobile’s role will grow exponentially as companies opt to develop their online strategies around it, building brand awareness and efficient, easy-to-use mobile apps to drive bookings.
The region has already seen phenomenal growth in online engagement in the last two years, transitioning from a traditional face-to-face booking model to a new virtual reality where 24x7 updated information is a basic expectation and speed of access is essential when it comes to planning, researching and booking.
When it comes to travel research, the hospitality segment leads others as the top activity performed by 83 per cent of mobile (and 74 per cent of tablet) users. Support segments like flight bookings, car rentals and package deals also get the benefit.
When compared to the research performed on a train, bus, cruise and package deals, research on hotels is about four times greater. It is now recognised that the travel vertical has been a consistent Top 10 spender among the dozens of other verticals (retail, entertainment, etc.) and on a regional level ranks at number four after the entertainment, telecommunications and automotive sectors in the Europe, Middle East and Africa market.
The trend is also seen on the upswing for mobile payments, which accounted for 29.5 per cent of payments globally. The research showed that consumers were actually more likely to purchase travel on smartphones rather than tablets.
These figures are estimated to reach saturation in a very short period and online will not only be the preferred way but the only way to go.
Fariz Nayan is regional manager of e-commerce at Tripmakers.