Travel light this holiday season

The climate and backdrop of the UAE might not immediately bring the spirit of Christmas to mind, but there is one element of the festive season that certainly translates from West to East — the Christmas and New Year exodus. 

 

December has traditionally seen a spike in travel as evident in the Middle East as it is in areas such as Europe and the US, as the holiday period triggers the getaway urge for expatriates and nationals alike. And that has meant travel companies have usually had a pretty good idea, well in advance, of what they will be getting for Christmas: a rush of bookings, and a rise in revenues.

 

Travel slowdown

But in light of the region’s economy feeling the strain of weak oil prices and currency fluctuations, there are signs the UAE’s travel industry may not find itself in such a merry mood as in previous years, with potential customers realigning their budgets to adapt to more uncertain fiscal times.

 

Premjit Bangara, General Manager for Travel at Dubai-based Sharaf Travel, says bookings for leisure travel in Christmas and New Year this year has noticeably declined year-on-year. 

 

“Despite lower air fares this winter, the demand for air travel has been sluggish and we expect this trend to continue into the new year,” he says. “This is mainly due to the fact that the last Eid break has come close to the winter break and this has led to clients deferring their leisure travel to next year.”

 

The most requested destinations this year have been the Maldives, Sri Lanka, Hong Kong and Singapore, says Bangara. And if overall Yuletide travel figures might be feeling the pinch, one element of the industry is experiencing a rise in popularity — the travel credit card.

 

The 2015 Visa Global Travel Intentions Study revealed that 61 per cent of UAE travellers prefer to be able to use cards across all merchants when they travel abroad, and the percentage that would feel more inclined to part with their money if use of the cards was more accessible is above the global average. A possible reflection of the country’s prevalence of high-net-worth-individuals, but also because of the holiday options that the UAE’s location and connectivity provides, travel credit cards are becoming popular.

 

Multi-currency prepaid travel cards issued by exchange houses such as Al Rostamani and UAE Exchange, which allow travellers to enjoy the convenience of plastic money without getting into unplanned debt, are also popular.

 

However, the strength of travel cards depends on people making travel plans, and a snapshot survey of the UAE’s travel sector as the holiday period approaches suggests such plans might have been crossed off the Christmas lists of many previously regular end-of-year holidaymakers.

 

“We certainly see the increasing use of plastic cards within the UAE for both leisure and corporate travel but the current global economic scenario has temporarily dampened the enthusiasm for travel,” says Bangara. “But we are hopeful that a turnaround is imminent and it will be business as usual in the first quarter of 2016.”

 

Reap the rewards

Fabio de Grazia, Head of Core Products for the Middle East and North Africa at Visa, says it has seen double-digit growth in credit cards volumes in the UAE between September this year and last. “Card issuers are keen to drive travel spends as this provides their cardholders with a smooth, secure and effortless payment experience,” he says. “The process starts at home, where travellers use their credit cards to book airline tickets and hotels through e-commerce or online portals. This is then followed up by card purchases at their destinations.

 

“Issuers have also made it rewarding to use your travel card overseas through a wide variety of campaigns, loyalty miles, cashback offers encouraging customers to use their cards when they travel internationally.”

 

Diana Jarmalaite, Research Analyst at Euromonitor International, says there has been a spike in the use of travel credit cards in the country. “The UAE enjoys a relatively young and fast-growing population,” she explains. “The tech-savvy and consumption-oriented community creates a perfect environment for the use of credit cards. During the past five years, Euromonitor has witnessed a shift in the market towards the everyday usage of credit cards for purchases among mid- and high-income consumers. They are keen to reap the rewards offered on these cards by banks, including air miles and cashback options.

 

“By the end of 2015, Euromonitor is estimating the number of credit cards to reach 4.7 million, excluding commercial credit cards.”

 

The benefits of travel credit cards are plentiful, says Jarmalaite. In addition to the various reward programmes that allows the cardholder to enjoy lower bills or extra perks, credit cards also have a well-developed security system.

 

“Using a credit card can lower the possibility of fraud,” she explains. “Credit cards can help in emergency cases to cover unexpected expenses. The latter fact makes a credit card an extremely handy financial tool while travelling abroad.”

 

There are also rewards to look out for in travel cards. “The most common cards give access to airport lounges,” adds Jarmalaite. “This provide travellers the opportunity to collect miles, get extra services on flight, such as upgrade possibility or extra luggage, as well as insurance.

 

“Some of the cards do not have currency exchange fees. In addition, it allows you to withdraw money in a foreign country as well as give special offers for hotels or for renting cars.”