Online travel sales set to reach Dh17.3b in UAE
Change is coming in how fees and commissions are charged on hotel and flight bookings. The consumer gets to be the winner in any such transformation. Image Credit: Supplied

Dubai: It could be the online travel industry’s turn to be disrupted.

A new online entity has launched operations in Dubai offering zero commissions on hotel bookings, while the prevailing average tends to be in the range of 5-15 per cent per transaction.

Welcome to the World – that’s the name of the portal – could yet bring down the commission structures in the online booking space, which hotel operators have repeatedly said have eaten into their margins.

So, instead of paying Welcome to the World a set commission for each booking coming through it, hotel operators subscribe at a fixed yearly rate of Dh50,000.

“We have a few hotel businesses already opting for partnerships with us, such as the Address, Marriott, Ritz-Carlton,” said Stefanie Schachtschabel, founder of Welcome to the World. “We have received strong support from businesses across this vital sector, including tourism industry regulators, who see us as a new enabler for growth.”

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Bone of contention

Travel and tourism is not the only services industry that is being altered because of differences over what fees and commissions should be. During the summer, after going through the harrowing time brought on by the pandemic, quick service restaurants in Dubai came together to launch their own order-and-deliver apps and portals.

Their grouse stems from the way standalone online portals were picking up to 30-35 per cent as commissions on every order received and delivered. And worse, restaurants were locked into year-long deals that gave them little flexibility and when the pandemic struck forced many of them into full business distress.

That’s when restaurants grouped together to launch their own delivery apps; a couple of them owned and operated by F&B brands are giving consumer the option of lower delivery charges.

“The initial months have been favourable – when a service can be delivered at more reasonable rates, the consumers will listen,” said an F&B brand owner. “The demands and rates charged by online portals are not sustainable.

“By coming together, restaurants have shown we can ‘disrupt’ them back.”

GoFood app
The GoFood app that was launched by a group of Dubai based F&B businesses, and which takes on the might of the online order-and-delivery portals. Image Credit: Supplied

Marketplaces go big on loyalty

The fight for the consumer and what that cost should be is also playing out on local online shopping sites/marketplaces. The big names are already locking in customers into their loyalty programmes, and which proved a huge hit in the ongoing end-of-year sales. Get into the loyalty schemes and they get to do away with delivery charges and get preferential treatment on orders, etc.

Can smaller online portals compete against that? For them, dropping shipping charges could just about eat away all of their margins unless they handle it right. And being small or niche operators, they just cannot get away with creating loyalty programmes or offering free delivery.

Already, some mid-sized online shopping portals have ceased to operate. As more shopping gets done online in 2021 and thus expanding the size of the market, the Big 2 will keep getting bigger.

But for the shopper, if it means access to more offers and zero shipping, he and she will not be minding all that much.
Membership programmes are helping UAE's biggest online marketplaces score. Image Credit: Supplied

Buy Now Pay…

The shop for less movement is entering the payment by instalment space as well. The handful of ‘buy now pay later’ apps allow purchases to be made – online and at shops – in set instalments of weeks/months. But the best part, as of now, is that none of these payments carry interest charges, which as any consumer will know can be quite a heavy burden on credit card based transactions.

More retailers are signing for BNPY, and at some point the categories covered under these schemes could widen. In this, everyone emerges a winner – shoppers don’t have to pay anything beyond the merchandise value and retailers get consumers to shop rather than hold back worried over what it might do their monthly budgets.

The COVID-19 created many sweeping changes in the retail industry, but raising BNPY’s profile has to be one of the key outcomes.

The likes of tabby, cashew and spotii have extended the BNPY promise and potential in the UAE and Saudi Arabia. Image Credit: Supplied

Can it work?

The online travel booking space has not seen too many changes in fee structure… so, it will be interesting to see whether Welcome to the World’s entry will force some.

The portal has certainly timed its entry, coinciding with the UAE launching a high-intensity 45-day ‘World’s Coolest Winter’ promotion. The first federal-level campaign invites the public to explore the seven emirates in depth.

This programme “aims to encourage residents to explore major landmarks and attractions across all the Emirates - that is exactly what we are tailor-made for,” said Schachtschabel.

But more than the subscription-based model, what really sets Welcome to the World apart is its video content. “We're reaching out individually to all stakeholders and we invite them to upload all their video content,” said Schachtschabel. “We are broadcasting channels that they (hotel operators) can use to broadcast their content to target audiences and then at the same time receive direct bookings on their own platforms.”