Online travel ready to take off

Companies are looking to the Gulf region to capitalise on the online travel market, a sector they believe still has huge potential for growth.

Tourists throng the Ottoman-era Ortakoy Mecidiye Mosque and Bosphorus Bridge in Istanbul. Turkey has become a hot destination for Arab tourists in recent years. Osman Orsal / Reuters

Global brands and start-up companies alike are looking to the Gulf to capitalise on travel booking websites, a sector they believe still has huge potential for growth as it has yet to catch up with other markets worldwide.

Hotels.com, which launched an Arabic version of its website in the Middle East three years ago, says bookings have grown 500 per cent since then.

"We're continuing to see very good growth in the region," said Cyril Ranque, the senior vice president of global market management at Expedia, the parent company of Hotels.com.

"Typically most of our demand comes in from our historical points of sale in the US, the UK, France, Germany, Australia, Japan, China. Now our big investment area is GCC countries and making sure we do serve that demand also."

Mr Ranque declined to put a figure on how much was being invested. Having an Arabic website had a major impact on increasing revenues from the region for the company, he said.

"The big investment areas for us are to make our content and our sites relevant for the regional customers," he said. "All our technology platform is from left to right, so we had to build a special platform for Arabic to be able to display language from right to left. It's all about being relevant to the local demand. If you speak to them in the right language with the right currency, it works." Consumers in the Middle East are often more reluctant to use their credit cards online, a major factor that has held back the sector.

The number of air-ticket sales in the region through online channels is expected to increase from 10 per cent in 2010 to 14 per cent by 2015, according to research by Euromonitor International. In North America the online market is considered saturated, with air-ticket sales approaching 60 per cent, according to the research.

Hotels.com is also considering introducing a post-pay model to the region, which it has used in other parts of the world, Mr Ranque said.

He added the company was also keen to launch an Expedia site for the region given the success of Hotels.com in the UAE. But no timetable is in place for its development, with the process more complicated because it would offer flights as well as hotels.

A wave of fledgling travel booking websites has emerged in the UAE in recent months. Holidaysarabia.com, a travel website based in Dubai is expected to go live next month and last month, RihlaPrime, an online luxury company based in Dubai, started operations. The company took its inspiration from Jetsetter, an online travel website in the United States.

"We saw a huge gap in the market here in the Middle East," said Shahdad Jahanbani, the managing director of RihlaPrime.

But he said the company had to adapt to Middle East clients often being reluctant to make online payments and was offering an option for them to book online but then pay in cash.

"We've tailor-made it for the Middle Eastern market and culture."

This month, Amadeus, a major technology provider and transaction processor for the travel industry, announced a mobile travel application for travel agencies in the Middle East and North Africa (Mena) to offer their customers. This is part of €2 billion (Dh9.38bn) of investment made by Amadeus into research and development of technology over the past seven years. The company believes booking holidays on mobile phones could take off faster in this region than other parts of the world, given the high mobile penetration rates, in the UAE in particular.

"I would like to look at it differently when it comes to mobile," said Ahmed Youssef, the regional director of marketing and operations, Mena, for Amadeus.

"We're actually surpassing the United States and western European countries when we talk about the UAE [in terms of mobile penetration].

"Mobile adoption will be faster than online adoption. We faced challenges when it came to online adoption - when people want to make self-bookings on websites. In the US, it's the 60 per cent; here it's less than 10 per cent. But we believe mobile will change that game. Mobile adoption can be faster in the region than it is in western Europe."