TravTalk Middle East Online Magazine
As we begin the year, our thoughts naturally turn to what lies ahead — clearly a lot! The dynamism of our industry coupled with an ongoing technology evolution ensures that no entity/trend will be the end-all or be-all. Here we analyse certain factors that could swing the pendulum in the year 2017.
Over the last few years we have borne witness to the incredible rapid growth of the travel and tourism sector and we expect this industry to continue to grow faster than the global economy and most other major industries. In fact, WWTC predict global growth rates of 3.8 per cent annually over the next 10 years to $11.4 trillion — that’s over four times the total size of the UK economy! The travel industry has and is going through an unprecedented period of change. This transformation is fuelled by an explosion of digital channels, proliferation of devices and changing consumer behaviour.
The oil crisis will continue to impact travel
There is a distinctly more frugal climate in the Middle East at the moment. One more clouded by fragile consumer confidence and a precarious economy as Saudi Arabia reels from the plunge in oil prices and the impact of government austerity measures. This has, as you would expect, had a knock-on effect on consumer spending including in the retail and travel sectors. There are definitely expectations for recovery in 2017 and 2018 in terms of continued growth however it is expected to be subdued and sluggish. Although Dubai is still better off than most of the region as the oil blow is much softer than in hydrocarbon economies such as Saudi Arabia and Bahrain, we still expect to see a continued impact on travel across the region as a whole.
OTA market going for growth
Despite the economic concerns in the region, I expect to see significant growth in the Online Travel Agent (OTA) market as more users come online and switch to booking their own travel instead of relying on agents. The consumers we deal with today are savvier than ever and are becoming more independent in the way they research and book travel. The travel market has been moving at a rapid pace and online is changing booking patterns, consumer behaviour and business models in travel. It is, and will continue to be, a huge area of growth. With Amadeus forecasting that the regional online travel market will almost double in value within in the next two years, rising from $18 billion to $35 billion by 2018 we will continue to see OTAs coming into this region to capitalise on the huge market potential.
Mobile research will shift to mobile bookings
The Middle East is the fastest-growing region for travel with the UAE being the dominant market. One of the key reasons for this is the young population. In the Middle East, 44 per cent of the population is under 20 years old, technology savvy, and some of the world’s most active and dedicated smartphone users. One in six customers in the Middle East use the Internet as the booking platform of choice and 60 per cent of airline booking and ticketing in Dubai comes from e-commerce. Mobile bookings in the region are amongst some of the highest in the world accounting for 21 per cent of bookings with some travel companies. Whilst we have traditionally seen more consumers research their trips on mobile devices before moving to a desktop or offline to book, I expect to see a significant shift towards bookings on mobile devices.
Increased focus on data ownership
Programmatic is evolving within the region with more of the larger travel brands looking to invest in their own data management platforms as they try to take more ownership of their own data. Big data has been a hot topic for some time but we have reached the point where all brands are aware of the importance of data but are still struggling to turn it into actionable insights. 2017 will be the year where brands make the leap to utilising data in order to maximise marketing budgets and drive revenue.
The author is Stewart Smith, Senior Director of Sales, MEA and Tourism at Sojern.
