Digital travel market is booming

UAE - Online travel packages continue to enjoy a surge in popularity across the UAE and the GCC, driven by travellers looking for a good deal and flexibility in their booking options, experts said.

The online travel market in the GCC is expected to reach $15 billion by 2023, according to data released by Mena Research Partners. The growth marks an increase of 140 per cent from its current levels. Annually, the GCC e-travel market is projected to grow by 20 per cent during the period between 2019-2023. The online travel market growth rate is well above the conventional travel market which is progressing at four per cent per year.

Lakshmi Anand, operation manager at International Travel Services, a division of Galadari Group, explained that there are a wide range of online travel portals that are available worldwide today, however, it is up to the customers to select the right one for them.

"Customers who intend to travel point to point may find it easier when booking online, since they have the origin and destination pre-decided," she said. "The challenge occurs while booking online across multiple sectors. The scenario is different as most of the online travel portals provide limited information. Compared to booking just flights tickets, customers prefer to have a bit more human interaction when booking or planning the complete holiday package since it involves gaining additional information, which is needed to ensure that they have a pleasant stay, and become a returning customer of that online travel portal."

The research by Mena Research Partners also showed that compared to global figures, the online travel market in the GCC region remains untapped. Presently, the online travel sector only accounts for five per cent of the total GCC travel market, compared to the global average of 12 per cent. Potentially, this could mean a boom in the e-travel industry which may log in 2.5 times growth.

"Demographic changes and changes in consumer preferences are largely shaping the upsurge of the e-travel market," said Anthony Hobeika, chief executive officer at Mena Research Partners. "The growth in the e-travel sector is expected to come from the larger number of young and tech savvy travellers who embrace the digital ecosystem to plan and book their journeys. These travellers have high expectations, demand personalised offers and do extensive online research before purchasing. Our estimate shows millennials at 20 million, accounting for a massive 40 per cent of the GCC population, which further indicates a growth in expected demand by this segment."

The advanced digital infrastructure in the GCC region is another driver for growth and a key catalyst as the region embarks on long-term advancement from its current low e-travel activity base. The Internet connectivity rates in the GCC have crossed 90 per cent in countries like the UAE and Bahrain, while rapidly expanding in other demographic heavyweights like Saudi Arabia. Along with high connectivity, smartphone penetration in the GCC stands at more than 75 per cent, a number which is among the highest in the world. Smartphones are the most popular devices for researching travel offers and online information, and the mobile travel market is expected to further expand the digital travel space in the GCC.

According to recent data published by Cleartrip, even though credit cards still remain the dominant payment method in the online travel market, debit card transactions are on the rise. In the UAE, credit card transactions dipped to 72 per cent from 81 per cent in the previous year and debit cards usage increased from 19 per cent to 28 per cent. The number of transactions made on mobile devices increased by 56 per cent in the UAE, and in Dubai, mobile represented 61 per cent of traffic and more than a quarter of bookings.

Sameer Bagul, executive vice president and managing director of Cleartrip Middle East, painted an optimistic outlook for 2019.

"During 2019, there will be a number of airlines that will start flying to the UAE, and on the other hand, UAE based carriers will continue to expand their network. Therefore, we are expecting 2019 to be a strong year for the travel sector," he said.

The growth in the airlines network he said, will lead to destinations becoming cheaper, and this will further expand the choices of places to visit for consumers.

"We have seen a slight increase in traffic to the UAE year-on-year and we expect this to pick up in 2019," he added. "In January, the government of Dubai made an announcement of refunding bank guarantees, which will further help drive growth in the emirate's thriving tourism sector. This capital injection will allow tourism firms to enhance their offerings, and will lead to an increase in international visitors."

Mobile, Bagul added, has become the most dominant channel for travel bookings in the GCC. "Travel packages for families also continue to be popular, and we also witnessed an increase in holiday packages for a group of friends, especially for short getaways. Based on our research, consumers continue to look for travel packages with good value."