Saudi Arabia: serious untapped potential

Saudi Arabia is often overlooked as a target market for both regional and international travel product and service marketers, but its true potential is starting to become unearthed.

The latest statistics reveal that in July 2007, the Kingdom's population was estimated at more than 28.6 million, and as Wikipedia has noted, this population is characterised by "rapid growth and a large cohort of youths".

In fact, it is believed that at least 48% of the population is aged between 16 and 24, giving rise to a new breed of travellers.

These potential customers own at least one mobile phone, have access to the internet, and instead of following in the footsteps of their forefathers - booking with an agent, paying cash and travelling on a full-service carrier - are more likely to set their own travel patterns and trends.

Typically they will book online, receive confirmation by SMS and travel on one of the low cost carriers (LCCs) that have quickly established themselves in KSA and in other Gulf nations and stay in a limited service hotel, freeing up cash to spend on entertainment.

Web bookings already far outweigh any other distribution channel for start-up LCC Sama, which CEO Andrew Cowen said puts and end to the myth that no one uses the internet in the Kingdom.

Cruise operator Royal Caribbean has concurred that web bookings are surging in Saudi Arabia given that many women, who are often responsible for booking the family holiday, do so online for convenience.

The absence of all-female travel agencies in Saudi Arabia to date makes surfing the web a much better option.

Both domestic and international travel in the kingdom have surged in recent years, according to the International Air Transport Association (IATA) with more than 33 million passengers passing through Saudi Arabia's 27 airports in 2006 alone.

And with KSA LCCs such as NASair preparing to start international services and Sama already running charter operations to Sharjah, Abu Dhabi, Amman and Damascus, these numbers are likely to rocket.

Sama's Cowen believes that by providing the market with more flight capacity and affordable fares, budget carriers are catering to pent-up demand, with LCCs proving a particular hit with VFR traffic - and no doubt the travel-savvy Saudi Arabian youth.

And let's not forget the top end of the market.

One Jeddah-based travel agent told ATN that his 45 top clients spend an average of US $150,000 to $200,000 on a one-week family holiday annually.

These clients want niche products and they want choice, hence this agent's decision to set up a luxury travel division and earn a fee creating luxury tailor made packages.

So, what will your travel company do to target this lucrative market in 2008 and beyond?

The potential is there, so it's time to unlock it.

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USER COMMENTS (1 COMMENTS)

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VERY TRUE INDEED
Posted by Hussain Motabagani, Khobar, Saudi Arabia on 25 December 2007 at 09:53 UAE time

Yes Gemma, its true, there is large untapped potential

Unfortunately even though 48% of the population is aged between 16-24 they are treated as if they don't exist. Yes Saudi Arabia can be described as "rapidly growing" however the "large cohort of youths" are unemployed and leach off their parents or are working dead end jobs for meagre pay.

You mentioned people spending $150,000 US for a vacation package, but that's 45 people, out of 28 million...

Young Saudis do want to travel and LCC airlines are helping a bit, but major destinations remain: "Dubai, Bahrain, Damascus and the Egyptian cities of Cairo and Sharm el Sheikh."

Dubai attracts the young travellers with its never ending number of celebrity concerts. I myself took a 3 day leave to attend Iron Maiden at desert rock festival in march 07. Using The online Box Office for ticket reservations, Air-arabia, and Hertz rent a car. All done online within 30 minutes.

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