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Tue 26 Apr 2011 12:00 AM

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Online booking boom

Arabian Travel News takes a close look at the online travel sector in the Middle East and reveals how web bookings are set for an explosion over the next few years

Online booking boom
Expedia launched in Arabic two years ago. There are “no immediate plans” to launch an Arabic version of

The online travel sector might not have taken off just yet in the region, but ask anyone in the industry and it seems we could be about to leap into an internet travel booking boom.

While there appears to be no official data to confirm exactly how many people currently use the internet to book travel online in the Middle East, a few hard facts are clear. The region has one of the fastest growing internet populations in the world, the highest number of smart phone users and a growing number of Online Travel Agencies (OTAs) are jumping into the market.

Sunil D’souza, country manager UAE & Oman, Kanoo Travel explains: “The Middle East has one of the fastest growing internet populations in the world. E-commerce could be worth in the region of US$30-90 billion, depending on your source of information, and the sector will grow very significantly in the future.

“At Kanoo, we represent several major airlines and we know from them that a growing proportion of transactions are happening online. This is a clear indication that the market is changing and consumers are seeking to book their travel online.”

According to Walter Lo Faro, director of market management, Middle East & Indian Ocean for Expedia, the number of travel bookings made online in the Middle East is set to “more than double” over the next five years.

Lo Faro estimates that around 20 – 25% of travel transactions in the region currently take place online, but he says the market is showing an “impressive speed of growth” as both travel suppliers and travel agents rush to cater to a growing demand from consumers to book travel online.

“The Middle East is slightly slower on this development but it’s getting there,” says Lo Faro. “Especially I would say in the past 24 months, the number of Middle Eastern users actually making bookings online has been growing exponentially.”

Expedia launched an Arabic version of its website two years. Lo Faro explains that while the site is “doing well” the “basic difference between an Arabic website and a European one is that you get a great deal of shoppers on the site, but the conversion is much lower, so there are many ‘lookers’ but not as many ‘bookers’.”

He admits that this indicates there is still some caution among the Middle East consumer about booking travel over the web, but says things are changing rapidly.

“Yes, people are still slightly reluctant to pay for things by credit card online. But people are getting more and more web savvy. They use internet sites a lot - Facebook etc. They are used to the tool itself but they are not particularly used to the transactional side of it, so between the viewers and the shoppers it’s not the same relation you would find in the UK for instance.”

He believes consumers will catch up quickly. “I think in the Middle East progress happens really fast. When I first came here, internet penetration was about 11% but now it’s nearly 60%. And that’s in just five years.”

OTAs enter the ARENA

Some major online travel agencies are now entering the Middle East market to capitalise on this development. Makemytrip, India’s biggest online travel company recently launched a Middle East version of its site ( The company plans to invest a “few million dollars” in the Middle East over the next two years.

Amit Saberwal, senior vice president, International markets said the site was launched due to consumer demand. “The highest number of visitors on outside India and the US were from the Middle East. We have also seen transactions originating from the Middle East so we decided to launch offering flights, hotels and holidays customised for Middle East customers.”

Saberwal predicts major growth in the online travel sector: “As per credit card industry sources over 10% of transactions are made online of which travel ranks at the top. But over the next few years we will see an exponential increase in online travel.”

Another major Indian OTA, Cleartrip, has also launched a local version - Tarique Khatri, VP, business development says the company plans to invest close to US$10 million in the Middle East market in a bid to become the leading online travel company in the region.

Khatri estimates that while currently only 10% of tickets are sold online in the Middle East, the potential for online travel in the region is “phenomenal”.

“One of the most interesting things about the Middle East is that the internet population is growing incredibly fast - it’s one of the fastest growing in the world. While there are no official numbers in terms of the e-commerce market in this region, there are different numbers floating around, ranging from $35 billion to $100 billion.

“More importantly, after meeting up with a lot of airlines in the region, they said close to 25% of their transactions were happening online. This was a clear indication to us that there was definitely big potential for an online travel agent in this market.”

Since launching, has received more than 30,000 travel bookings, and in February had over 250,000 unique visitors. The company is targeting a three-fold growth in the region Middle East this year.

“We will do whatever is required for us to grow and be the leader in this market,” said Khatri. “By this time next year we should be three times as big as what we are today.”

Off-line agents move on-line

It’s not just OTAs who are looking to grab a share of the web bookings out there. Some of the region’s biggest travel companies are now investing in the latest technology and gearing up to launch their own web booking portals.

Kanoo Travel is currently in the process of “fine tuning” its first fully-fledged online bookings portal, complete with payment gateways offering air, car and hotel products. The investment into online is “in keeping with the wishes and needs of our major corporate accounts and the changing face of the traveller’s needs,” explains D’souza.

“We recognise there is a growing number of consumers who are frequent internet users and who are comfortable making bookings online. This is the case for younger aspiring consumers. For these the future is to provide a full array of attractive, value-for-money services in a portal that is easy to use, friendly and safe.”

D’souza says Kanoo will roll out a number of new online products and services over the next few months including “B2B, B2C and B2B2C” solutions. “One development we have pioneered in Dubai is an online booking platform. Once we add the payment gateway, then our clients will be able to make bookings and recieve all their services online.”

D’Souza estimates that once the web products are launched, Kanoo’s online business will grow to represent a “double digit” proportion of the company’s total travel business in the next three to five years.”

Another major player, Orient Travel is also making major investment into the online sector. Asim Arshad, CEO said the company has not yet “finalised its online strategies - but broadly speaking the website will have all airline content, special fares, hotel rates, package tours.”

Orient Travel has made an initial investment of around US$ 108,906 (AED 400,000). “It’s time for us to have an online booking tool for our organisation, because that has become an essential requirement in today’s marketplace, especially for our retail, leisure as well as corporate clients, and furthermore to increase our market reach,” says Arshad. “Initially I don’t expect a huge influx of bookings on the online portal, it should be gradual and steady. I do not foresee it taking over the offline division in the near future.”

Barriers to entry?

With internet users in the Middle East growing so fast, this begs the question - why is the Middle East lagging behind other markets when it comes to online travel?

There are some barriers. D’Souza says internet security and the fraudulent use of credit cards is still a major concern: “We are seeking top advice in how we build our payment gateways and provide internet security for ourselves and for our customers. We will only introduce new online services once they have been thoroughly tested and benchmarked against international security standards.”

According to Khatri, while security has been a major issue in the past, banks are now finally getting on top of this.

“When it came to security, the ‘Verified by Visa’ and MasterCard was something that a lot of banks had not implemented. So people were always apprehensive and worried, wondering, will my transaction be safe? What if some fraudulent transaction takes place? Now if you look at the major banks in the region they are all gradually moving towards implementing that, which means customers will be assured of their transaction modes being safe.”

Another sticking point has been that many banks also don’t allow debit cards to be used for online purchases. “Credit cards and debit cards work on two different technology platforms,” explains Khatri. “The Middle East has a huge debit card base and most banks have not enabled debit cards to be used for transactions online. Cleartrip has enabled debit cards for those banks which allow it and thankfully we have been fortunate in that almost 20-25% of transactions now happen on debit cards. I think banks are realising that they want people to start using these cards for transactions too.”

The other big obstacle is credit card charges which are among the highest in the world, says Albert Dias, co-founder of - a local online travel website.

Dias says has now “stepped away” from the leisure travel market due to “unfavourable commercial conditions”. He adds that airlines, who were the first to enter the online sphere in the region create difficulties for travel agents looking to move online.

“Suppliers have already established their share of the market. Most airlines are not very receptive to challenges or threats to their own existing revenue streams. Price is very important - and there has been an almost unspoken opposition to any threats or any challenges to a supplier’s price.

“There are even threats to matching that price, let alone going below it, and it’s not something we can do with the leisure market which is why we stepped away from it,” says Dias.

Despite these challenges, Dias says there is still a great deal of untapped potential in the online travel business. is now planning to launch a brand new website - currently in the development stage - which will specialise in holiday planning.

“We believe this is a niche in the online travel sector that has yet to be explored here,” says Dias.

“Our new product will allow customers to plan their entire holiday in a way that neither airlines nor travel agencies allow you to do right now.”

A boom time for online travel

Despite the challenges that do exist when it comes to setting up online booking portals in the region and encouraging people to feel comfortable enough to use them;  all our experts agree that online travel bookings are set for an explosion in the Middle East over the next few years.

“A lot of traditional agencies are looking at investing in the online market - a lot of large companies are building online products, and for us it’s a good sign because I think we are all here to look at how we can develop the market size from what it is now to what it should be,” says Khatri.

“For example if you compare the market here to India - almost 60% of domestic tickets in India are sold online. So there is still a huge potential to develop the market out there, and with more players coming in, this will only add to that momentum.”

Lo Faro agrees that with all travel players making a move to online, the sector will see exponential growth in the coming years.

“The percentage of 25% [online bookings] is very likely to double in the next five years - very, very easily,” he says. “Especially as offline becomes online.”

“The online push is not just coming from OTAs after all. It’s coming from the hotel side, the supplier side.  It’s coming from offline companies who are selling more and more online and it’s coming from travel agents who are increasingly going online.”

“It’s all about convenience,” he adds. “After all, if a customer finds it more convenient to go online to buy something, they are going to do that.

“And you better be there waiting, right?”

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Spencer 8 years ago

who on earth will look at a name like that and trust it enough to enter their credit card details?

Get real, Buy a real domain name !

Farhan Ahmed 8 years ago

The problem in the online travel segment is that there are too many portals out there, with a vast majority having little or no credibility...customer satisfaction is simply nonexistent!

Samuel Berstein 8 years ago

"with a vast majority having little or no credibility."

Most have no credibility because they are done on the cheap, cheap domain name, cheap looking website

If you want to lead on the internet you will need a top quality .COM domain and a well designed website, that will at least get them in the door to your virtual shop. From there it is good serice that will keep them coming back.