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.”

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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 Musafir.com — a local online travel website.

Dias says Musafir.com 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. Musafir.com 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.”