The hottest topic on everyone’s lips at this year’s ATM was the growth of online travel as all players vie for a slice of this rapidly developing sector — but is it too late for some and what’s the future for traditional ‘bricks and mortar’ travel agencies?

By far and away the most hotly debated topic and this year’s Arabian Travel Market was the growth of the online travel sector.

With a raft of new online travel companies now entering the arena and the bigger international players finally now taking notice of the Middle East region, it seems the topic on everyone’s lips was — how to get in on the online action?

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Expedia announced plans to launch a Middle East version of its online booking site within the next two years; brand new OTA Joob.com is making its presence felt, and even newly launched Middle East group buying website GoNabit.com announced a new channel dedicated solely to travel deals.

Sana Toukan, senior research analyst, Euromonitor said there had been 14% growth in internet retailing across the region over the last year: “Internet retailing is growing exponentially in the Middle East. Social networking such as Facebook and Twitter is an important driver and the region’s young demographic plays a critical part. The next five years will see really high growth in internet retailing,” she predicted.

A ‘winning horse’
Online players at the show were keen to talk up the potential of the region’s online travel sector, and dismiss views — traditionally held in the local industry — that there are too many barriers in the region for e-commerce to develop.

Dan Stewart, CEO and co-founder of GoNabit said: “Please discount this idea that people are afraid to use their cards online —that’s just companies setting their expectations low. We are a 100% e-commerce business.”

Stewart added: “We did a deal with the Banyan Tree in Ras Al Khaimah and processed US $360,000 in one day. And we are just getting started. This shows the potential. Online is no different to off-line. There’s a lot of room for success.”

Hari Nair, vice president of market management, Expedia was equally enthusiastic describing the Middle East as a “winning horse” when it came to online travel.

“Expedia is really optimistic about this region,” he said. “This is a huge area of opportunity for us. We have seen 45% growth in the last year and are looking at an 18 – 24 month timescale for launching Expedia.”

Meeting market needs
Local online site Joob.com, which launched just a few months ago said the key for new online players in the region was specifically tailoring the product to suit the needs of the market — for example by allowing customers the option to pay in cash if they were still unfamiliar with transacting with cards online.

“Our research shows that people want to move away from the traditional model of the travel agent,” said CEO of Joob.com, Omar Ahmad. “But you have to find solutions for them that are convenient. You have to solve the basic problems unique to this region.

It’s a bit of a hybrid — for example, allowing people to do their research online but pay by cash.”

Joob has also been developed in both Arabic and English. “People speak Arabic here so if you are targeting residents or local expats you must provide a service in a language they feel comfortable in.

Companies that take that initiative will be the ones to succeed,” said Ahmad. “It’s not easy to do. We have a whole team in place that does nothing but translation. But we believe in this region. If we can answer the challenge of the consumer they will adapt.”

Clicks vs bricks
So with the buzz surrounding the growth of the online sector, where does this leave the traditional ‘bricks and mortar’ travel agents?

Asim Arshad, CEO, Orient Travel argued that while travel agencies would have to adapt to the development of online travel, the unique demographics of the Middle East region means there will always be a need for ‘bricks and mortar’ agencies.

“This market is unique and different. A lot of people will still want face-to-face contact. The demography in the Gulf is predominantly labour force. Are they internet savvy? Are they credit card savvy? No. The leisure side needs a travel agent; as most people prefer to sit across from an agent and book.

“Whilst we all know technology is going to be embraced and take shape in the Gulf, you will always have a predominant labour force that uses the traditional method of buying,” he argued.

Arshad added that unexpected events such as last year’s ash cloud which had thrown people’s travel plans into utter chaos had only served to highlight the value of booking through a travel agent over the net: “When the volcanic ash happened you will not believe how many calls we got from people asking us to change their bookings.

We asked them — where did you book? And they all said online. It has proved the value of booking through a travel agent.”

Even Hari Nair from Expedia agreed that travel agents still had a place alongside the online world: “Travel is such a large space there is plenty for everybody.

Expedia has been here for 15 years but that doesn’t mean travel agents have gone away. One third of our business is through a call centre and we are dot.com company which tells me that people are keen to speak to people. Traditional travel agents do a much better job of complex trips and itineraries which we are not equipped for yet. This would be a major investment and it’s not our priority at the moment.”

So what’s the future?
But from some quarters, the message to the travel trade was very clear, with Roland Bunge, general manager, commercial, Kanoo Travel warning that travel agencies would start to see a “gradual decline” as the online sector developed.

“There will be consolidation and disappearance of bricks and mortar as we have known,” he said.

“Travel agents will continue to survive but in a totally different business model. If we don’t move towards e-commerce we won’t survive and we don’t have the right to survive,” he added.

“There is a strong labour force population here so the travel agency in downtown Damman will stay. But I don’t see bricks and mortar agencies continuing. There will be general decline of retail offices until only the flagship office will remain.”

Naz Musa, managing partner Gulf Reps was equally stark: “Agencies that
are now thinking about launching a website should have been thinking about it five years ago.”

Musa predicted that while Middle East consumers still had not wholeheartedly embraced booking travel online, preferring to book through an agent, it would not take much for them to make the switch, especially if travel agents did not add value to their services.

“For many years travel agents here have not been getting the level of investment in training and product development that they need. You can’t walk into an agency here and ask about a destination, because [the agent] won’t know about it. So clients research online and then book through an agency.

“There’s always a world where you need bricks and mortar,” said Musa. “But that market is about your staff being experts and adding value. If it’s just ticket booking you might as well do it in your own home.”