Smooth operator

Hakan Bakar, CEO of new budget package tour operator the Holiday Factory, explains how his cheap holiday deals are set to ‘revolutionise’ the travel industry in the GCC.

Taking a holiday out of the Gulf is a pricey business. Despite our perfect positioning just a few hours’ flight time from some of the most sought after destinations in the Middle East, Asia, Europe and the Indian Ocean, there’s little option in the market when it comes to budget breaks.

The major holiday companies such as Emirates Holidays and Etihad Holidays cater almost exclusively to the top-end of the market, and it’s been estimated that holidaymakers in the Gulf pay up to 50% more for their trips abroad than travellers in Europe.

Times are changing though, and opportunities for more budget options are finally entering the market. Last month, the Holiday Factory launched in Dubai claiming to be the “first real tour operator” selling cheap package holidays out of the GCC, with Hakan Bakar, CEO of the company boldly stating that he planned to “revolutionise” the region’s travel market.

Having worked in the travel industry since the age of 17, most recently as head of leading German operator Oeger Tours, which carried a million passengers annually before being taken over by Thomas Cook, Bakar knows a thing or two about the travel industry.

He is astonished at the lack of affordable travel options currently available to GCC holidaymakers.

“In the UAE there is no real package tour operator — the other tour operators are only targeting the luxury, higher income level of the market with tailor-made tours.

“What people don’t realise is that there’s a big mid-market here that also wants to travel. That is what’s missing here.”

Bakar says the plan is to offer up the kind of cheap package deals to holidaymakers in the GCC, that are enjoyed by almost 90% of holidaymakers in Europe.

“If you go the airport now, and ask people coming into Dubai from Europe what they paid for their holiday — they will say for one week in a three or four-star hotel, approximately 700 Euros (US $998), including flights.
But here if you just want a flight ticket to go Europe you have to pay this amount. And all the airlines charge these prices.”

Bakar predicts an “explosion” in travel once the concept of cheap package holidays takes hold in the region.

“There is an ever growing mid-level income group that offers potential for businesses. We studied the market and realised that this segment wants to travel but there weren’t enough affordable options available to them.

Most travel agencies offer packages that are expensive compared to those in other markets making it possible for only a few to afford it. This is where Holiday Factory can bridge this gap that currently exists in the market without compromising on quality.”

The Holiday Factory plans to undercut established operators such as Emirates Holidays and Etihad Holidays by at least 40 - 50%. A launch offer to Istanbul was unveiled of just AED 1,290 ($351) for a three-night package, including return flights, transfers and accommodation in a three-star hotel.

And a quick scan through the new Summer 2011 brochure — which covers 23 destinations across Asia, Europe, the Indian Ocean and the Middle East reveals further bargains; including AED 1,680 ($457) for a three night package to Beirut, or AED 2,380 ($648) for a three-night package to Prague.

Similar holidays to Istanbul cannot be found for “anything near this price right now in the market,” claims Bakar, “you would pay double.”

All the prices in the brochure have been fixed for the summer season until October, and Bakar insists that prices are guaranteed. “You see a lot of prices advertised here, but when you actually go to book, it’s not possible to get that price in real life. This is the first brochure where the prices are real.”

Of course the margins on such cheap deals will be tiny, so where will Holiday Factory make its money? The revenue will come from volume, and plans for the company are ambitious. The aim is to be handling one million passengers annually by the first five years of operation, from across the GCC region. “I can tell you that our target is to be the leading tour operator in the GCC,” says Bakar.

“To be the leading tour operator you have to produce big numbers. So it will not be just a few thousand.”

While the headquarters will remain in Dubai, the brand will be launched in four more GCC countries by September this year.

Bakar says he is currently involved in negotiations with all 122 airlines flying into and out of the UAE to secure cut-price rates. He says the response from most airlines to working with the operator has been fairly positive so far.

“Most of these airlines, they know the model. They usually have segments that they sell to the tour operators, but they don’t do it here in the UAE. So we are the first ones to start doing this business.

“Of course they had to speak with their headquarters, it was not just a case of having one meeting and it was done. We have been working for over one year on this project.”

So for he has contracted with 20 airlines including Flydubai, Air Arabia and Etihad Airways.

“The airlines are happy to do deals with us. Today with everything being online the airlines can change their prices everyday according to their loads factors.

“But airlines still have a flight schedule and they have to fly so there are always some empty seats and most of them are happy to have a key partner where, when they are looking at their forecasts we can come together and make some good offers — especially for those periods when they have less demand.”

So far negotiations are still ongoing with Emirates, he admits, but Bakar is confident of a positive outcome. “We don’t have a contract with Emirates Airlines so far but we are speaking and negotiating with them. It is a local airline but for us it is the same whether we are negotiating with them or another airline.”

The Holiday Factory has launched an office in Dubai Festival City to “keep one ear close to its customers” but all packages will be sold through travel agents, so a major drive is now on to educate the trade about the new products and how to sell them.

Fam trips have been promised and agents will have the opportunity to earn commission of “7-8%” on packages. The company wants at least 400 to 500 travel agents in its fold in the next two to three months.

“We are in the process of educating travel agents. We will also make some fam trips for the people sitting directly on the sales point which will bring them closer to the product and give them all the product information they need.

“The level of education, and the knowledge of destinations from the trade working here is very low so we will do everything we can to bring them to a better level and a better sales point.”

Bakar says reaction from the trade has been positive. “All the travel agencies here have an outbound department and they also have an inbound department, but I believe if you do everything you will not succeed in all of them. We can produce holidays but we cannot open 100 offices in the UAE and sell them. So we will provide the holidays and they are the sellers.”

For this year’s summer season Bakar is pegging Turkey as a winning destination: “I think travel habits will change a bit this year due to the situation in the Middle East.

“Definitely Turkey is seeing a profit from what’s going on in places like Egypt and Tunisia. People are afraid to go to these places. And in the Middle East, Turkey also has the benefit because it’s an Islamic country.”

And with the Holiday Factory offering up five night deals at five-star hotels in Antalya for less than AED 2,500 ($680) this summer — well you can’t really argue with the price either can you?