The Middle East Travel Market Is Booming: But Companies Need A Different Approach To Succeed

The Middle East travel market, which once was mostly limited to regional travel or travel to major cities in Europe, like London, has seen a major shift in recent years. The younger generation of travelers is a rapidly growing demographic of tech-savvy and adventurous consumers who are changing the face of outbound travel from the region.

Middle East Travel Market Growing

IATA predicts a robust growth rate of 4.4% annually for the next two decades, with a total market of 501 million passengers by 2037. Statista predicts that six of the region’s countries alone (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates), which make up the Gulf Cooperation Council (GCC), will claim a $94 billion travel market by 2020 and could reach $140 billion by 2025.

Travel Preferences Of Middle Eastern Travelers Changing

And it’s not just that the market is growing; it’s changing in nature. Consumers in the Middle East are traveling internationally more than ever, and have unique concerns and preferences.

64% of travelers go abroad, favoring Europe (27%) and Asia (21%) according to Amadeus research. Many are drawn to green and cool landscapes different from their own, such as Ireland, which provides a respite from local climates.

Middle Eastern travelers also like to travel in groups, both for safety reasons and because they are family oriented: 57% travel with family and 15% with friends. And to underline the changing demographics of the region’s travelers, 51% report feeling empowered by technology rather than anxious about it and don’t hesitate to use services like Uber while on holiday.

Challenging The Prevalence Of Offline Bookings And Cash Payments

The interesting thing about the Middle East travel market is the contrast between the young, tech-savvy consumer, and the slower pace of change in their home countries. Since most travel has been booked in offline channels in the past, there is a huge opportunity for companies that can offer something new. On the other hand, there is still some resistance to change.

Most travel is still decided upon through word of mouth advice, according to a recent study, though search engines and online review sites are now a close second. For now, most travel is also booked through offline travel agencies and paid for in cash. Why? The cultures of the Middle East place great importance on personal relationships and trust building, plus there are a variety of languages spoken in the region, which create localized markets. Companies that can build trust and cater to local needs will be the ones to win customers.

In addition, there is also a lingering lack of trust for online payment methods. But this also is changing. Global brands including Uber and Amazon are slowly winning over customers and boosting confidence in online payments, particularly among the large younger population that has grown up on digital and mobile. In fact, Phocuswright predicts 41% of travel bookings to be online by 2021.

Big Names And Local Players Making Waves

Travel brands, both regional and global are paying attention to these trends, recognizing a market that is ripe for major growth. Booking.com has found success by being the first global OTA to localize content in Arabic. The business garners 39% of online searches currently and have vastly increased staff in the region, from fewer than 10 in 2011 to more than 190 today.  Meanwhile regional travel company Cleartrip found a way to gain the trust of customers by acquiring the well-known Saudi Arabia based travel company Flyin.

Google also made a play in the region, launching Google Hotels in the market. And Amazon has become a major player in e-commerce in the Middle East through its acquisition of Souq.com, with some in the region speculating that an entrance into the travel market a natural next step.

The opportunities for modernization in the industry are substantial, according to a recent article from PhocusWire. For companies that provide payment platforms, mobile booking solutions, and more, the shift to digital is coming, but companies must be able to address the unique localized needs of the region to be successful.