Could you elaborate on the current scenario of the travel industry?
The industry can be looked at in two ways – the growth and potential. There has been enormous growth in the industry be it inbound or outbound. However, the bulk has been witnessed in the inbound segment. Outbound has seen growth but not exceptional. If we have to gauge the growth of Emirates, Etihad and Qatar or even Air Arabia, they have and are growing fast leading to increased market share. This growth has resulted in the mushrooming of travel agents day by day.
With each one claiming their market share, the earning has been compromised, thereby resulting in diluting of the business. Subsequently, the growth has given rise to a very competitive scene. This is certainly not helped with different strategies adopted by airlines. This finally leaves it up to the agent to chart out a feasible business structure resulting in profitability.
If we have to go back in time, commission structures have come down from seven to zero. This was not a bad move as it was the nett fares. Here agents could mark it up as per their strength and quality of services offered. However, the drawback was this mark up is not categorized and is open ended.
From a travel agency perspective, based on the growth, volumes have increased but margins have gone down. The bottomline impact is almost the same as cost of operations have not reduced but rather increases day by day. This has given rise to a mixed impact on each one’s business. The growth is welcome but there needs to be some criteria set to the quality of agents and their service. If a structure is not put in place, it will result in a compromised service quality.
How has Al Naboodah Travels performed in 2013?
Our performance for 2013 was certainly better than 2012. We witnessed growth across our topline and bottomline. Our growth has been around 18% over 2012 and expected growth for 2014 is more than 20% across the different divisions. This year, we are very optimistic about our growth. This has been given a boost with the Expo 2020 win. Initially, in my opinion, the impact will be more on inbound rather than outbound. In terms of expansion, we would like to expand out inbound division. This segment has been showing a lot of potential especially from countries such as India and China, which have been primary markets; followed by Saudi Arabia from a regional perspective. However, the new budding markets are Turkey, CIS countries including Canada and US.
Have you seen an uptake in specific divisions across Al Naboodah Travels?
If you see the current scenario, market has increased and so has the share for most airlines. We have number of renowned airlines as GSAs who are performing very well. Cargo has shown positive results followed by leisure and corporate which is growing. The only challenge we see is in the retail business.
How do you see Al Naboodah Travels addressing the retail challenge?
The retail segment is an important vertical for us and we wil not do away with it. To boost this segment, we will be foraying into the online arena. This according to us is the future. The portal is ready and there also has been a soft launch. We will soon be also introducing the website in Arabic. Having gauged the performance, we should be fully operational within the next three months. We are currently working on payment gateway which is a very key aspect of the online offering. This step is one way to enhance our retail offering.
Would there be any key differentiators for the portal?
There are two key differences. One is certainly the rates we offer which would be more competitive and the other would be our ecommerce activities. This will be coupled with a wide range of products including several value-adds. We will also be offering a pay-on-delivery service within Dubai and Northern Emirates. This will cater for people who are unable to make payments online. Our objective is to offer a one-stop shop for the traveller.
Do you see travellers willing to experiment with the outbound segment?
We certainly see people asking for new destinations. If we have to look into the past, it was mostly Europe and US. There were small numbers for other destinations. Suddenly, Malaysia becomes a sought after destination. Regionally too Dubai was yet unknown as a destination. Saudi Arabia was the biggest market and in former years, there travellers preference was always Bahrain. Things have changed now. In current times, Dubai is the most sought after destination in the world. Austria from being an unknown destination is now the most preferred. Germany has also been explored to a great extent beyond Frankfurt. This is followed by Thailand and SriLanka and so also is Canada which is slowly picking up. In terms of niches, adventure and sports tourism are two key ones.
Which niche tourism segment do you see a potential?
The sports tourism segment is picking up reasonably well. While adventure is a very niche market but a lot of people are into this segment. People would like to have a bit of adventure within their holiday but would not opt for a complete adventure holiday.
What other new developments can we expect from Al Naboodah Travels this year?
The expansion of our inbound division is certainly on the cards with a strong focus on this segment too. We also work on the wedding segment and would like to enhance our offerings here. There are plans to expand within the GCC countries with Saudi as a priority. If plans materialise, we would consider having a presence in the region. We are also working on setting up an Umrah division. This was delayed due to policies which are under review.