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Middle East Travel Market

I am currently back in Middle East. This is my sixth trip since July 08. Rapid growth is still the norm here despite the economic downturn, though the market is showing some signs of a slowing down. Even hot markets such as Dubai are showing signs of a slowdown as many construction projects have been slowed or put on hold.

The following chart describes the maturity of global market based on travel technology adoption:

The Middle East is an emerging market where online travel itself has not yet taken off. Corporate travel agencies are still primarily transaction processors rather travel management consultants.

There are both structural and cultural barriers to adoption of corporate booking tools. Most of the agency staff is actually Indian. Rates for agency staff are still much lower than in Europe or the US. Service is viewed as an essential component of corporate travel.

Despite these obstacles I do believe we are on the cusp of a major change in corporate/agency relationships here in the Middle East. High net worth individuals will continue to demand personal service, but many Middle East residents in my age group (baby boomers) were actually educated in the US or Europe and thus are implementing Western business techniques. With places such as Dubai now facing a drop in occupancy, online travel companies such as Expedia are poised to launch Middle East operations in 2009.

As this chart (developed in conjunction with Market Designs) indicates the evolution of a market first begins with basic infrastructure and online activity. Travel search follows with the adoption of online booking. Corporate booking tools are at the last stage of market development.

I believe the current economic downturn combined with the rapid growth of online travel will dramatically change the lansdcape for corporate travel mangement in the region over the next 12 months.