From the revolution in human-machine interface, to transformation of the Middle East, it’s all happening here
There’s nothing like being on the ground, and getting around, to feel the energy and vitality of a region on the move and my trip, covering Saudi and Dubai, this time left me with no doubt that this is a market that will shape the future of global travel, not only in terms of its travellers but also in the tech innovations to come.
In addition to Emirates, I flew with flydubai, flynas and Saudia and so had a mix of travel experiences but it was all good. No major hassle, all pretty efficient, just a lot of people. In my session with Steven Greenway, CEO of flyadeal, he predicted that the Riyadh-Jeddah route, now ranked third in terms of revenues by OAG, will become the top earning route in 12 months’ time.
Steven Greenway: “We’re tripling in size literally in the next five years.”
“It will happen, without a doubt,” said the low cost airline veteran. “What’s happening is no different from what we’ve seen in other regions. We will see it here without a doubt. We’re already seeing it.”
Of his airline, he said, “We’re sitting at 32 aircraft, 33 in two weeks’ time, and we’ll be up to 100 in the next five years. We’re tripling in size literally in the next five years.”
The growth to come is astounding and the appetite for innovation, voracious, given the tech-savviness of the Middle Eastern consumer, most of whom are under 35. flyadeal is going for a digital-first approach, aiming for 99% automation in customer interactions and a focus on app-based services. “I’ve never seen a market that’s so tech-savvy,” said Greenway.
Here are the key takeaways from the first Phocuswright WiT Middle East event in Dubai on May 3.
From left, Floor Bleeker, Accor; Sanjay Sharma, Orascom; Qais Ammouri, Almosafer; Timothy O’Neil-Dunne, T2Impact
1. The revolution is in the human-machine interface
A panel of technology and product chiefs called out the biggest change to come – “the interaction between humans and intelligent machines”, with AI beginning to handle more complex and content-rich interactions, which previously were thought to be beyond the capabilities of machines.
“The human-machine interface is going through a huge transformation,” said Timothy O’Neil-Dunne, managing partner of T2Impact.
Added Sanjay Sharma, CTO of Orascom Hotels Management, “Human-Machine interface is transforming at an accelerated pace. From implants which can connect our brain to a phone, to an AI which can see, hear and speak, the new age human-machine interface will redefine the way we live and work.
“In the hospitality world, it will redefine guest experience – for example a trusted virtual agent will act as a personalized butler conversing with our guests in their preferred language; streamline operations for example, Intelligent Agents will automate many of the existing processes; and drive innovation by freeing up colleagues for more valuable work.”
Floor Bleeker, CTO of Accor, added, “In hospitality we feel that we are at a tipping point when it comes to the use of technology. RPA, AI and smart automation will replace many manual processes both in the back offices and in the interaction with our guests. In the foreseeable future this means that hotel staff will have more time to focus on what matters most: providing excellent hospitality experiences.”
Qais Ammouri, CTO of Almosafer, said, “The way that I see the relationship between Humans and AI in the future is co-existence, beside Automation and replacing the manual repetitive work of humans, AI will help humans perform their tasks more affectively, but not replacing humans in any major fields completely.
“In travel, AI will help and improve massively the customer experience in all the travel journeys ( from inspiring, booking and post booking), introducing more personalised itineraries, and much faster services.”
The biggest quandary facing technology chiefs is “managing costs while driving innovation”. They must ensure new technologies like AI are cost-effective and do not lead to financial strain on the organisation. “It’s cost because you have to keep the wheels going while you’re going and you have this huge sea change of technology which carries a significant amount of cost and impact,” said O’Neil-Dunne.
Sharma, who said Orascom was transforming from desktop to mobile operations and aiming to embed AI in every process, added, “The biggest challenge is the ever-evolving role of the CTO, the technology is changing so fast. The CTO needs to be in the middle of all business processes, which is again outside their normal domain.”
Ross Veitch: “AI is going to be the pal that’s gonna deliver on all the promises of personalization.”
Artificial intelligence (AI) is on an exponential improvement curve, and its current capabilities are the most basic they will ever be. Future developments in AI are expected to vastly enhance its functionality, including language proficiency and personalized service delivery.
Said Ross Veitch, CEO and co-founder of Wego, “The generative tools we’ve all been playing with… are amazing. But they are the dumbest they’re ever gonna be. And they are on an exponential improvement curve.”
He sees potential for AI in providing more personalized and individualized travel recommendations, potentially alleviating issues like overtourism by guiding travellers to less frequented destinations.
“AI is going to be the pal that’s gonna deliver on all the promises of personalization… enables you to do stuff that is very, very difficult to do with rules-based or algorithmic-driven… more recommendations for stuff that’s off the beaten path.”
In describing the evolution of human-machine interface, Veitch said, “We will have intelligent agents working for us that know a lot about our travel preferences and that will have access to all the tools they need to research, compare, reserve and pay for travel on our behalf. They will interact with us via a number of different devices and UI types, depending on what is convenient for us and what is appropriate for the task. They will seek additional input as required. A travel assistant will be only one of many topic specific expert agents that are quietly working away in the background for us.”
Albert Fernando: “It’s not about the first mover advantage; it’s about changing consumer behaviour.”
3. Beyond the obvious, other markets of promise
The most interesting aspect of the Middle East is how fragmented the markets are, which then gives rise to a mosaic of different models of OTAs. For example, Dubai-based Travelwings, which operates across Africa, is the only OTA in 19 out of the 27 markets it operates in.
Said CEO and co-founder, Albert Fernando, “Launching an online travel company in a market where there are no OTAs in many of these countries – it’s not about the first mover advantage; it’s about changing consumer behaviour.
“(In Morocco), credit card penetration is less than 2.5%. It’s been a fantastic journey for us because it’s not about just starting the online traditional way. It’s about local content, local call center numbers, local payment solutions… cash on delivery, which probably doesn’t happen in the online travel world per se, but that’s something that we’ve inculcated.”
His top five markets are South Africa, Morocco, Kenya, Nigeria and Ghana. “We believe in being ministers across many markets. That makes us more powerful than being a king in two or three countries. Our strategy is basically spreading across and de-risking ourselves from any kind of future problems coming through.
“Every single market has a story. You actually have to be real masters at localization for each market. it’s about setting the base right. Even if I spread myself so thinly but, at the same time, you actually have to be real masters at localization for each market.”
Wego’s Veitch pointed out the potential of Iraq, which hitherto has been overlooked. “Iraq has been having a quite little economic boom – interesting startups and new businesses being set up, tackling ride hailing and food delivery, and there are 50 million people there with addressable markets and travel needs.”
Boon Sian Chai: “We are starting to invest here. We are prioritizing supply.”
4. Competition heating up with new players entering and ramping up
With such market potential, no wonder new players are entering. Trip.com, the Chinese giant, is extending its tentacles to the Middle East.
Said Boon Sian Chai, VP of International Markets, “We are starting to invest here. We are prioritizing supply. We will do direct contracting with four and five star properties where the margins and ADR are higher and it’s also where our strength is, especially with the Chinese outbound premium customers. However we don’t want to forgo the budget category, so we will work with big wholesalers and partners like Expedia, Booking and Agoda to take their inventory.
“We have just started localizing our websites to Arabian to tap into the Middle East outbound market. We are growing well in UAE, Egypt and Saudi Arabia. We see travel demand from Saudi to UAE but we also see them fanning out to Europe.
“We have signed partnerships with Qatar Tourism Board, Saudi Tourism Authority, Almosafer, and we will invest in brand building.”
He shared the areas where Trip.com differentiates from other OTAs – its app which is 80% content “because we believe content drives transactions” and and customer service. “We have deployed AI customer solutions and seen self-service resolution of 78% for flights and 68% for hotels. We are able to do semantic recognition and achieve 85% accuracy of requests.”
Another differentiator is in live streaming. “Our live streaming initiatives, particularly the Boss Live campaign, have also played a crucial role in engaging audiences. These sessions have generated a cumulative transaction volume of over US$1.48 billion and attracted a total audience of over 1 billion global viewers since its launch in March 2020.
“The live streams not only captivate a global audience but also demonstrate the revenue-generating power of the platform, as seen in the “Super World Tour BOSS LIVE” live stream with the Thailand Authority of Thailand in the first half of this year,2024, which resulted in over US$2.8 million in sales in just one day.
Having said all that, when asked about the trend he’s most excited about, he stressed, “It may sound like a contradiction to all what we are hearing about AI and technology. I feel it’s going back to basics. Booking, Expedia, Agoda – all are leveraging scale and tech. But for us, it’s all about relationships and doing one-on-one good deals with partners.
“Right or wrong, we don’t know. The others are all grown up – 30 years old, Trip is still a child, so we are scrappy. We don’t mind doing manual work to get more attention and deals.”
Muzzammil Ahussain: “I think the biggest challenge we have is how to prioritize, there are so many opportunities in Saudi, in the region.”
5. Local giants stay focused on home markets
Meanwhile, Almosafer, riding high on the tide of Saudi tourism, is digging deeper into its home market. CEO Muzzammil Ahussain said it is building a platform to support its five verticals – corporate travel, inbound, domestic, tours and activities and religious – by utilizing a unified tech and data stack to enhance each segment.
“Scale drives a lot of value so we can be the best because we have the biggest in each, because we have the platform behind it,” he said.
Domestic tourism has seen a surge and it now forms 50% of the company’s business, but that doesn’t mean Saudis are travelling less to overseas destinations, said Ahussain.
Asked if it looked to companies like Trip.com which, even though it has a huge home market, is expanding globally – with about a 70 (China)/30 (international) share, Ahussain said, “We have a hybrid strategy. We want to focus on our core market in Saudi while selectively expanding our consumer business in markets like Kuwait and Qatar.”
He identifies prioritization as a key challenge, given the plethora of opportunities in Saudi Arabia’s booming travel sector. “I think the biggest challenge we have is how to prioritize, there are so many opportunities in Saudi, in the region.”
One priority has been to feed more long tail content into its tours and activities platform, a joint venture, with Klook so that “we can support the diversity of local, authentic experiences that are springing up in Saudi, and those experiences are also available on Klook’s platform outside Saudi”.
6. Families, digital nomads shaping trends in alternative accommodation
With a market big on family and multi-generational travel, as well as home to large expatriate communities, and Dubai positioning itself as a haven for digital nomads, it is no wonder that platforms like Airbnb are experiencing strong growth. It hired Amani El Sehrawey O’Neill as Public Policy Manager, Middle East, over a year ago to shape public policies around short-term rentals. She said, “Government attitude towards shorr-term rentals in the Middle East is largely positive, seeing it as complementary to traditi0nal accommodation and vital for achieving tourism goals.”
Airbnb has a partnership with Dubai’s Department of Economy and Tourism (DET) to promote Dubai as a remote working destination.
In her presentation, she reported growth in the UAE, mostly driven by Dubai, but sees a lot of opportunities across the region. Foreign visitors still dominate, contributing about 20% of total travellers and in the UAE, four out of its top six origin cities are from the Gulf region.
“Total guest spending is actually quite robust, we’re seeing about 1,000 dirhams or US$400 per day,” she said.
Across Airbnb, long-term stays made up 19% of gross nights booked in Q4 2023. Roughly a quarter of those stays were for trips of three months or longer. Nights booked for trips over three months increased more than 20% compared to Q4 2022.
“While some companies are encouraging return to office, LTS bookings indicate this trend is here to stay,” she said. “For the past seven quarters, long weekend stays have been the fastest growing trip type on Airbnb.”
Ultimately, whether it’s in inbound, outbound, corporate travel, flights and tours and activities, it is undeniable that the Middle East is undergoing regional transformation and unprecedented growth.
Said Kerry Healy, Chief Commercial Officer, Premium, Midscale & Economy, Middle East, Africa, Turkey & Asia Pacific, Accor, “Dubai was completely on the brink of something breathtaking that we’re now living and breathing and experiencing today. There’s a new race. It’s not about building the buildings, but it’s about creating the demand for future products.”
