Study shows industry’s resilience amidst slowdown, flu scare

As another GCC market - Qatar - braces itself for zero commission to be introduced, ATN looks at how the Middle East's travel trade is coming to terms with this phenomenon.

Muscat: Oman is on its way to becoming a preferred wedding destination for a large number of Indian couples, thanks to the efforts by the Sultanate’s Ministry of Tourism in promoting Oman as a wedding destination in the “big, fat Indian wedding market.” In line with this approach, the ministry supported Oman’s leading tour and travel operator Zahara Tours in hosting six leading wedding planners from India to showcase Oman’s attractions. During their five day stay in Muscat from 6-10 October, the group inspected major properties, including Al Bustan Palace, Bait Al Zubair, Al Alam Palace, Grand Hayatt Muscat, Shangri-la, Chedi Muscat, the Royal Opera House, the Grand Mosque, Amouge Factory, Millennium Resort, Karjeen Restaurant, and The Cave Complex. The ministry also arranged for business meetings with leading wedding event managers and allied service providers, including Los Clarita Oman, DMCs, Key Light Production and Krupa Khimjis. Lubaina Sheerazi, head of the Indian representative office of Oman’s Ministry of Tourism, was also part of the delegation. Zahara Tours took the wedding planners on local sightseeing trips, which enabled them to have first-hand knowledge of the Sultanate’s rich cultural and geographical diversity and uniqueness. “Today, the Sultanate’s largest and most promising market for destination weddings is India. Realising this fact, the Ministry of Tourism’s India Representative office in Mumbai coordinated with some of the major wedding planners in India in a bid to raise awareness among people of India about the attractiveness of the Sultanate as a prime wedding destination. We worked with Zahara Tours to host them and also show various sites, including hotels, restaurants, and cultural centres, such as the Royal Opera House in Muscat,” said Aysha Raisi, Desk Officer for the Indian Market at the International Offices Department at the Ministry of Tourism. “India is a large market waiting to be tapped by the tourism industry in Oman. Towards expediting this mutually beneficial partnership, the Ministry of Tourism has been organizing various promotional events, collaborating with major tour operators and hotel groups in Oman. We facilitated the wedding planners’ tour, as part of this strategy,” said Raisi. Commenting on the wedding planners’ familiarization trip, Harsh Abrol, vice president of Zahara Tours, said: “As a responsible and leading Destination Management Company operating in Oman for over four decades, our goal has been to promote the Sultanate in diverse markets. India figures prominently, with respect to destination weddings. We hosted leading Indian wedding planners in Muscat, with the objective of allowing them to explore and see for themselves the amazingly huge potential this country holds as a premier wedding destination. This is the second time Zahara is hosting Indian wedding planners in Muscat. With hotel inspections, sightseeing trips and meetings with local vendors, such as florists and event managers, arranged as part of the program, we hope they will receive a broad perspective about Oman and its potential, which in turn will help popularise Oman as a wedding destination among Indians who look for a memorable wedding experience.” “We are working on the final arrangements for a couple of big Indian weddings in Muscat, and a lot more are in the pipeline. We have been receiving a lot of enquiries from Indian wedding planners. For the time being, we are focusing on Muscat. It is a well-developed city boasting world-class hotels, restaurants, avenues for entertainment, stunning beaches and mountains. We also have an office in Salalah, and we are actively working on expanding our reach to other destinations in Oman, beyond Muscat,” he said. Zahara Tours offers pre- and post-wedding tours to exotic locations, including Salalah and Jabel Akhdar, apart from Muscat. With oil prices on a deep decline, Oman is looking at ways to diversify its income, and tourism is accorded highest priority in this diversification strategy. Wedding tourism, MICE tourism and film tourism are all part of the promotional strategy adopted by the ministry of tourism to promote Oman abroad. According to HarshAbrol, with the Indian economy on a high growth trajectory, people’s aspirations have reached higher, which will surely lead to an increasing number of Indians seeking destination weddings in unexplored lands. The wedding planners hosted by Zahara Tours included Seven Steps, Platinum World Group, Motwane Entertainment and Weddings, Gurleen M Puri&Sudha Khanna, and Kickstart Entertainment.

Notwithstanding competition, the Internet and thinning margins, travel agencies in Oman are a long way from being relegated to the status of relics The concept of travel agencies, such an important facet of tourism industry, has been confined to the history books in much of the advanced economies thanks to the advent of the Internet and the consequent proliferation of online booking sites like expedia.com, travelocity.com, lastminutefare.com and many others. But unlike the West, travel agencies in Oman are not relics of the past, but a very happening business. There are several reasons for this. Online penetration as a percentage of the population is extremely low in the sultanate and is confined to urban areas like Muscat. Besides, a big chunk of expatriate workforce consists of labourers from the sub-continent who depend on travel agents or their sponsors for their ticket requirements. The number of passengers using Seeb International Airport has witnessed a quantum jump. It is believed that an additional 100,000 people have entered the country over the last 12 to 14 months. Much of that increase in workforce is to build the multibillion-dollar projects that are taking shape all over the country. Petrochemical and manufacturing plants in Sohar; integrated tourism projects like the Blue City in Al Sawadi and the Jebel Sifah in Muscat as well as the the huge development that will take place in Duqm are examples. All these require a lot of manpower and consequently involve flying people into Oman from the sub-continent. Says Shankar Bose, general manager, Bahwan Travel Agencies, Airline travel witnessed a boom in 2007 and has continued in the first few months of 2008. I can tell you for sure that we have seen a two-fold increase in ticket sales as compared to the same period last year." Airlines crash into party With airlines all over the world struggling to make profits on account of high operating costs and fierce competition from low-cost budget carriers, they are constantly looking to cut costs to stay afloat. One of the areas they have targeted is the commission paid to travel agents. About 15 years ago, the commission paid to agents was a handsome 12 per cent and has been slowly reducing. This was then reduced to nine per cent, then five per cent and now ten carriers do not pay any commission at all. Some airlines like Etihad, Emirates and Indian continue to pay a five per cent commission fee. Says Dinesh Poojary, business development manager, Eihab Travels, "Commission is basically gone from most international airlines. We depend on the volume of our sales for commission." Bose adds that travel agents now make money by charging a service fee from the consumer. The matrix for this has been developed by a committee of airline representatives. There are various parameters, one of which includes geographical distribution broken up into segments like Europe, US, Asia-Pacific and Middle East. Airlines also pay fixed fees on different ticket classes. For instance, it could be as high as RO40 for a first class ticket to RO10 for an economy class ticket. Since this payment mechanism was introduced, income has reduced drastically. Airlines have introduced payment-linked bonuses and these depend on travel agents producing certain thresholds of business. And every year the bar is lifted a little higher. Airlines are also in direct competition with the travel companies. For an airline, agents are a cost and if it can bypass them substantial savings can be ensured. "Airlines are encouraging consumers to book on their website. For them it's an investment that will pay at some point pay off in the future. Airline country managers are getting incentives to wean away customers from agents. Airlines are also spending heavily on marketing like newsletters, loyalty programmes and bargain deals on tickets. And they are doing it constantly," says Bose. Discounts and service There is fierce competition in the market. Sources say that cash discounts are highly prevalent among smaller players and some not-so discreet players also part with some of their assumed future earnings. Then there is the entry of overseas players following the signing of the WTO agreement. Regional heavyweights like Bahrain-based Kanoo Travels and UAE-based Saraf Travels have created a stir in the market. Dubai-based Dnata has taken over OUA Travels. Says K G Shekar, travel manager, BCD Travel, "Competition forces you to offer better service. In such a market, the level of service will be the key differentiator. Travel agencies will have to come up with specialised services based on client requirements." One of the reasons why travel agents continue to thrive is because of the credit facility offered to customers. Bose says the average outstanding payment is about 100 days and this plays a major part in their survival. Nazareth Fernandes, manager - Travel at Zahara Travel and Tours attributes their strong performance to corporate customers. "We offer clients a single point of contact and, of course, we have the best pricing. Otherwise clients would have to go to ten different airline websites, which are not always up-to-date with information. Small-time agents have fallen because airlines have removed incentives but big companies like Zahara, which charge for services, will always remain because of large corporate clients. We are an American Express representative dealing with global clients like Morgan Stanley and Goldman Sachs. There's no threat from the Internet." Net travel Travellers are on the leading edge of technology adoption. Having control over making travel arrangements is very important, and the web plays well into that. Does this mean that travel agents everywhere should quit their jobs and brush up on HTML? A study in the US shows consumers will only book a certain amount of the trip online. If things get complicated, they want to speak to someone. Plus, booking online can actually cost more than booking through a travel agency. A 2005 study conducted by Topaz International found that a particular business itinerary cost, on average, US$80 more when booked online than when booked using a corporate travel agency. Shekar says online travel bookings are unlikely to take off anytime soon. "I don't see it happening in the next five years. Perhaps in ten years' time, this is a possibility. Besides we have a huge amount of business from the interiors where Internet access is limited. Another important factor is that a major part of the business comes from the sub-continent, most of which comprises the labour force." Eihab Travels' Poojary too is quite confident about the continuing popularity of travel agents. "People are less computer literate here, and also anything done on the Internet is not 100 per cent guaranteed - a hotel room might be smaller in real life than it looks online, for example. You cannot fight with a machine. People have experienced these problems so they prefer to rely on travel agents." Another disadvantage of booking online is that in many cases customers cannot change the date of travel and refunds are not possible. There are also hidden charges in many cases. This is where the service aspect becomes the key differentiator, believes Shekar. "Imagine getting stuck at an airport when a flight is cancelled. Had you booked with a travel agent, they would provide backup support by issuing you a new ticket or guide you through flexible travel options that will allow you to continue your journey without much trouble. Observers say another reason for Internet travel not taking off is the lack of penetration of credit cards. Being a predominantly cash-only market, there are few takers for online bookings. Besides, people are scared to pay for goods and services online for fear of fraud and identity theft which are two major problems in emerging countries. In fact, the Central Bank of Oman is yet to authorise online purchases using credit cards for goods and services rendered in Oman. It is believed that the apex bank is working on the legal framework and other issues to make e-transactions possible. But the question remains how soon.

The sharp decline in the value of the rupee has deterred Indian expatriates in the sultanate from taking a leisure break during Eid holidays, and they are opting to send money back home to take advantage of the favourable exchange rate. With the onset of Ramadan and travellers looking forward to Eid holidays, travel agencies have reported a decline in the bookings by Indian expatriates this year. With the Indian currency tumbling to fresh lows, the average value of the rupee against the Omani rial has been in the RO153-155 range since the start of Ramadan, as compared to same period last year when it was between RO142-145. The rupee dropped to a record 61.21 against the dollar on July 8. It closed Tuesday at 59.72. "We have observed a decline in the number of Indian expatriates planning to travel abroad during Eid holidays this year. Due to the fall in the value of the rupee, people prefer to send money home rather spending it on leisure and travel. We have been receiving queries but the queries are not getting converted into business due to this dilemma in their minds. And as for the Omani population, the Far East still remains the most favourable destination for travel," said Sunil Prabhakar, CEO of Travel Point. Echoing these views, Suraj Shroff, manager for outbound travel at Zahara Holidays, said, "Fewer Indian expatriates are planning to travel abroad this year for Eid holidays, one of the reason being the fall in the value of the Indian currency. Expatriates wanting to travel to Europe are also facing difficulties in getting appointments with European consulates for visas. Airfares are also not competitive and on the expensive side. As for Omanis, places like Malaysia and Singapore still remain the favourites." Although the Far East still remains the most sought-after holiday spot, Istanbul, the Maldives and Paris, are also popular with holidaymakers. Travel agents are offering tailor-made promotions, apart from tour packages, ranging from short three-to-four-day trips to extended seven-to-ten-day options in order to attract more travellers and to make them aware of other destinations. "Omanis as well as expatriates will be travelling more to places like Istanbul, Kuala Lumpur and Paris for their Eid holidays. As for Indian expatriates, we have still not seen a considerable decline in the number of travellers but it is still to early to comment about the coming weeks," said Shankar Bose, general manager of Bahwan Travels.

Vacation plans to Thailand will not be majorly hit following the coup that placed the military in control of the nation, according to tour operators in Muscat who expect bookings to increase during the summer break and Eid holidays. A nationwide curfew has been imposed in Thailand but movement of tourists has been unaffected, the country's tourism authority has said, allaying fears of travellers.

Outbound holiday travel and bookings have picked up momentum for the Eid Al Adha holidays as the residents prefer peaceful and short haul destinations this time to escape the Omani summer. On the destinations, the travel agents observe that the residents seem to avoid going to places where terror threats are high. This was echoed by most of the major players in the industry who said during the upcoming Eid break, many Omanis have booked their travels to “more peaceful places” in Asia and in Europe such as Georgia, Switzerland, as well as the UK (particularly London). “Yes there is a drop in our outbound business. This is mainly because of the current economic situation in the region and the uncertainty in certain destination,” said Rajeev Thomas, Assistant Manager – Holidays, Eihab Travels.

Business travellers and holidaymakers departing from Salalah Airport are discovering that the newly inaugurated gateway is more than just an architectural masterwork with state-of-the-art fixtures. Tucked away in a discreet section of the departures hall is an airport lounge replete with amenities that take away a lot of the hassles and stressors synonymous with modern-day air travel.

IndiGo, which recently began operating internationally, continued expanding out of Mumbai (BOM) on 10 October with its 180-seat A320s. The Indian low-cost airline now flies daily to Singapore (SIN), complementing its recently launched Delhi flights, in competition with Singapore Airlines’ twice-daily services and each daily flights on Air India, Kingfisher and Jet Airways, as well as thrice-weekly flights on Qantas. The second route to be launched that day by IndiGo was to Muscat (MCT) in Oman, which notably is IndiGo’s first international destination to be launched with a Mumbai route before Delhi services. Competition to IndiGo’s four weekly flights comes from Oman Air’s twice-daily and Jet Airways’ daily flights.

MCI Middle East, and Zahara Tours have signed a new strategic partnership to elevate and develop Oman’s MICE sector in the Middle East market and drive its meetings industry forward. With MCI’s global expertise and Zahara’s local knowledge, the partnership will result in the designing of innovative programmes and products to enhance the experience of conducting meetings in Oman, said a statement.