Doing it on the cheap
Another issue is that the quality of IT solutions supplied in the region is often under par, and the travel sector has often had a tendency to go for the cheapest option.
Belzner said companies were “very price sensitive, which is a real problem because they tend to be sold IT solutions that do everything for a very low price. These projects are not going to work and are stopped after a short while. Money is dumped without any success.”
According to Memon, the trend was for companies to outsource technology requirements to cut-price programmers in India who were not experts in the travel field.
“India is the technology power house of the world and while there might be very good developers and software companies there, they don’t all have a product or a system for the travel industry.
“The travel industry is not as simple as other industries. There are standards and processes, it’s so complicated and there are many involved in the supply chain from airlines, cruise companies, hotels, inbound tour operators to outbound tour operators, and the list goes on.
Going for the cheaper option can have dire consequences in the long run he said. “Some of the biggest organisations in this part of the world have spent years and millions of Dirhams and they had to write off everything.”
Other tech firms report similar experiences. “Our challenge comes from companies in the East who undercut us. The money has gone but they are not able to deliver the product,” said Baig.
He stressed that travel firms must ensure IT systems will be properly implemented and the correct training given before making any investment in technology: “The management may save money on a product but if it’s not implemented properly this is money down the drain. Once a company signs up for our system we have 15 days training for each department. Almost 50% of our cost goes into training the staff.”
Technology is not free!
Often it’s not even just a case of going for the cut-price option, but — rather astonishingly — many travel agencies expect technology to be free.
“Travel agents in this part of the world are very spoilt,” stated Memon, which he says is down to the way GDS systems traditionally pitch for agency business, offering up everything on a plate.
“They don’t pay anything [for the GDS] They get the shops painted! New signs and windows, they give them free computers, and vouchers every time they making bookings over a certain volume. But unfortunately GDS are a very small part of the travel business.
“What about your CRS process? Managing your customer profile, and the packaging side of things? Then you have your bookings, your documentation, your accounting, your reporting, your MIS, your B2B website, your B2C website — GDSs don’t do any of that because that’s not their business.
“Ask any travel agency in this part of the world what they want and they typically say — we want to be like Expedia. But my answer is, do you have any clue how many millions Expedia spends on technology?
“They want to be the best but they don’t want to spend on it and that is the sad story of technology in this part of the world. We all like to be high-flyers but you have to work hard for it and invest and that is, and will remain the biggest challenge.”
Time to take the leap
So what is the future for the industry if travel companies continue to remain stagnant in terms of technological innovation?
Carla predicted the region will soon witness a rash of new OTAs enter the sector. “Whilst we may be amongst the last few regions to adapt to a trend, we are known for the speed with which we adapt — and we will soon see several independent OTAs operating as well as full-service portals as corporate white labels operating in this region.”
Baig warned that travel firms relying on outdated, manual processes will lose the edge in grabbing business. “The West talks of automation. Europe and America and even Russia for that matter, will deal with you if you have an automated solution. They don’t want to deal with you if you are manual.”
Established players will need to play catch up to ensure they are not left behind. “The new players coming into the market are coming with a vision. They will take over this market. The old players will see marginal growth, but companies who are innovative will be seeing the major growth.”
Memon said travel agencies were already losing out to OTAs, and this process would only speed up.
“It’s already happening. Travel agents are already complaining that customers who used to go to them are now going to booking.com, expedia.com etc and booking directly on those websites. And these websites are not even based in the Middle East — these are companies based out of Europe, Asia, and the US.
“In my view, adoption of technology for travel agents is not a question of ‘if I should’ it’s a question of ‘how quickly can I?” he added.
“I’ve said this for years to travel agents here — innovate or die — adapt to technology or you will be extinct.”