Travel in Cyberspace

MSN Arabia and Emirates Group is a mighty combination, but do they have what it takes to create the region’s first successful online travel agency?

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By  David Ingham Published  January 13, 2002

A mighty combination|~||~||~|Khaled Bichara certainly can’t be faulted for his boldness. The global travel industry is in the pan and you all know about the problems facing the Internet industry, but that hasn’t stopped the CEO of MSN Arabia from ploughing ahead with the launch of a brand new Travel Channel.

Aside from being a massively ambitious undertaking, the launch of the MSN Arabia Travel Channel is being trumpeted by Bichara as a victory for MSN’s partner model. The channel is managed by Emirates Group, with MSN Arabia providing the platform on which it is delivered. The two companies share any transaction and advertising revenues generated on the channel.

“The way we see things is that MSN is a horizontal marketing platform that will bring in the users. We then work with vertical partners, each of which will bring his core competency to the site,” explains Bichara. “We’re proving that co-operation can work in this market. A lot of people were very sceptical,” he adds.

All very well, but isn’t the launch of MSN Arabia Travel Channel a bold, maybe even risky, move at a time when the travel industry is in the doldrums and there’s little money being made online? Bichara argues that a downturn is always a good time to launch a big new venture, since more marketing impact can be made.

“If you look now, it’s easier to get column inches; good news is not one of 200 pieces, it’s one of ten; and it’s easier to recruit good people,” Bichara says. “It’s a good time to launch, although maybe not a good time to start.”

MSN Travel Channel’s architects say they don’t want to compete outright on price. Instead, Emirates and MSN talk of the convenience and choice that shopping for travel online will offer.

“User feedback will contribute to its design and content, and we’ll offer facilities such as travel tips, activities and advice based on their comments,” says Simon Lewis, manager, Emirates’ E-Ventures Group. “Our aim is to enable consumers to achieve their travel,
leisure and transportation goals in a single environment.”
||**||Growing array of choices|~||~||~|
At its launch, the partners were saying that the Travel Channel could offer users in nine regional countries access to 47,500 hotels, cars from 37 hire firms and flights on 500-plus airlines. There’s also the ability to book tickets for top community and sporting events; check weather and currency rates; and look up destination and city guides for more than 40 countries.

A quick test by Arabian Business offered some idea of the level of choice that the Travel Channel can give you. A request for a flight to Manchester over the Christmas period resulted in around six offers of flights.

Air France was the cheapest, running through Emirates itself, KLM and British Airways. The number of alternatives offered wasn’t bad and should grow as more airlines and agents come on board.

“The choice and convenience of it is going to be one of its major strengths,” says Bichara. “We don’t want to go into a price war because it’s proven worldwide that online properties focused on being the cheapest are not here today.”

Nevertheless, MSN Travel Channel does aim to offer what Bichara describes as ‘local rates.’ This is the price that you actually pay for the ticket when you buy it, compared to the often inflated rates that are quoted in official price lists. This local price won’t necessarily be cheaper than you’d get in your Deira or Cairo bucket shop, but will be “competitive,” Bichara says.

Payment will be done online by credit card and tickets will be delivered to customers through local partners. Cash on delivery will not initially be an option, something that Bichara admits could restrict sales. “It may limit [sales] because a lot of people don’t have credit cards, but we don’t see any other way to do it at the launch,” he says.
||**||Mixed track record|~||~||~|
The track record of online travel services is mixed. Priceline.com, the famous ‘name your own price’ service in the USA, came into existence in 1998 and only achieved its first profit in the second quarter of 2001. In the third quarter it immediately returned to familiar territory, with a loss of $3,586,000 on revenues of $301,989,000.

One notable success story, however, is SouthWest Airlines, the US budget airline, which generated 30%, $1.7 billion, of its passenger revenue for 2000 at its Web site, southwest.com. In June 2001, InternetWeek magazine voted southwest.com one of the top 100 e-businesses in the USA.

Since September 11, the outlook for online travel sites, as for the whole of the travel industry, has changed. In order to try to drum up business, airlines and operators have been dropping their prices to rock bottom, cutting into any price advantage that Web sites may have had.

Cut price deals are also advertised prominently all over newspapers, removing the incentive to go online and ‘look for the best deal.’ “Web sites are under pressure because you can easily find so many deals,” says Andrew Drwiega, editor of UK-based Inflight magazine.

Aside from pricing, online travel sites in Europe have always had to contend with the established tradition of booking holidays through a travel agent. Of course, there is an increasingly intrepid few, like students and independently minded travellers, that will arrange things themselves online, but they remain a minority.

Drweiga believes that the way forward for Europe’s travel sites will be to offer users something that they can’t get their hands on offline. Surprisingly, it’s budget airlines that have led the way here, offering their ‘last few, bargain seats’ only on their Web sites. “That’s not something that will happen through travel agents,” says Drwiega.
||**||Grabbing eyeballs|~||~||~|
At the moment, there are no exclusive deals on MSN Arabia Travel Channel, although Bichara does claim that travellers will find offers online that would be very difficult to find offline. Business development teams at MSN Arabia and Emirates are also said to be working together on ideas that will increase the value of the site.

According to Inflight magazine’s Drwiega, research from airlines like KLM shows that premium travellers are not so much interested in price as in air miles and benefits. That would appear to reinforce the need for MSN Arabia to start offering people that little bit extra to shop online. “Initially, we have a competition where you can win tickets,” says Bichara. “Definitely, more work will be done.”

Before MSN can even begin to have a chance of success, it first needs to attract eyeballs. It has a big head start because of MSN Arabia’s existing audience, although the company won’t confirm how large that audience is at this early stage of its existence.

Bichara will only say that the site already ranks amongst the Middle East’s most highly visited sites, when compared with those in the Arabian Business Web Index. “For the launch of MSN, we’ve mainly been doing online and viral marketing, and a real campaign will start next year.”

MSN Arabia Travel Channel’s medium and long term fortunes will ultimately depend on regional uptake of e-commerce and recovery in the travel industry. As military action in Afghanistan winds down, the travel industry will be looking for a recovery in passenger and tourist numbers.

So far, that recovery appears to be elusive. “Passenger numbers are recovering very slowly,” says Drwiega. “Routes outside the USA are faring better but routes into the USA are down, and that is such a large proportion of air travel.” When the industry does start to pick up, MSN Arabia and Emirates will be hoping that a large chunk of business will come their way. ||**||

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