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How brands can unlock the potential of travel & tourism in the Middle East

Sawan Prasad on how brands can unlock the potential of travel & tourism in the Middle East

Research

How brands can unlock the potential of travel & tourism in the Middle East

By Sawan Prasad, head of consumer, travel & tourism practice, Kantar TNS

Global travel indicators show resilient growth against many odds. Current estimates suggest that over the next 20 years, more than $3 trillion is going directly into leisure and tourism and indirectly into the supporting infrastructure. By 2020, the region will add airport capacity for 300 million extra passengers, build more than 200 new hotels, add 100,000 additional rooms, grow visitor numbers to 150 million and increase the size of its aircraft fleet by more than 150 percent by 2025.  Softening the ‘unaffordable’ perception among the non-intenders and broad basing the appeal will make intuitive sense for the Middle East region and especially Dubai, where tourist inflow makes up 11.6 percent of its GDP. In order to drive sustainable growth in this sector, it’s imperative to understand the demand and supply side of the equation. Which segment is fueling the growth? ‘Luxury’ or ‘Mid-Market’? To understand this better, Kantar TNS and On Device Research conducted a Global Travel Behavior and Attitude study based on an online survey of 7,900 international travelers across 12 countries.

The ‘mid-market’ segment isn’t enough to drive actionability. But, attracting more visitors from the mid-market sweet-spot would boost up visitor numbers and occupancy rates.

Variation in travel segments isn’t only by country of residence. But also – more so, in fact – by mindsets, travel companions, occupational status and earnings.

Dubai is very much a luxury destination. There is a bouquet of options for each segment and choice. While the luxury destinations growth matures and saturates, some of the fastest-growing destinations cater to the mid-market level. Dubai is clearly more popular among Luxury Travelers (LTs) and Affordable Luxury Travelers (ALTs). And so, it makes intuitive sense to attract ALTs at a higher rate by diversifying the offer. In terms of budget sensitivity, while all the four segments are relatively more sensitive toward air tickets, LTs and ALTs show less sensitivity toward dining and accommodation where more diversified accommodation concepts are required.

Travelers are quite savvy when booking tickets. When it comes to airline travel, 70 percent of travelers search online or use online websites to book hotels, airlines, transport, and so on. With this in mind, here are some key points to consider:

  • Leverage and upgrade one-fourth of ALTs and PETs (Premium Economy Travelers) who have luxurious mindsets.
  • Maintain the quality of experience for higher-end travelers.
  • Associate LTs to the exclusive class and dissociate ALTs and PETs from economy class.
  • Target ‘Bleisure’ travelers (mixing business with leisure) seeking for slice of Leisure Luxury and tickle the segment mindsets across all stages of travel — before, during and after.
  • Hoteliers need to strike the right cord of portfolio of room stock mix. Milk the penchant of Middle East travelers for 5-stars but overall invest in a broader portfolio (villas, palace hotels, designer apartments, theme apartments) driving more new and diversified concepts of rooms for LTs and ALTs.
  • The service and product difference needs to justify premium with a great potential for the ‘Premium Economy’ segment. Target LCC’s especially for short haul who are willing to go upmarket with business-class style services.
  • Finally, don’t take your eyes away from the economy segment LTs and ALTs and target them with impulse upgrade offers and in-flight luxury shopping.

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