In the United States today more than a third of all plane tickets are bought on the web, thanks in great part to the fact that 68% of the country’s 328 million inhabitants use the internet – according to www.internetworldstats.com – and that the credit card has become almost as ubiquitous as the wristwatch. In stark contrast, across the Middle East, only 8.2% of roughly 261 million inhabitants use the internet and many people have never seen a credit card. But despite this world of difference, Mitri Kurban, a partner of Lebanon’s Kurban Travel, is convinced that now is the time to launch a Middle East online travel booking agency – appropriately named uflyonline.com.
A revamped concept
Uflyonline – the website – has actually been around for a couple of years. But it has kept a distinctly low profile, operating behind the existing travel agent Kurban Travel. So, although you could buy a ticket online, you had to pick it up from Kurban Travel. “Not the best way of doing it,” agreed Kurban. Only recently, though, did he and his fellow investors decide that the time was ripe to transform uflyonline from an unpublicized website into a fully-fledged, independent company – a move streamlined by a marketing campaign that by the end of the year will have cost almost a quarter of a million dollars (around 70% of total costs).
“Two years ago, we didn’t feel that the market was ready. For two years, we advertised only online. Now, more people in Lebanon and the region are using the internet, technology has advanced, the internet is much faster, and airlines like Emirates, Saudi Arabian Airlines and even MEA are using e-ticketing and the internet more,” Kurban said. “We have opened a real bricks-and-mortar shop to let people know that we exist, that internet booking is a reality, that it’s the best way to book for a journey. The shop is licensed and operated in Lebanon. It’s open 24 hours. The choice is there and prices are very competitive.
“If we don’t move into the business, in this region now, someone else is going to.”
Uflyonline had only been functioning in its new form for five days when Executive spoke to Kurban, but he said sales already indicated the marketing campaign was drawing customers to the site. “We’ve been positively surprised by the appetite of people for this service,” he said. “People have been catching on immediately, jumping on the internet and booking.” In the 48 hours before the interview, Kurban said, uflyonline had sold 10 tickets.
Following international trends
Kurban witnessed firsthand the boom in online booking in the United States when he was living there in the late 1990s, and predicted its spread to Europe. In fact, one of uflyonline’s current owners is a Frenchman who set up an online booking agency in Europe just as the boom was spreading. “He told me: we should try this in the Middle East,” Kurban recalled. “I began seeing how it could be implemented here. I went from Cairo to Dubai to Abu Dhabi to establish the system. It took us almost a year-and-a-half to create alliances and understand the business. And we had to adapt the technology. We dealt with a lot of problems, a lot of bugs. We changed our business plan many times. Finally, we came to the conclusion that we would have to set up a shop in each target city and begin promoting online booking as a real product and give people the choice.”
The company is owned by four partners: Kurban, the French online booking agency owner who suggested the Middle East venture to Kurban and apparently wishes to remain anonymous, Openfares, a Canadian software solutions company active in North and South America and Europe and hoping to expand into the Middle East, and a Saudi silent investor. Together, the four have already invested almost a million dollars.
An inexpensive startup
“That’s actually a very small amount for this type of business,” said Kurban. “The startup budget for my French partner’s Europe venture in 1998 was 12 million euros. Today it would cost him 30, 40 or 50 million euros.
“The reason it has cost us so little here is first, we haven’t done that much yet; second, the cost of advertising and many other costs are much lower; and third, we don’t for the moment have any competition.”
But Kurban said he expected competition to flourish as the concept took hold in the region. “We have noticed that Europe follows the US by three to four years,” he said. “And we follow Europe by three to five years. So the gap between the United States and us is about 10 years. Online travel developed in the United States in 1996. Today, almost a third of European air travelers purchase online. In five or six years from today, online booking may take a 10% share of the Middle East market.
“I don’t think it will ever reach 30% or 40%,” he added, “because of the lack of education, of people speaking the languages. But even 10% of the Middle East online market is a lot of money.”
Kurban said he expected the company to spend a lot more over the next few years establishing client bases across the Middle East.
In Lebanon, over the coming year, another $300,000 to $500,000 will be spent, he said. And then come other Arab countries. “If our Lebanon venture is successful, we’re moving into Dubai next, then Abu Dhabi, then probably Kuwait. We’ve seen a huge number of US soldiers using our services in Kuwait.” Kurban said the company expected to spend another $6 million in the region over the next three years.
When uflyonline established its low-key internet presence behind an existing travel agent in Lebanon two years ago, it did the same thing in seven other Arab countries – Bahrain, Egypt, Jordan, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates. And just as it has transformed itself in Lebanon into a fully-fledged independent company, so it hopes to do the same in the other seven countries.
Kurban said he sees the company breaking even within two years. He said he hoped to be doing $10 million worth of business in Lebanon within two years, “comparable to one of Lebanon’s top five travel agents,” or 3% of Lebanon’s roughly $300 million travel agency sector.
Kurban acknowledged that it may not be easy drawing customers in this part of the world away from the traditional face-to-face purchasing they are used to. The website “doesn’t talk,” he noted. But he is convinced that there are enough modern, aeroplane-using internet users in the Middle East to make the system work. And in an effort to retain a reassuring human element, uflyonline has established call centers that are open to queries during regular working hours. Customers are also free to pick up their tickets from uflyonline offices.
In another tacit admission that it will take time for Middle Eastern online bookers to become as automated as their Western counterparts, uflyonline doesn’t oblige customers to pay by credit card. “People are happy to drop in at our office and pay cash. Many don’t trust credit cards,” Kurban observed. Nonetheless, he added, half of the purchases over the past five days had been made by credit card. “For the moment we are educating people in the region,” he said.
Kurban is keen to stress that uflyonline is not a subsidiary of Kurban Travel. It is an entirely separate company. However, his share of the investment is effectively a Kurban Travel investment. “And so we’re trying to do it in a way that hurts Kurban Travel least,” Kurban explained. “That’s why we’re keeping it totally separate, so the customer doesn’t have two choices in the same office.”
Uflyonline currently counts 25 staff, of whom only seven actually work in Lebanon. “Everything else is outsourced to web and technology people, mostly in Canada,” explained Kurban.