While the sentiment was bullish that the Middle East would be the first region in the world to recover after China, panelists at the WiT Middle East panel were also mindful of the current restrictions and obstacles facing the resumption of air travel.
Ross Veitch, CEO and co-founder of Wego, says: "GCC (Gulf Cooperation Council) countries have done a good job of keeping the spread of the virus relatively contained. I think between GCC countries will be some of the first air corridors to open up. There’s enough trust, connectivity and co-ordination for that to happen.
"After China, I think the gulf will be one of the first regions of the world to come back online. If I were a global brand, I’d be looking at the Middle East market for recovery, before Europe and the United States."
Muzzammil Ahussain, executive vice president, consumer travel, Seera Group, is more cautious, describing the situation as being in “phase 1B… [It] just started to open but there are still significant restrictions and travel is still closed.”
He commended the Dubai government for being swift in deploying a digital approval pass that allows it to monitor people's movement, which has helped contain the spread. Now, restrictions are beginning to be relaxed with shopping centers and some restaurants reopening with limited capacity.
“Dubai is very much built on a tourism economy. In the region, we’re very bullish on domestic, but international inbound into the region [from] beyond GCC corridors will take some time.”
He said that Saudi Arabia is seeing a similar pattern, where curfew measures are slowly being lifted and small Ramadan gatherings are being allowed.
“I think there will be some false starts because we’re all learning in this. We want to do it correctly and be safe… in the end, the focus will be on staying close to home, and short trips, so they can return home quickly if anything goes wrong.”
Optimism tempered by what happens with flying and how industry responds to health and safety concerns
Tempering his optimism that travel would go back to what it once was over the next 18 months, Veitch says: "As long as we don’t make it miserable to fly – as soon as it’s safe, people will want to travel again for all the reasons they have throughout history.
“We need to make sure whatever we put in place as a stopgap solution isn’t institutionalized,” in reference to how tight security measures post-9/11 still continue today.
The onus is also on travel industry players to be responsible about how they inform and communicate to their customers.
Stuart Crighton, CEO and founder of Cleartrip, adds that health, safety and security would take on “a whole new branding perspective” as part of industry initiatives to win back consumer confidence.
“It’s going to be the way that suppliers differentiate themselves… for platforms we operate on, we’re going to have to define how intuitively we allow suppliers to communicate that.”
Achieving that would require significant investment, to meet both suppliers’ needs as well as to rebuild consumer confidence. “Without that, we’re going to be living in a paranoid environment, [until] we get a vaccine… if consumers are convinced suppliers are looking after their concerns, it will take them a long way,” argues Crighton.
Ahussain says it was important that the industry “not just push travel, but to show what travel makes the most sense.”
He predicts that the "stopover model" would fall in favor of direct flights. “It’s too early to tell but I think non-stop [flights] are going to be more prevalent.”
He says airports will want to be secure and travelers will not see a stopover as “worth the extra risk” of further travel restrictions. Until travel regulations are made clear, direct routes will be favored.
The panel agrees that it would take a lot of effective and sensitive communication between suppliers, intermediaries, and consumers to get people to start travelling again. Plus, building greater flexibility into products would help mitigate risk for customers.
Yes, offline to online shift works in OTAs favor, but everyone is vulnerable
For now, the travel companies represented on the panel are in survival mode and even though the market shift towards online is in their favor, Stephan Ekbergh, CEO of Travelstart, moderating the panel says, “not everyone is going to survive."
The long and short of it is, regardless of scale, every business is still vulnerable, he says, adding that consolidation is inevitable.
Responding, Veitch says: “Digital is the easiest channel to activate… if you want to fill empty seats and empty rooms, it’s far easier to do it on digital platforms that it is on legacy channels. Could there be consolidation? Sure.”
Crighton says it was more important travel companies fix their business first before thinking of anything else.
“Think about what your companies will look like post-COVID-19 and prepare for that reality. We’re operating on year 2021 cost structures but we’re going back to 2016 revenues, and you’ve got a huge disparity in your own backyard. Make sure you fix that. If you don’t, you won’t be around," he says.
“In a recovery environment, we will have many opportunities to grow but maybe not in the conventional ways we’re used to. In that respect, maybe M&A is a smarter, more relevant, more practical way to give something stronger to consumers but I think, at this point, allowing M&A to come into the decision-making process where you’re probably experiencing some degree of fragile infrastructure and fragile cash flow, it’s a very dangerous thing to do.
“You need to fix your business first.”
In many ways, Crighton welcomes the opportunity “to work like a startup again,” as observed by Ekbergh.
Says Crighton, “As your business got larger and larger, it’s become a very different animal to run, and I think you have the benefit of all the experience of that, but the opportunity to send it in a different direction with a different outcome and that’s exciting."
The question then is who has the advantage in picking up post-COVID – global or local companies? Ahussain says that while local players would need to find an edge to survive, the Middle East has a unique advantage in that “we understand the market, and global players may not be able to tailor themselves to the unique needs of this market, in this region. We should take that as our advantage against the bigger companies.
“We should continue to evolve based on the nature of the customers here and yes the UAE is a place for a lot of expats but there’s still a community here… and we can tailor our offering locally, that’s what’s made us stronger in the first place.”
In the air, even more turbulence
The panel is less optimistic about how well the global airline industry would fare overall, pointing at potential closures, consolidation and state-level bailouts. IATA predicted 85% of world airlines would run out of cash in the absence of state-level bailouts.
Naturally, flag carriers linked to national governments would be best positioned to survive, says Veitch. Privately owned airlines, he said, will have to raise money in public markets. “Even the very best run private airlines with the biggest cash buffers will find this really challenging to get through without some degree of assistance from the state level,” he says.
Ahussain says aviation in the Middle East was slightly more fortunate than other markets in that the vast majority are state or government-backed. “I don’t think the Middle East at an airline level is a consolidation market.”
He adds the most vulnerable would be low-cost carriers and that those who do survive will become much leaner operations.
Government subsidies needed to help SMEs
With Wego being dual-headquartered in Singapore and Dubai, Veitch said he was fortunate because the Singapore government has offered significant direct wage subsidies for travel, tourism and aviation companies to prevent retrenchments – a model that he hopes will be adopted within Middle East states too.
“A great model for the UAE government to have a look at is working with local banks to make temporary bridging loans available to SMEs… If you’ve got a sovereign wealth fund, it’s a great time to tap into it," he says.
“It’s obviously going to be expensive to do across the whole economy, but I think it’s going to be a lot cheaper than trying to rebuild. If SMEs across the board go under, it will take the UAE a decade to recover so I think there is an argument for it.”
Saudi Arabia has adopted a furlough model similar to Europe where companies can receive wage subsidies for KSA nationals, explains Ahussain. “That helps us as a group significantly. KSA has done a pretty good job of providing some strong infrastructure for Saudi nationals.”
Maintaining team culture at a time of remote work
In terms of businesses, patterns in the Middle East seem to echo that as the rest of the world in terms of adapting to remote work and seeking out ways to maintain company culture in this new environment.
Crighton says: “We’re all learning rapidly as we go along.” He describes daily leadership meetings, regular overviews of different departments, as well as identifying heroes to recognize “the unsung corners of the business” and ensure everyone feels a stronger sense of purpose.
Cleartrip is also experimenting with virtual idea-thons and hackathons to identify what opportunities are being presented in the crisis and how to position the company for recovery.
Ahussain says similar practices were happening across Seera Group, where regular team meetings and clear and constant communication have helped business continue. He remarked the biggest challenge was integrating the group’s call center infrastructure to function remotely – a problem commonly faced by online travel companies during this time.
Considering the fairly swift adaptation to remote work, Ekbergh makes the case for whether offices should be considered “more like a church, where we come there for special events and do things together that we can’t do from home” with remote work continuing as the default.
* This article originally appeared on WebinTravel.