Amadeus and World Wide Worx conducted research about the African online travel industry, identifying five trends which they believe are shaping the market.
The study was conducted among 1,045 business travel decision-makers across ten countries in Africa.
Here are the trends:
1. Satisfying a special appetite
Electronic commerce is growing in Africa, but not in exactly the same mould as developed economies like the US or Europe. With various infrastructure challenges, new and unique ways have evolved to deliver online shopping experience in Africa.
2. Africa is not a country
A single payment system is unlikely to be uniformly adopted in all countries in Africa, often not even between neighbouring countries. Purchase and payment methods must be adapted to local infrastructure and local shopping culture.
Credit card and Electronic Funds Transfer (EFT) payment modes dominate in African travel industry.
The biggest gap is seen in Nigeria, where 59% of respondents say they pay by credit card and only 30% by EFT. In half of the countries, a lower proportion of companies pay by credit card than EFT.
Interestingly, mobile money is barely used as a payment mode, aside from Angola where the penetration is at 12%. This is once again a warning signal that proliferation of mobile money transfers is not necessarily synonymous with mobile payments.
3. Ring it up
The 2013 Gemalto Netsize Guide shows there are at least two different mobile money transfer services available in 40 markets. In Kenya, Madagascar, Tanzania and Uganda, there are more mobile money accounts than bank accounts.
As per the Guide, there are now 81.8 million registered customers of mobile money transfers services, which is expected to grow to 381 million by 2017, with the total value of transactions projected to increase from $44 billion in 2011 to $395 billion.
M-PESA mobile payment in Kenya
With M-PESA payment, a Kenya Airways ticket costing up to $1,400 (tickets booked on the airline’s website or through its call centre) can be paid directly from the cellphone after which the traveler will receive an SMS with the ticket number.
The success of the M-PESA payment option has led Airtel to enter a similar arrangement with Kenya Airways. Registered customers of Airtel Money pay in a similar, although more complex way as those of M-PESA. The main drawback of the Airtel option is that transactions are limited to a ceiling of $700. Any amount above this must be paid in multiple transactions.
Tanzanian-based airline FastJet is the latest airline to partner with M-PESA to process payments for online bookings indicating a growing desire to tap consumers’ demand of mobile payments systems.
4. Have passport, will travel
52% of respondents preferred to book their travel online, which all include air tickets in their booking activity. Only 20% of companies book accommodation online, this signals significant scope for growth and opportunity in the future.
18% of companies intend to book travel online in the near future. This level of activity corresponds with the 70% of businesses whose staff use mobile or online apps while traveling, indicating a high level of interaction and techno-savvy.
Payment methods for online travel vary considerably from country to country. While 45% of companies report using credit cards and 43% use EFT, this balance is absent in individual countries. For example, in Nigeria 59% of respondents pay by credit card and only 30% by EFT.
Credit card penetration is low in the overall population, but it is high among businesses and business decision-makers.
Despite 83% of companies centralising travel procurement, only 66% of companies use travel agencies, which is ascribed to a lack of trust in third parties having control over travel arrangements.
Senegal leads with an 80% usage rate of travel apps, followed by Ghana and Angola (each at 76%). Interestingly, South Africa has only 69% usage rate of travel apps despite its heavy smartphone penetration.
The lowest incidence of travel app use is in Cameroon, which still has a 60% usage.
5. Surprisingly strong policies
Across Africa, very few websites have significant traction as destinations for online travel bookings.
Top three most widely used African travel sites are all South African airlines, with about half of the respondents reporting their use being from other African countries.
Below chart shows various travel websites that are used by more than 2% of respondents:
70% of companies reported having a company policy for travel bookings, but only 39% of respondents saw this as an important barrier to the adoption of mobile and online tools.
Only 51% of companies surveyed currently book their travel online. Again, this varies from country to country with Nigeria (62%) and Cameroon (61%) showing the highest usage levels, while neighbouring Cote d’Ivoire lags at 44%.
Another indication of the huge disparities in usage patterns, despite considerable communications infrastructure advantages, is the case of South
Africa and Uganda that show that less then half the companies surveyed book travel online. This could be explained in South Africa’s case by the heavy reliance by larger organisations on travel agencies as a means to applying strict travel booking policies.
The research reveals that online booking is expected to grow in the coming years, but at a more moderate pace up until around at least 60%, if not 70% penetration of direct online travel booking.
Almost all respondents (whoever doesn't have a mobile system) were positive to adopt mobile tools. The total expecting to be using mobile tool falls short of 95% in only one country: ironically, Kenya, the home of mobile money, at 88%.
Business policy that dictates travel bookings
70% of respondents said that their company has a corporate or business policy that dictates how travel must be booked, in Uganda this number is at 85% and a low 63% in Senegal and Ghana. Usage of travel agents is less in these countries.
At 76%, Kenya stands second in the list of African countries in which business policy dictates travel bookings.
Automated online corporate booking system
Surprisingly, high number of companies report having an online corporate booking system that manages the above policy automatically. No less than 33% of companies report having such a a system - close to half the proportion that has a policy.
East African companies are the most likely to have such a system, with 38% each in Tanzania and Uganda, and 35% in Kenya.
Cost, flexibility and complexity are considered as barriers to adoption of online or mobile tools. Given the strong focus on centralized travel booking and travel policies, clearly there is a need for systems able to comply with modern business rules.
Related reads:NB: African businessman
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