The sun rises on online travel in Africa
As prices for minerals rise, Africa’s business travel sector is benefiting and a number of firms are gearing up for a predicted boom in online travel. Sally White reports
Money is flowing into Africa again. The soaring prices for minerals (from copper to cobalt, gold and diamonds) of the last few months are beginning to restore its fortunes, and those of its online hospitality industry. Demand is rising for raw materials for mega government infrastructure and wealth creation programmes promised from China to the US. As it does so, Africa’s position as the World’s No.1 mining location is drawing to its cities international business travellers and conference organisers, along with the financiers.
There is going to be more money around to invest in Africa’s many tourist attractions, boosting the already rising incoming-traveller numbers: more money, too, for mobile phones and online business development. Inevitably, there will also be more expansion and M&A in the travel industry itself. A first major one has just come with the agreed merger of HotelOga and Savanna Sunrise.
African OTA Wakanow, has seized on the increasing interest in African holidays to announce plans for a UK office. This follows on its European launch of DestinationsAfrica®, a global booking platform that aggregates African packaged holidays from over 23 African countries. The US is among future new offices.
There are other signs, too, that activity levels are rising: at Africa Internet Group (Africa’s first unicorn), for example. This was founded by two of German tech incubator Rocket Internet’s top French executives and has also pulled in as investors major international funds and companies.
While the greater part of its business is in consumer goods and services, Africa Internet is now expanding and rebranding its OTA to Jumia Travel. Offering access to 25,000 hotels in Africa and 200,000 around the world and with offices in ten African countries, Portugal and France, it claims to be Africa’s No.1 hotel booking site. Jumia Travel has now integrated its flights and hotel booking on the same platform.
Most of Africa’s online marketing is for merchandise and services (such as jobs and real estate) rather than travel. So, with their specialisations, HotelOga and Savanna Sunrise regard themselves as hospitality technology leaders. Together, with their partnerships with Expedia, Booking.com, TripAdvisor, HotelBeds, CTrip and many more, they aim to form a giant African OTA.
“From the position we are building, we are now well poised to expand our footprint to Frontier and Emerging Markets globally,” Savanna Sunrise co-founder Havar Bauck stated in his press release. This OTA, Dubai-based with a Nairobi hub, was set up by two Norwegian hoteliers, who started four years ago with a bricks-and-mortar hotel. It has never had outside backing and runs at a profit. The group now offers bookings at over 400 hotels across East and Central Africa.
Bauck added: “The challenges facing the hospitality sector across these markets are very similar, and we are eagerly preparing to tap into the immense opportunities that exist.”
Mobile catches up
HotelOga was created in Nigeria just a year ago. It had backing from the Polish venture capital service SpeedUp and was established with the aim of helping African hotels maximise their online presence. It now has more than 500 hotels signed up for its online booking engine, channel manager and management systems.
Founder Marek Zmysłowski knows his market, having built and managed Africa Internet’s travel business, according to his interview with VanguardNewscom. As mobile internet penetration rapidly increases, he says, the African travel and hospitality industry is now catching up with the new mobile consumer.
There is a lot of scope to increase online travel booking within Africa
Consultants McKinsey told the Financial Times last year that about a third of the African population had internet access. But it predicted that this would rise to 50% by 2025, and would include 360 million smartphone owners.
There is a lot of scope to increase online travel booking within Africa - Amadeus said last year that only 16% of travellers booked through OTAs. However, it saw sufficient opportunity for growth in Africa to invest $40 million in African and Middle East OTA Travelstart. It did so along with MTN, the major African mobile and digital services operator.
“Trends are changing rapidly, booking habits are switching to online, hotels will be more active in setting up hotel rates like airlines, with more online payments. The question really is, how fast we can make that shift happen,” Zmysłowski told AppsAfrica.com.
“The African travel sector is one of the fastest growing in the world. Technology is changing travel at an increasing pace, this is why building a travel technology company in Africa and beyond is so exciting,” he added.
These two companies agreed to merge at similar valuations. Marek Zmysłowski will take the role of the CEO, and Håvar Bauck will be the Executive Chairman. The group will retain both brands initially, until a unified marketing strategy is rolled out in the near future.
The African travel market is beginning to look very attractive. After a slow start, the International Air Transport Association (IATA) says, African airlines had their best growth performance last year since 2012 - up 7.4%. IATA says growth is being underpinned by strong demand on routes to/from Asia and the Middle East.
Tourism rose by 4% in the first half of last year (the latest numbers out) according to the United Nations World Travel Organisation (UNWTO). It has described Africa as being one of the fastest growing bases for tourism sector globally, behind South-East Asia.
IATA does point out that economic conditions in much of Africa are still difficult, particularly in the biggest economies of Nigeria and South Africa. Yet, the upward trend in seasonally adjusted passenger traffic numbers “has reasserted itself in recent months, helped by strong demand on routes to/from Asia and the Middle East.”(There traffic grew by 18.6% during the Jan-Nov period in 2016 compared to the same period in the previous year.)
However, numbers like those coming out other parts of Africa, such as South Africa and especially Sub-Saharan Africa, are extremely encouraging. As the UNWTO pointed out, economic star region Sub-Saharan Africa “is noted to be on an upward recovery curve at 12%” - a very promising growth trend.