Published on Tuesday, June 14, 2011
In the second in a series of guest comments, Mark Bradbury, joint CEO of Cardiff-based travel technology provider RWA Ltd, takes a closer look at the online travel market in South Africa.
This week, he investigates the adoption of online booking of both flight only and holiday packages.
"The flight only market is well adopted in South Africa. The countryâ€™s low cost carriers have established and demonstrated a viable online booking market for their flights. It would be fair to characterise the online flight only segment as at the Early Majority stage.
A major influence in this is the fact that the domestic flight market is a significant one. The Johannesburg to Cape Town flight route is in the top 5 busiest routes in the world with around 700 flights per week. Other hubs such as Durban and Port Elisabeth contribute to a busy domestic flight market which has prompted a number of low cost carriers to enter (and exit!) the marketing including the recent entry of Velvet Air.
There are some limited non-domestic routes e.g. to Livingston that are also being booked online. As these carriers expand their international operations into other parts of Africa and to places such as Zanzibar, I would expect to see a growth in â€˜overseasâ€™ online flight bookings.
The adoption is an important pre-cursor for other online travel booking segments as:
1. It has introduced the concept of online travel booking to the South African market
2. It has helped South African early adopters to become comfortable with entering credit card details online and making purchases for higher value items
3. It has helped South African companies work through how they protect themselves from the very real threat of fraudulent transactions â€“ a major problem in South Africa.
South Africa has a number of established tour operators such as Thompsons and Holiday Tours with more specialist operators such as Beachcomber and World Leisure Holidays who are focussed on specific destinations such as Mauritius. These companies have well established brands but have focussed primarily on selling via travel agents. Their focus therefore has, up to now, not been on developing the kind of online holiday booking capabilities one finds in many of the European markets.
A brief visit to any of these company web sites will reveal either quite limited online booking capabilities (in the case of Thompsons) or enquiry forms (in the case of Beachcomber, Holiday Tours and World Leisure Holidays).
It is interesting, too, that many South African travel agents have, up until now, shown a marked reluctance to embrace the Internet as a booking tool. This is due to a combination of lack of good agent online booking facilities provided by tour operators and agents themselves wondering whether the internet is their â€˜friend or foeâ€™. Some agents such as Club Travel and Beachtag have embraced the Internet and are exhorting others to do likewise.
A new breed of travel company is now emerging in South Africa that is challenging the established tour operators and agencies. Both Kulula and 1time have launched Holidays business in the last two to three years and established industry figures have established new travel companies such as The Holiday Factory that are seeking to change the face of the South African travel industry.
South Africans are starting to book holidays online in reasonable numbers. Due to the nature of the South African market, the early adoption has been the booking of domestic holiday packages where the destination is known e.g. Cape Town, the Garden Route and Kruger and hotels brands such as Protea and Southern Sun are well known and trusted. Kulula and 1time have now have established â€œHolidaysâ€ brands selling their flights with hotels, car rental and other ground products. Kulula for example is seeing major growth in online holiday bookings. It would certainly be reasonable to characterise the domestic online holiday booking market as in the early adopter phase.
Beyond domestic, there is a trend towards online booking of â€˜knownâ€™ destinations such as Victoria Falls, Mauritius and, to a lesser extent, new destinations such as Zanzibar.
As we look further afield, we find that South Africans are not yet ready to make online holiday bookings for even destinations such as the Seychelles and the Maldives. It is interesting that even the innovative The Holiday Factory does not offer online booking for their overseas destinations but prefers people to talk to one of their consultants. It is reasonable, therefore to characterise this online booking segment as still in the innovator phase."
Mark Bradbury is Joint CEO of RWA Ltd., a travel technology provider that has been working closely with a number of South African travel companies for the last five years to help them deliver on their strategies and plans. RWA worked closely with both Kulula and 1time on the launch of their â€œHolidaysâ€ businesses visit www.rwa-net.co.uk and www.sell-it-suite.com.
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The recent insolvency of Low Cost Travel Group, one of the large players in the travel industry had a big impact on the travelers, hotels and all related players from both wholesale & retail arms. There were about 27,000 people on a holiday who had booked through the company comprised of a €200 million wholesale arm and €500 million OTA / retail arm.