Travel marketplace Wego banking on Ramadan to boost traffic monetization

Photo: Mamoun Hmedan, Wego’s managing director for the Middle East, North Africa and India

*Corrects $60.5 million in equity funding over five separate rounds to $45.5 million in equity funding over four separate rounds

As the self-proclaimed largest travel online marketplace in the Middle East, Wego’s overall growth rates in the region could boost its traffic monetization by more than 14 percent during Ramadan compared to the same period last year.

In the world of tech start-ups and e-commerce, online marketplaces have different methods of monetization. Sometimes, a platform takes a small percentage of each transaction that flows through its marketplace. Other times, sites rely on advertisers. Often, it’s a mix of multiple strategies and executions for generating revenue.

In the Middle East, online travel marketplace Wego, which launched in the region in April 2012, claims to be the undisputed champion in terms of its number of participating merchants, including airlines, hotels, and online travel agents.

Wego gives advertisers access to its travel audiences via programmatic placement buying. This is meant to help brands target travelers both on and off the website with relevant ads.

In 2016, Wego saw an increase in traffic monetization of 14 percent during Ramadan. If what the company says is true about its size and growth in the Middle East – a region where online travel usage has been growing fast – it stands to reason that Wego’s traffic monetization during Ramadan this year will grow yet again.

“Since Wego entered the Middle East market we’ve witnessed a rapid adoption of online travel planning and booking which has continued to increase year-on-year,” Mamoun Hmedan, Wego’s managing director for the Middle East, North Africa and India, told Salaam Gateway.   

“Over the last 12 months, we have seen another evolution with over 70 percent of travel searches taking place on a mobile device, and more striking, booking conversions increasing by 65 percent,” Hmedan added.

Without disclosing revenue and search numbers, Wego says in the first quarter of 2017, it saw an overall 77 percent growth in revenue year-on-year.

For the Middle East alone, Wego claims 105 percent growth in searches during the same time period. 

Wego’s Middle East surge is reflective of the region’s travel sector growth. In recent years, companies like Travelport – a platform providing distribution, tech, payments and other solutions for the travel industry – have gone on record saying that online travel bookings will represent 36 percent of all bookings in the Middle East in 2017, as opposed to 25 percent in 2015. This claim was made in the context of the region’s mushrooming $72 billion travel market. Travel market researcher Phocuswright predicts the Middle East’s online travel market will nearly double in value within the next two years, rising from $18 billion to $35 billion by 2018.

THE RAMADAN EFFECT

Online travel companies operating in the Middle East see Ramadan and Eid al Fitr as their annual bread and butter in terms of traffic, revenue, and user acquisition.

Based on recent data, there are two definitive periods pegged as the prime times for online retailers and e-travel providers looking to reach Muslim consumers around the world: the two weeks leading up to and the last two weeks of Ramadan. 

During these peak periods in 2016, online retail sales increased by 51 percent on average. Travel sales spiked by 27 percent, says industry thought leader Criteo, a France-based retargeting company that works with e-tailers around the world to deliver display ads to web shoppers who have previously visited an advertiser's website.

RAMADAN TRAVEL BEHAVIOR

Hmedan confirms there are always two distinct spikes in the Middle East’s annual travel shopping: one prior to Ramadan and one during.

End of Ramadan or Eid al Fitr travel involves Muslims either heading home or to holidays, particularly for Middle East residents looking to escape the heat during these few years when fasting happens in the summer months.

According to Hmedan, the average lead time in the Middle East is shorter than many other markets. “Approaching the end of Ramadan, we always notice a surge in the number of flight searches and bookings [...] Muslim expats are planning their trips to spend time with their families back home. For example, searches to Egypt increased by 26 percent during Ramadan last year, while searches to Jordan increased by 20 percent. There is a general increase in the searches to destinations such as Dubai, Istanbul, and Bangkok during Ramadan as Muslim users are planning their getaways. Searches to Dubai increased by 9 percent [last year],” he said.  

Middle East residents also travel in larger groups. “In the Middle East more frequently we see large groups of searches and bookings where extended families travel on holiday to spend Ramadan together internationally,” said Hmedan.

“Large groups, especially from Saudi Arabia, can include family groups that include aunts and uncles, grandparents and more. We saw an [overall] increase of 23 percent in travel searches last year during Ramadan,” he added.

In the Middle East markets where it competes, Wego battles a slew of well-funded direct and indirect competitors such as Kayak, TripAdvisor, and Skyscanner, which is owned by China’s travel behemoth Ctrip.

Saudi Arabia is Wego’s and its competitors biggest target market in the Middle East, followed by UAE. Wego also has a firm foothold in Southeast Asia where it started out, in Singapore, in 2005.

Since it launched, Wego has disclosed $45.5 million in equity funding over four separate rounds. It is backed by a heavy-hitting line-up of venture capital and private equity players including Tiger Global Management, Square Peg Capital, News Corp, and Crescent Group.

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