When Zachariah George, of Launch Africa Ventures, moved to Africa after 15 years ago, there were more mobile phones in Manhattan than the whole of Africa. Today there are more mobile phone lines in Africa than the whole of North America, including Mexico and Central America.
That phenomenal shift, on top of a population demographic where more than 60% are under 25, will be the reason why Africa will leapfrog into the future, bypassing paths seen in the West, as well as South-east Asia.
“As always, Africa will carve out its own course,” said Stephan Ekbergh, CEO of Travelstart and co-founder of Innovation City, in opening the second WiT Africa held in Cape Town. “Africa is leapfrogging using technology when it comes to payments, crypto and mobile usage. For example, certain countries like Zimbabwe went on to crypto very fast to preserve their currencies; they pay salaries in crypto, and by apps.
“It will leapfrog when it comes to education and entrepreneurship as well. Most things in Africa are still not done so many explorers and cutting-edge entrepreneurs are finding their way to Africa to set up shop to see how they can merge entrepreneurial skill with arts/science exploration. It’s certainly a place that makes you come alive.”
That message of Africa carving out its own course was carried through in every session – investors saying it will take local capital funding local heroes to unlock the pent-up entrepreneurial spirit in this continent where jobs are not guaranteed and online travel players declaring it will take local solutions to unlock the depth and breadth of the different markets in this continent of 1.37 billion people.
Chris Hemmeter: A “generational moment for startups” and “an existential threat to suppliers”.
Transformative, better, cheaper technology needed to unlock promise: Is AI the key?
When a panel of local OTAs comprising Andy Hedley, managing director of Travelstart, Albert Fernando, CEO of Travelwings and Bayo Adedeji, Group CEO of Nigeria-based OTA Wakanow, was asked what it would take for Africa travel to leapfrog, they answered, cheaper, better, transformative technology.
So could AI be the beginning of the tipping point, if that is what is needed? In another session, Chris Hemmeter, managing director of Thayer Ventures, pointed to the AI moment as a “generational moment for startups” and “an existential threat to suppliers”.
He spoke about three waves of change: discovery, agency, and adaptation. The discovery wave is reshaping how travellers find and plan trips, while the agency wave demonstrates AI’s potential to complete complex tasks, such as planning an entire dinner from recipe selection to grocery delivery. The adaptation wave points towards a future beyond static personalization, emphasizing real-time, context-aware experiences that leverage advanced CRM stacks.
To entrepreneurs, he said, “This is the most exciting time to start a company in the history of this industry, for all industries, because of the transformative power of this technology. I would have you think, through the value chain. This is not just about the selling and retailing of stuff. It’s all of the things happening through the value chain.”
To suppliers, he said “the future of travel planning and booking is moving towards conversational interfaces and AI-driven agency, potentially eliminating the need for traditional search and booking processes.”
He added, “We’ve lived in this whole world of keywords, search, optimization of content that’s sort of managed and orchestrated around a particular way of being presented within the world. And now we have this sort of new experience of context taking control.”
Thus, travel suppliers who fail to optimize their content and data for AI systems risk becoming invisible in search results, posing an existential threat to their business, he said.
“That’s the thing that’s scary about this world of three or four recommendations – everybody else just doesn’t exist. That’s really scary.”
From left, Diesel, Andy Hedley, Bayo Adedeji and Albert Fernando on how they are tackling local complexities
Meanwhile, real problems to deal with
But the reality is, local OTAs have a lot of daily challenges to deal with – fraud, lack of trust in online payments, credit card fees, low margins, fragmented markets and rising global competition.
Also, what is the real addressable market? Said Adedeji of Nigeria, “Available statistics says that there are 220 million people. We only have 18 million people that travel and out of that, 12 million travel within the country.”
However, there is an informal economy, he said, of young Nigerians who spend their weekends clubbing “and they don’t realise that they can travel for less than what they spend in a weekend”.
This contrasts sharply with a market like South Africa which behaves more like the West – “South Africa is not Africa,” said Adedeji, eliciting laughter from the audience.
On their wishlist to grow the travel market, the panel cited the easing of visa restrictions and lower costs of travel within Africa. “It is cheaper to go from Ghana to London than to go from Ghana to Sierra Leone. It makes absolutely no sense,” said Adedeji.
Hedley said that the airlines’ implementation of New Distribution Capability (NDC) in Africa has fallen short of its promise, focusing more on cost reduction than customer personalization.
“NDC is not offering the promise of what it came in to do. Airlines seem to be using it mainly to buy and reduce their distribution costs, when it came in with the promise of personalization to the customer.”
Competing against the global giants
Commenting on the entry of global OTAs into his market, which presents the lowest barrier to entry for these giants, Travelstart’s Hedley said, “We have the advantage in that we are all in Africa. We understand Africa’s complexity and differences and we have a head start.”
Another factor that could impact global players’ success in Africa is whether they are able to have flexibility in their policies. He pointed out that in order to operate effectively, international OTAs would have to be willing to make exceptions to global policies. “Most won’t be able to do business as they usually do,” he added.
Travelwings’ Fernando said that while concerns exist, the presence of global brands could accelerate market development. “South Africa is quite mature, East Africa is growing, West Africa is way behind, and Central and North Africa offer many opportunities. The market is quite big. We shouldn’t be concerned – it helps to grow ourselves.”
However their entry could challenge certain assumptions, said Adedeji. “We need to watch to see whether the model that we have always sold, like the customer needing some offline and online in most African markets, is still critical.”
Diversifying to flights, car rental – “we have to outthink them”
One thing they are doing in common is reduce their dependence on flights and expand into hotels, as we have seen OTAs in Asia, such as MakeMyTrip in India, do with much success.
According to Hedley, in South Africa, air distribution is about 70% indirect and 30% direct currently but if it goes along global patterns, there will be a swing towards direct.
He pointed out that South Africa’s leisure market is reaching its limits. “Big players have been interested in South Africa and are trying to come in, but there’s a limit to where you can go as a purely leisure-focused OTA. You have to expand your verticals. Cars are a big thing for South Africans travelling abroad, and we haven’t really tapped into that market yet.”
And even though Adedeji said that most of his customers who book flights do not stay in hotels – “they stay with families and friends” – he’s adding hotel inventory, one hotel at a time, door to door.
“Most of these budget hotels don’t have technology, or understand it, so we have to go door to door to acquire them,” he said, with Fernando agreeing that is also what his supply team is doing.
Fernando said that payments was critical to unlocking growth but the market was very fragmented. For example, in South Africa, online payments forms almost 95% of its business while in others, it could be as low as three percent.
The reality is, while the local OTAs are confident in their local knowledge of the markets, the one thing they don’t have is the marketing spend of the global OTAs – and Google and Skyscanner are dominating search.
Said Adedeji, “For example, Expedia spends $1.9 billion on marketing per quarter. We can’t win against Expedia on marketing spend – we have to outthink them.”
