Six years after Singapore-based travel metasearch site Wego entered the Middle East, the region now accounts for half of its total business and is the key reason why the company achieved profitability 18 months ago on $1 billion worth of gross travel bookings across the entire business.
Said Ross Veitch, CEO and co-founder of Wego, “It’s a nice feeling, more than half of those bookings came from the Middle East. The good thing about meta search is that it scales well on a fairly fixed cost basis, unlike the OTA model which needs a lot of costs on the customer care side.
“In the last couple of years, we’ve had 60% growth in revenue year after year across our business and MENA was growing by 80%. There’s a lot going well there. The Wego app is the top in key markets and among the top five in the travel category on the IOS and Playstore across the Middle East region.
“It’s a vibrant marketplace with 1,000 sellers on one side and 10-15 million consumers using Wego a month. When we first came, there were virtually no OTAs in the region, now there are more than 50 OTAs based in the Middle East, live on the Wego platform.”
Unlike its timing in 2005 which was deemed too early to address the South-east Asian market, Wego hit the right timing in the Middle East. “You need a lot of options for meta to work. There was an abundance of world class airlines operating from the region and without a strong OTA, consumers had to visit websites, one by one. We came into the vacuum and people started shopping for us,” said Veitch.
Wego started searching for new markets when it felt the South-east Asian market wasn’t growing as fast as it needed to, and it needed to look for other high growth opportunities.
Question of timing and realistic addressable market
“We were a little early in South-east Asia. The key to making the business work is the realistic addressable market. We think about household income – a minimum of US$10,000 a year – and that means a strong middle class. The Middle East has about 100 million households in that band, and it’s growing fast. Turkey for example is a big middle income country and we are seeing fast growth there.”
Wego operates on two models – search and refer where customers book on partner sites and search and book within Wego. Veitch said it sees better conversion rates on facilitated bookings within the Wego app and hence one of its top priorities is to fully integrate its platform with suppliers.
Other priorities include “extending the lead we have over other meta competitors, expanding into other markets and evolving the product from simple meta search to a full-blown marketplace and get everyone booking on our platform”.
That means working on a whole suite of issues from fraud prevention to payments and loyalty.
Adding inspiration to search and book amid growing power of social media
While it will remain laser-focused on providing flight hotel search, it is adding more inspirational and explore content. “Our data science team is working with product to surface trip suggestions, to give people more reasons to come back to Wego even when they don’t have a trip in mind.”
Asked if this would add complexity to the product, Veitch agreed, saying, “We will be pretty careful about what we add. As we add this new stuff, we will remain focused on making sure the core services remain best in market.”
Veitch, who divides his time between Singapore and Dubai, is excited about the Middle East for several reasons. “It has an incredibly young population – the pyramid is the inverse of North Asia, especially Japan whose population is shrinking. That young population gives us a lot of tailwind for growth.
“They are incredibly fast in adopting new tech and have the most mobile-savvy population. We are definitely seeing a decline in desktop usage and people relying solely on mobile.”
Asked if it would drop “mobile first” for “mobile only” in future, Veitch said, “We already lean into mobile for product development but the web is still a great discovery platform. It’d be silly to go app only but the days of radically different conversion rates between desktop and mobile are over, they are pretty close today.”
Another key trend is the importance consumers place on social media and influencers for inspiration. “Snapchat, Instagram and Twitter are huge channels of influence – it’s a market that relies on word of mouth and social media amplifies that behaviour.”
Competition on the rise as local companies reinvent and global brands expand
Serving this growing market of travellers is also a burgeoning pool of local travel brands. “In the six years, we have gone from no local players to more than 50 that we work with. It’s a great time to be a traveller in Middle East, you have a lot of choices. Some offline players are investing to reinvent themselves and new startups are emerging.
“The way we look at it, the more vibrant the market, the better it is for the marketplace model.”
The Al Tayyar Travel Group in Saudi Arabia, listed on the stock exchange, stands as a good example of a traditional travel company reinventing itself, as reported by WiT here. It launched the Tajawal brand in 2015 and went on to acquire Almosafer, and is on the move to become a leader in the online travel space.
“It will be interesting to watch, it’s rare an incumbent traditional travel company makes it big in digital and there are more players in the Middle East that are well-funded.”
Wego itself has raised US$60 million over the years, with two key investors in the Middle East, among them MBC and MEVP.
The increased activity by global brands such as Booking.com, Expedia, Agoda and European-based brands has also been good for the region. As European brands have expanded into the Middle East, will Wego consider expanding to Europe?
“We have a dozen European points of sale live, and growth will be organic. Our core will remain MENA and Asia Pacific. The interesting question to ask in the future of global brands is where MENA or EMEA (Europe/Middle East/Africa) fit into their organisations. Currently it is linked to Europe for colonial reasons but the link with Asia, in particular, India is stronger and we are always encouraging them to move Middle East into the Asia grouping, or be its own entity.”
With the emergence of platform plays offering accommodation, flights, tours & activities, transportation on one platform, will Wego go that way?
Said Veitch, “We want Wego to be everybody’s favourite travel app – there obvious products we’d like to add, cars, activities, tours, insurance, restaurants. Our ambition is a little humbler than the super app people talk about – we want us to be the app within the travel context.”
Note: Ross Veitch will be speaking at WiT Middle East in Dubai on April 9. Join us as we dig deeper into the trends and opportunities emerging in this dynamic region of the world. Sign up here.
• All Wego images credit: Wego
