Tech driven growth in the Middle East travel market: Phocuswright

The Middle East is emerging as a powerhouse in the global travel and hospitality industry. Its strategic location, combined with major airports in Dubai, Abu Dhabi and Doha that are already well-established as key hubs for layovers and connecting flights, positions the region perfectly to capitalize on this growth.

Beyond its geographical advantage, the Middle East is actively investing in infrastructure. This includes not only expanding and modernizing airports and transportation networks, but also developing new and exciting tourist destinations. From historical sites and cultural experiences to cutting-edge entertainment options, the region is diversifying its offerings to cater to a wider range of travelers, from budget-conscious holidaymakers to luxury seekers.

4 key takeaways from Phocuswright's Middle East Travel Market Report 2023-2027:

The Middle East travel market is on a clear upswing; travel gross booking values recorded 13% year-over-year growth in 2023, which is five times higher than the growth in GDP in the region.
Travel suppliers in the region generated US$91 billion in gross booking revenue in 2023.
Online penetration increased to reach 46% of total gross bookings in 2023. The growth in digital transactions is being driven by a greater adoption of customer-facing tech solutions being provided by travel suppliers, and an increase in travel demand from a tech-savvy customer base.
The resurgence in both domestic and international tourism, in addition to longer stays in hotels, increased occupancy rates, which in turn had a positive impact on hotel bookings. Hotel gross bookings reached $23.3 billion in 2023, up 16% year over year and 4% higher than 2019 levels.

Major events like World Expos and FIFA World Cups are acting as catalysts for tourism growth. These events not only attract a significant influx of visitors, but also raise the profile of the region as a must-visit destination. The exciting transformations happening within the Middle Eastern travel and hospitality industry is attributed to several factors, including:

The Rise of Digital Travel Platforms

Online booking platforms and mobile apps are becoming increasingly popular, influencing every stage of the travel journey. Tech-savvy travelers, particularly from China and Europe, are utilizing these digital tools for research, booking flights and hotels, and even planning personalized in-destination experiences.

Tech-driven Growth

The surge in online bookings is fueled by several factors. Travel businesses are increasingly adopting customer-facing technologies like AI chatbots, mobile apps, and loyalty programs. In addition, they continue to integrate advanced back-end systems like booking engines, dynamic pricing tools and wider distribution channels.

A Maturing Market

The influx of new players catering to diverse traveler needs and budgets highlights the maturing Middle Eastern travel market. This demonstrates a recognition of the value proposition in catering to various tourist segments.

Market Leaders and Growth Segments

Airlines remain the largest revenue segment, driven by established global players like Emirates, Etihad, Qatar Airways and Saudi airlines. The hotel sector, while competitive and fragmented, boasts a strong supply pipeline. The car rental segment, although currently small, is growing and will continue to benefit from increased demand.

The Middle East travel market is strong, as evidenced by a robust 13% year over year increase in total gross bookings in 2023. Bookings reached $91 billion, and this momentum is projected to continue, with the market forecast to grow 40% growth and surpass $127 billion by 2027 (see Figure 1). The positive trajectory is propelled by two key forces: heavy investments in travel infrastructure across various sectors and surging customer demand.

The UAE is leading the charge in the region (see Figure 2). Saudi Arabia is another regional powerhouse poised for significant growth. Qatar, despite its small size, boasts a powerful travel industry. Egypt, with its rich history and vast hotel infrastructure, is contending with some regional challenges; the ongoing geopolitical conflicts in both Eastern Europe and the Middle East have cast uncertainty over the destination’s flow of tourism and its overall economic performance.

Phocuswright's Middle East Travel Market Report 2023-2027 provides a comprehensive view of the Middle East travel market, including detailed market sizing and projections, distribution trends, analysis of major travel segments, key developments and more. It focuses on four key travel markets within the region – United Arab Emirates (UAE), Saudi Arabia, Qatar and Egypt – and includes sizing and projections through 2027.

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