Overview of the Tourism Industry
Tourism is a dynamic industry and one of the most profitable sectors of the world economy. It plays an important role in the economy in the context of both developing and developed countries. Tourism in Bangladesh contributes both directly and indirectly towards the GDP growth of the country by creating new employment opportunities, alleviating poverty, earning foreign currency from the foreign tourists, improving economic standards for the locals and making people economically and socially stable. The tourism industry is one of the most profitable sectors in Bangladesh and the country has seen a positive trend in the comings and earnings from this industry.
Travel Tech Redefining Tourism
Technology has put its mark and become a blessing for every industry. The tourism industry in Bangladesh is no exception. With a growing interest in travel, the dynamics of the industry has changed fundamentally. Once the industry was predominantly ruled by traditional travel agencies, but nowadays, we are seeing rapid rise of Online Travel Agencies (OTAs) over the past few years. The change has affected consumer choice and behavior. A growing number of urban travelers now are using online travel services to avail various travel-related services from booking flights to hotels to finding relevant information. According to market insiders, the market share of the OTAs has grown to 5%-20% from almost non-existent just a few years ago. The leading OTAs such as Flight Expert, ShareTrip, Go Zayaan and Amarroom share a significant market share among themselves.
In the global economy, we have seen the growth of the travel-tech industry in the last 3 decades. Unlike most countries, the travel industry in Bangladesh has always been offline. Traditionally, someone has to rely on a travel agent to book tickets and search hotels to find a relevant match. Even though the overall industry
was growing, the use of technology in the local travel industry was not growing as fast as it should have. Around 2017, Online Travel Agencies, OTAs, started popping up in the country. The shift in the industry slowly started to gain momentum as people slowly but enthusiastically started to move to online from offline. When the pandemic hit, the industry came to a standstill as all non-essential travel stopped. As restrictions were lifted and people grew impatient, domestic travel picked up again from September and domestic travel grew approximately four times from October 2020 to January 2021. With the resurrection of the industry, the shift to online has become more apparent as people avoided physical visits to the agent offices, stations and so on. Slowly, the convenience of online booking was paying off and the appeal is continuing to grow.
Major Players in the Industry
ShareTrip: ShareTrip is the country’s first and leading online travel platform that provides end to end travel solution and experience. Initially started with the name Travel Booking BD, they had a dream to make travel easier for people. Customers can avail their travel services by using their app or through their website. They do not want to limit their services only to the direct customers and have already built their own B2B portal. Through the portal, they are aiming to cater to the travel business entities.
Go Zayaan: GoZayaan is a travel tech company which focuses on the emerging market of Bangladesh. The company provides onestop online travel solution for booking local and international flights and also reserving hotel rooms for holidays, thereby providing the travelers the ease to book tickets by being the first-ever platform in Bangladesh that accepts payment from both local currency cards as well as mobile financial services. Recently, to expand its service offerings and to invest in its in-house developed technology platform, GoZayaan has received a foreign investment of 22 crores.
Flight Expert: Flight Expert, one of the very first online based travel agency, was founded in 2016 aiming to unlock all the facilities of Online Travel Agency (OTA) so that people can easily book local and international flights or reserve hotels online, all at once. Flight Expert holds close to 35% market share in the OTA booking segment in Bangladesh. The company operates booking services throughout the world and has listings of about 250,000 hotels and over 600 airlines. Aiming to provide quality services to people, Flight Expert successfully reached out to people over internet and smartphones. Now, it is regarded as one of the best OTAs in Bangladesh.
Amarroom: Amarroom is a Dhaka-based domestic market focused OTA. The company started its operation in 2016 and quickly managed to get attention from the market. Amarroom has created an in-house inventory management software for the local hotels which it offers for free to hotels. Hotels can use the inventory to manage their off-line inventory as well as online sales through Amarroom. Amarroom’s plan was to build a technology-powered ecosystem where all domestic hotels, resorts, airlines, buses and relevant service providers will be integrated and offer cost-efficient and flexible tourism services to the people with the aim to fulfill an important gap in the market.
The Future of Travel Tech
Tourism industry has experienced major impact due to the increased popularity of internet over the years. In the beginning, travel suppliers went online to provide information. Now, major online travel sites are much more likely to offer booking options to tech-savvy consumers who can go beyond simple transactions such as point-to point air and hotel reservations. In fact, travel packages are accounting for an increased share of online business in the tourism industry. The tourism online business is growing fast and the competition is fierce. The online travel agencies are expected to flourish exponentially in the future years. Online advertising is essential in this particular industry for companies to gain customers and therefore to make profit. Tourism-related businesses need to understand the full potential of this marketing tool in order to succeed against the major players. Keeping up with the pace of technological development and global trends, Bangladesh’s travel market is expected to experience exponential growth in the coming years.
COVID-19 and its ramifications on the industry has acted as a wake-up call for tourism players globally, forcing them to become creative while embracing digital technology. The post-pandemic world will see travelers become more dependent on digital channels. Therefore, it is crucial for tourism players to embrace digital technology to accommodate these travelers or risk losing customers to competitors. While traditional travel agencies may find it difficult when OTAs make aggressive moves, the reality of travel services in Bangladesh moving predominantly online is inevitable.
HOUSING MARKET: RISING CONSTRUCTION MATERIAL PRICES & ITS IMPACT
For a country such as Bangladesh which is ever growing in terms of population and GDP, meeting housing needs as per demand was always a challenge. In such perilous situation when housing supply was struggling to keep pace with the rapid urban growth, pandemic happened. Now, as the economy crawls back to normalcy amid the coronavirus pandemic, the surging prices of building materials is threatening the country’s housing market.
Cost of almost all the construction materials such as steel, cement, coal, and stone increased significantly owing to factors such as increase of freight charges, hike in fuel price, unavailability of cargo ship, etc. This has led to increase in the construction costs (which comprise of around 50% of any overall project), by around 20% and this upward trend of cost is expected to sustain till mid-2022. The cost of mega construction projects undertaken by the government such as Padma Bridge and Elenga Road Project has increased multiple folds due to surging material prices. It has also left many developers unsure about their future residential and commercial projects. Contractors of development projects are now hesitant to bid for their new projects and are demanding price adjustments for their ongoing projects.
The housing market, however, is in its phase of rebound, thanks to certain government policies such as lower interest rates cap for banks, reduction of registration fees, etc. Along with this, recovery of the overall economy will surely make this industry come back strongly.
RIFAT ISHTIAQ KHAN
IDLC Finance Ltd.