16 May, 2001

Emirates Agents “Convict” Aussies

Imtiaz Muqbil

In this dispatch:

EMIRATES AGENTS “CONVICT” AUSSIES: Emirates Holidays, the in-house tour wholesaler of Emirates Airlines, launched its glossy 325-page brochure for 2001/2002 in Dubai last month. Twenty-four countries featured in the brochure strutted their stuff to 220 specially-invited travel agents. The Aussies took the cake. Here’s why.

BRIDGING THE GULF: Asia-Pacific NTOs are sharpening their marketing pencils in the Middle East. A roundup of the marketing campaigns and strategies mounted by the NTOs of Malaysia, Singapore, India all of which exhibited at the Arabian Travel Market.

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1. EMIRATES AGENTS ‘CONVICT’ AUSSIES

‘Twas the night before the latest Emirates Holiday brochure launch in Dubai, and the Australian contingent was meeting to plan its sales pitch to the 220 travel agents expected to attend. Not for them the run-of-the-mill presentations they knew the agents would get from other exhibitors. No, they decided to convene a “supreme court” and try Australia on charges of being the “best destination in the world.”

The Aussies took turns being the ‘judge, prosecution and defence’, and the agents were the ‘jury’. Needless to say, like a true kangaroo court, there was a 100% conviction rate. Overwhelmed by the force of ‘evidence’ from Victoria, Queensland, New South Wales and the Australian Tourist Commission, the agents agreed ‘beyond any shadow of reasonable doubt’ that Australia indeed was “the best destination in the world.”

The Aussie courtroom dramatists Gary O’Riordan (New South Wales), Ian McDougal (Victoria), Paul Buggy (Queensland), Teresa Tan (ATS Asia-Pacific) and Fiona Royall (the Australian Tourist Commission), gave a taste of why the destination is among the fastest growing in the brochure of Emirates Holidays, the in-house tour wholesaler of Emirates Airlines. Travel agents cheered and clapped as they gleefully sent Australia to the gallows. Later, almost to a man (and woman), agents judged the Aussies to be the best sales presenters of the show. The publicity impact for the Aussies from that simple bit of creativity was incalculable.

Australia features prominently in the 326-page brochure (effective period: 1 April 2001 – 31 March 2002) as indeed do many Asia-Pacific destinations to which Emirates flies. New Zealand, a visa-free country for Gulf Cooperation Council visitors, has been added as a ‘natural extension’ to Australia, even though Emirates Airlines does not fly there – yet. Pages on Bali and Malaysia have been expanded, Hong Kong positioned more prominently as a gateway to China. Some emerging niche-market tourism products like ecotourism, sports, cooking classes and cruising also gain considerable prominence.

Emirates Holidays generated 230 million dirhams (about US$64 million) in sales for the Emirates group in the fiscal year ending March 31, 2001, based on 68,000 passengers. The sales were up from 194 m dirhams in fiscal year 1999/2000 and a whopping 15% increase is forecast for 2001/2002. Though holidays are a relatively small part of the airline’s turnover in 2000/2001 they are an important player in helping bolster another revenue source: Filling seats in a fast growing routenet.

This year, about 100 agents were invited from Dubai and 120 from other countries in the Gulf, Middle East and Mediterranean where most of the Emirates routenet is concentrated. The primary sales vehicle used by Emirates’ retail travel agents world-wide, the brochure has been given a major editorial revamp, with refreshed pictures, contents and layout. Each destination has been made more specific in terms of what it has to offer.

John Felix, Manager of Emirates Holidays, says one new feature is the classification of hotels which Emirates has graded as per its own standards, a move designed “to iron out to the inconsistencies of ratings in different parts of the world.” With 60% of Emirates Holidays sales being generated in GCC countries, where a four-star hotel can be quite different from a similar rated hotel in Europe or Asia, Mr Felix says consumers needed to be better informed about what they were buying.

Cruising has also been added, covering destinations in Asia, the Caribbean and Mediterranean. It is gaining popularity, Mr Felix says, and will make even more headway with the recent opening of a major cruise terminal in Dubai.

Thanks largely to the major promotional work being done by Asia Pacific NTOs, Mr Felix forecasts strong growth in visitors heading East (see story below). Increasing competition amongst Asia-Pacific destinations means more higher-standard and better quality products at affordable prices. Asia-Pacific NTOs are ready supporters of the Emirates brochure launch, forking out US$1,500 a pop for each the booths at which they make their pitch to the agents. This year, 24 NTOs were represented, up from 20 last year, the new ones being New Zealand, France, Kenya and Oman.

Unchanged this year is Emirates Holidays’ commitment to the travel agent. Inspite of the global swoon over direct-bookings and cost-savings, Mr Felix says distribution provided by travel agents is irreplaceable. Emirates Holidays does not yet have a direct booking Internet facility. A trickle of direct-booking requests do come in, but they are neither encouraged nor offered price discounts. Indeed, Mr Felix says enhancing distribution by adding more retail agents will remain the critical growth strategy going forward.

That is another reason why Emirates is sticking with the hefty brochure. Inspite of high production costs, and a print-run of 250,000 copies, about 15% more than the 2000/2001 brochure, Mr Felix says people still like to take away something to read comfortably back home. The brochure is available on the Internet and will soon be on CD-ROM but Mr Felix believes paper will remain king. The brochure will remain in English only; he says Emirates Holidays’ almost entirely FIT clients are all familiar with the language.

Also being resisted is the global trend to lock up land-side business with specific hotel chains and ground operators with regional offices in the Asia-Pacific. Seeking to maintain the freedom and flexibility for clients, the brochure reflects a good mix of independent and chain hotels. Asia-Pacific ground operators are constantly pitching for the Emirates business but Mr Felix says it has not yet proved operationally viable to go simply with one. “When it does, we will consider it, but we are not going out searching for it.”

Mr Felix says the economic and political difficulties in the Gulf and Middle East have had no discernible impact on outbound travel, which remains a priority for upper-income Arab families and expatriates, no matter what. “I see no change in the foreseeable future,” he says.

Within a few months, the growth strategy until 2010 is to be finalised. Mr Felix says it will be designed to give consumers with a wider choice of holidays especially to attract repeat customers who are becoming more familiar with destinations. The brochure is also becoming more known, available and reachable, which Emirates Holidays plans to push further via more support for travel agents, more frequent sales visits, more visibility and more advertising.

There will also be more stress on boosting outbound from new markets like Europe, Malta, Iran and India. Other Gulf airlines, seeking to join the bandwagon, are developing their own brochures, but Mr Felix claims the competition is welcome. He says the increased choice will mean more awareness work done with the trade, which will benefit all players.

2. BRIDGING THE GULF

For years, Gulf residents and expatriates have taken their annual summer holidays in Europe, North America and the Mediterranean counries. For just as many years, Asia-Pacific NTOs have pooh-poohed the Middle East as a small market worth only a fraction of their time and money. Now, both trends are changing – and fast.

Asia-Pacific national tourism organisations (NTOs) are stepping up their promotional and marketing activities in the Arabian (or Persian) Gulf. A dramatic decline in yield per visitor out of traditional markets like Europe is fuelling a desire to better balance the mix of visitor arrivals and boost the share of visitors from Gulf and Middle East. At the same time, economies are crimping in the Gulf, too. While this has not yet affected the desire to travel abroad, it is certainly leading to some closer scrutiny of prices. Says the Middle East manager of one major Asia-Pacific NTO, “About four years ago, even the Saudis started asking about prices. They had never done that before.”

Gulf travellers are what Ian McDougal of Tourism Victoria, Australia, calls ‘the perfect tourists.’ They stay long periods, travel as families, spend a lot and have virtually no problems with illegal immigration. The Asia-Pacific is a destination just waiting to be visited, certainly possessing all the major ingredients for a holiday. Among the factors contributing to that trend:

— Currency devaluations in much of Asia have made it much more affordable, and more value for money than the long-standing haunts of Europe.

— Monsoon season in Southeast Asia and winter in Australia / New Zealand provide the perfect climatic conditions to flee the sweltering Gulf summer.

— Islamic traditions of countries like Malaysia and Indonesia boost the familiarity factor especially for Gulf visitors.

— Many Asia-Pacific countries either waive visa requirements for Gulf countries or issue visas on arrival.

The following is a roundup of the marketing campaigns and strategies by three Asia-Pacific NTOs (Malaysia, Singapore, India) which exhibited at the Arabian Travel Market (ATM). More to come in the next dispatch of Newswire.

Malaysia

Malaysia had the largest contingent of sellers amongst Asia-Pacific countries at the ATM, 105 participants from 70 organisations. With good reason: Visitor arrivals from the Gulf and Middle East have shot up from roughly 22,000 in 1999 to 55,000 in 2000, with a target of 100,000 in 2001.

The shared Islamic traditions of the two regions means Muslim visitors have no problem with halal food or finding mosques. All Middle East countries get a visa-waiver for a stay of upto one month, including Iran and Lebanon. Malaysia’s stable ringgit, pegged at 3.80 to the US$ is good for both conducting business as well as for visitors. The country’s 70% rainforest cover delights the greenery-starved desert dwellers who also have no interest in Malaysian political developments and are unperturbed by news reports about domestic issues. Kuala Lumpur, Langkawi and Penang are the most popular destinations, with Sabah and Sarawak doing well among the Gulf expatriate market.

Two marketing and promotion offices have been opened in Dubai and Jeddah, both attached to Malaysian consulates. The Jeddah office covers Saudi Arabia and Bahrain, and the Dubai office covers UAE, Oman, Qatar, Kuwait, Lebanon, Syria and Egypt. An independent office is being looked at, with beefed-up manpower. Meanwhile, the plan is to ‘be there’ at as many travel trade events as possible. Malaysian tourism authorities are working closely with Emirates Holidays to promote the Malaysian component in its brochure.

In 2000, Minister of Culture, Arts and Tourism Dato Abdul Kadir Sheikh Fadzir personally led a roadshow through the Gulf region. Although already well established as a family destination, the new focus is promoting the MICE business from the Gulf. Just a day before the ATM started, Malaysian Prime Minister Mahathir Mohamad was in the UAE on a private visit to speak at a forum but did take the opportunity to boost business and trade contacts.

Seat capacity has become an issue. Saturation has set in, especially in summer. There are six flights a week by Malaysian Airlines out of Dubai. Of these, three are Boeing 777 flights coming in from New York, two A330 flights from Istanbul and one turnaround flight. Other airlines like Emirates, Gulf Air and Saudi Arabian Airlines also operate to Kuala Lumpur. Authorities feel there is enough traffic in summer to support a doubling in seat capacity for that period. Various options are being tinkered with, including charters and the usage of MAS aircraft otherwise returning home empty after depositing Malaysians in Saudi Arabia for the Haj pilgrimage.

Total promotional budget for the Middle East is about US$2 million, of which about US$1.4m was spent on media buying in calendar year 2000. This year’s plans are to continue the media spend and bolster it with more fam trips, split between 70% media and 30% agents. New markets will also be explored, like Turkey and Iran. To diversify the market, health tourism is being promoted. Joint promotions are being worked on with the Singapore Tourism Board, which will help capitalise on the Singapore Airlines flights out of the Gulf.

Singapore

The Singapore Tourism Board (STB) has for the first time decided to go into electronic media for tourism advertising in the Gulf. A TV campaign started in May 2001 and will run through most of June, primarily to catch the peak season for summer outbound travel. The campaign is designed to back-up the awareness for Singapore through a sustained campaign of seminars and roadshows.

One new media buying strategy is to use channels primarily addressing the local Arab market, not the traditionally-used regional channels. This is because popular dramas and soap operas on local channels are considered to have a higher female audience, the main decision-makers for the largely family-oriented Arab travellers. Hence, the focus of the content is on the family, especially the new “Live It Up” campaign highlighting ways Arab visitors and their children can live it up in the upmarket, safe, high-comfort environment they are used to.

In 2000, Singapore received 88,000 visitors from the Middle East, including Turkey. The major market is Saudi Arabia followed by UAE. This year, the target is about 10% more, especially by focussing on markets like Kuwait and Iran. This will help maintain the momentum of the previous Millennium millennia campaign and complement the STB roadshows, especially in countries like Saudi Arabia for the past five to six years.

This year’s roadshows have seen considerable interest in spas which the STB plans to develop further because it opens up a completely new vista for the family market and boosts the average length of stay. The ALS is about three to four days though others have been known to stay for upto a week. Like with other areas, the strategy remains to maintain Singapore’s status as a gateway as it can never hope to rival its neighbouring countries in positioning itself as a mono-destination.

The roadshows covered the key cities of Riyadh, Jeddah and Dhahran. In the past, STB was also the only NTO to cover Jubeil but of late, it has been found that travel agents in some of the most distant cities of Saudi Arabia prefer to come down to the main cities. The STB also tries to mix and match its agent invitees amongst good and mediocre producers in anticipation that competition and the benefit of updated information on new products and developments may encourage the mediocre agents to become good producers. An e-bulletin has been started to keep them informed about what’s going on in Singapore.

Like other destinations, Singapore has huge peaks and troughs in its Middle East visitor arrivals, leading to the usual logjam in flights during the peak summer season. The target is now to focus on the troughs and the STB has identified the elderly and honeymooners as being potential non-peak travel targets. Young executives are another target, especially married couples with no kids. The STB believes the airline situation will resolve itself over time as demand increases.

India

There about 850,000 non-resident Indian (NRI) expatriates in the UAE, including roughly 600 dollar-millionaires. The Indian Tourist Office in Dubai believes that if, by acting as ambassadors for their country, every Indian was to get at least one non-Indian (Arab or expatriate) to visit India a year, “there would be no need for a tourist office in the Gulf.”

Unfortunately, that is not the case. While not every NRI can generate one visitor arrival, many top-level Indians with local business contacts do make an effort. The tourist office says about 112,000 visitors came from the Middle East in 1999 (the last year for which total figures are available), plus another 30,000 to 35,000 expatriates. The office believes the actual figures are much higher because the Indian visitor arrivals statistical system is tabulated by nationality rather than residence. Growth has been about 5%.

The flight capacity is an NTO’s dream: 225 flights a week from the Gulf to 18 international airports in India. However, nearly all of this capacity is mopped up by Indians working in the Gulf. It is also a lopsided arrangement. There are no direct flights to India from outposts like Iran, Turkey, Egypt, Lebanon or other Levant countries. Emirates, which already has a major network in India, is now starting to fly to Hyderabad, with possible plans for Chennai (formerly known as Madras). Gulf Air is planning to fly to Bangalore and Chennai.

As a tourist destination, India is felt to have three major advantages. First, proximity. Most Indian cities are only 90 minutes to three hours flying time away, allowing visitors to even go on long weekends. Secondly, language is no problem. Not only is English widely spoken in the Gulf but many local Arabs are learning to speak Indian languages to communicate with workers in their offices and homes. Thirdly, the travel trade is familiar with India because many consultants working in Gulf travel agencies are Indians. However, the tourist office rues the fact that Indian consultants promote other destinations rather than India.

Unfortunately, India negates these advantages by its universal visa policy. All Middle East citizens need visas for India, though local embassies are claimed to be expediting issuance within a day. Realising the competition emerging from other destinations with a no-visa policy, the Indian tourist office has appealed to its foreign ministry to grant visa on arrival at least to Gulf nationals. The bureaucracy is pondering that request.

The Indian private sector is also critical of the fare-pricing policies of local airlines Air India and Indian Airlines. Many Indians working in the Gulf travel on home leave with air-fares paid for by their employers. There is virtually no competition on these routes, which are also among the biggest money-spinners for Indian carriers systemwide. Interest is scant in promoting tourism per se. Along with a recently imposed ‘fuel tax’, the fares to India become much pricier than to other destinations.

The tourist office’s operating budget was 60 million rupees in 2000 (about US$1.3 million at current exchange rates), of which about 20 million rupees was spent in the UAE alone. This year’s budget is undisclosed but has been affected by the decline in the value of the rupee. Hence, a major strategy has been to pool marketing efforts with tour operators, hotels, airlines as well as with shopping malls. Intense activities are ongoing with the travel trade and major tour operators like Emirates Holidays, DNATA, Thomas Cook and Emirates World Holidays.