How technology is disrupting Kenya’s hospitality industry

November 14, 2016
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Kenya's main tourism source markets such as UK, US, Italy and Germany recorded a drop in performance/SAROVA HOTELS
Kenya’s main tourism source markets such as UK, US, Italy and Germany recorded a drop in performance/SAROVA HOTELS

, NAIROBI, Kenya, Nov 14 – Three years ago, hotel booking site Jovago.com launched in Africa with a plan of replicating the success of online booking platforms across the globe. 

The opportunity was ripe for Jovago, which has renamed to Jumia Travel under the Jumia brand.

The e-commerce industry was young but rapidly growing, driven by a generation that is digital-first where Googling comes naturally for any query. A few months after the Africa launch in Nigeria, Jovago launched in East Africa.

The idea of having an online travel and hotel booking portal was pervasive in most markets, but surprisingly new in Sub-Sahara Africa, a lesson the founders of Jovago.com soon found out.

While some hotels did not have any kind of online presence (website or social media accounts), most hotels were reluctant to try out the platform even though it was free to enlist. Jovago staff would make appointments to pitch the benefits of signing-up.The offering to hotels was simple: customers could search and find hotels, and proceed to book.

The offering to hotels was simple: customers could search and find hotels, and proceed to book.

Estelle Verdier, the East Africa MD of Jumia Travel, recounts how Jovago had to painstakingly work at convincing hotels to sign up in the early days of Jovago.

“There were no track records to refer to, and also the concept of a local online hotel booking platform was quite new as none of the few existing ones had a local office. The realization that Jovago was a real company with an address received positive response,” says Verdier.

Jumia Travel, like many other online agents, makes money by earning a pre-negotiated commission from hotels after customer’s book through the platform.

However, adoption of technology in the hospitality industry is yet to go full circle in some markets. The most common concern and challenge for e-commerce platforms, according to Verdier, is the ‘generation gap’ between the operational staff and the executive (decision-making) counterparts.

“While it is easy to sell the idea of online hotel bookings and e-commerce to the millennial in managerial positions, it can be quite a challenge to convince their older managers. You, therefore, require great patience and training as well as proven record and flexible guideline when launching partnerships,” explains Verdier.

The connected traveler

In spite of the challenges, the online travel agency has listed over 25,000 hotels in Africa and operates in 40+ countries in Africa and Asia with offices in 10 African countries. Jumia Travel partnership with Expedia – the largest online travel agent – allows it to display more than 150,000 hotels worldwide.

According to Jumia Travel, Kenya, in particular, has shown quite a remarkable uptake – with local tourists embracing the concept even more. Sporting events and long weekends are particularly good evidence to this.

The lure of online agents is the bundled up listing (where you find many hotels under one website) and discounts offered by online agents. This, coupled with the opportunity to compare prices, is a challenge to the traditional way of booking trips.

According to an ITB World Trends Report, online bookings reached about 65 percent in 2015 while travel agency bookings dropped to about one-fifth. Mobile bookings are growing at the expense of desktop, expected to climb to 46 percent of all online sales by 2019 from the current 31 percent.

Surprisingly, Kenyans are leapfrogging global trends with 60 percent of bookings carried through mobile devices while the rest is split among traditional booking methods.

The sum total of the changing landscape in the hospitality and travel industry has pushed hotels and airlines to be more innovative and adopt technology driven strategies to stay in the game, or ahead of the competition, depending on the market.

For instance, Starwood Hotels and Resorts in the US (mother company of Sheraton hotels) has adopted a mobile strategy where guests can communicate with its front desk staff via mobile messaging apps like WhatsApp, before or during their stay. The mobile experience has seen mobile gross bookings of the group rise by more than 50 percent in 2015.

Meanwhile, airlines are pushing the envelope by providing a more customized experience by allowing passengers to choose preferred seats, Wi-Fi and other add-ons as they book their flights.

The hunt for cheaper flights has catapulted online travel sales from $374B in 2012 to $483B in 2015. Growth is expected from emerging markets in coming years, with the online dominances of Europe and the US declining over the same period, according to PhoCusWright, an industry research organization.

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