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Money Matters

Seeking workaround

By Tariq Ahmed Saeedi
Mon, 02, 16

Online hotel booking is slowly gaining traction in Pakistan and does not presently match the pace of growth of internet penetration in the country

Online hotel booking is slowly gaining traction in Pakistan and does not presently match the pace of growth of internet penetration in the country. Barring a few big hotels, a myriad of small and medium resorts, villas and lodges are still not leveraging the digital tools to improve their businesses. Their unwillingness to go online is, however, not an excuse for digital hotel classifieds to keep an eye off the promising market. 

Berlin, Germany-based Rocket Internet – an incubator with insatiable appetite for technology innovations – built its stakes in Pakistan’s infant industry after launching its hotel and vacations rental portal Jovago.com two years ago. Since its inception, the business-to-consumer website has added more than 2,000 hotels across 150 cities to its listings. But, the website eyes thousands more.

Nadine Malik Almani, country manager at Jovago Pakistan, said hospitality industry needs to be sensitised to the new value propositions. “Generally, hoteliers lack the marketing platforms to get hold of their target audience,” Almani said. “Small hotels need to be educated about how they can increase their outreach through internet channels.”

Internet population is growing and it has crossed the mark of 25 million, 12 to 13 percent of the country’s estimated population of 200 million.

Almani admitted that the number of Internet users comprise a fraction of the total population. “But, it’s bigger than many countries,” she said. “So, it won’t be a better idea to enter when the market is captured.”

Positive macroeconomic indicators in Pakistan have encouraged Jovago to move to the country. Critics may not digest this fact, but it is a reality that the country’s population growth, smart phone numbers, buying power, middle class expansion and economic growth rates are charming for the investors of internet businesses.

The Rocket Internet’s philosophy is simple: analyse the macros of an investment destination before pouring in funds. If it finds these figures promising and sees an untapped demand for internet-based business models the funds make an investment decision.

The internet giant doesn’t share its investment amount, but it has a distinct strategy of pioneering a product in emerging markets from Myanmar, Nigeria to Pakistan and Bangladesh. The fund is already running a number of Internet businesses in Pakistan with some of its brands, like Carmudi.pk (auto classified) and Daraz.pk (ecommerce site) being surprising additions to the country’s cyberspace.

Almani also declined to reveal the investment stats, but the evidence showed that it could be not less than millions of dollars.

A Tech in Asia’s report said Pakistan was the second biggest recipient of investment in tech start-ups in Asia in 2015 after Malaysia as the country received $71.1 million last year.

Jovago operates in a total of 50 countries in Asia and Africa. In Pakistan, it has footprints in Karachi, Lahore and Islamabad with 55 tech buffs in its team.

Customers have an option to scout for a suitable accommodation, which could be best in prices or location. There are filters to help customers with different needs to make a decision.

Out of indecisiveness or else, customers, in Pakistan, go for last-minute booking. “Majority of them make booking at the eleventh hour,” Almani said.

She said majority of customers prefer to make payment at the hotel. “Internet payment industry is small, but it is up and coming,” she added.

Growing number of smartphone users is an attraction for the hotel vertical to improve its presence in Pakistan. She said low-priced smartphones are now available to reduce the digital divide. Jovago’s mobile application has scored 10,000 downloads on android.

Accelerated internet rate or uptrend in online hotel booking is not a workaround to challenges faced by the tourism and hospitality industry in Pakistan. 

Almani said access to tourist hotspots is a key barrier to growth. Numbers of flights are small, while transportation infrastructure is in poor shape. 

Tourism industry in Pakistan has been staggering for last many years despite that the country is blessed with a score of tourist attractions from archeological wonders to scenic landscapes.

The share of tourism industry in Pakistan’s GDP is much less than a percent, suggested a report issued in October last year by the Pakistan Institute of Legislative Development and Transparency (Pildat).

The report said one billion tourists travelled around the globe in 2012. Pakistan managed to attract only 0.09 percent of them. Likewise, the country got a meager share of 6.7 percent in 14.37 million foreign tourists visiting South Asia as against 46 percent of India. Only 14.7 percent of tourists coming to Pakistan in 2012 had recreational purposes, said the report. 

The Jovago’s executive believes that the government can do a lot more to change the negative perceptions about Pakistan. “That can attract tourists from around the world to visit beautiful places we have,” she said.

At the same time, local travelers can be encouraged to explore the tourist destinations inside the country. Pildat’s report said local tourism happens to be more buzzing activity than foreign one in any developing economy.

The report, however, said only 14 percent of 46 million domestic tourists, recorded in Pakistan in 2009, were recreational visitors.  

Jovago is eyeing innovative products to promote local tourism. “We’re experimenting tour guides…but, our present objective is to invest in our relationship,” she added.

The writer is a staff member