RACE TO $1BN
HOW WEGO’S MIDDLE EAST GAMBLE IS PAYING OFF
What’s the story behind Wego? Wego’s founding story is in equal parts about scratching an itch to enhance the travel shopping experience and sensing a good business opportunity. I studied the travel metasearch pioneers in the US when in a regional product role at Yahoo! in Singapore. From a consumer perspective, I thought the core proposition, being able to browse the entire online travel market in one place, was clearly superior to any offered by the big online travel agencies of the day. In fact, metasearch was something I wanted to use when planning my own travels. But at that time, the model didn’t exist outside of the US. I discussed this new business model with my cofounder who was working on ecommerce with IHG, the global hotel chain. His US colleagues were witnessing great results from early marketing investments into these travel metasearch pioneers. There was a clear business opportunity to take travel metasearch beyond the US. So, we teamed up and did just that.
There are new travel booking platforms popping up all over the Middle East. Is the market still not saturated or are there just that many untapped niches?
When we first entered the Middle East about five years ago, no single brand was dedicated to online travel at such a scale in the region. Booking online meant going to each airline or hotel website and checking prices. Fast forward five years, and MENA’s online travel space is experiencing a Cambrian explosion in terms of new business models, brands and products entering the market. Today, Wego has over 50 local online travel agencies (OTAs) in MENA active on the website. These local brands compete in the Wego marketplace with global players such as Booking.com and Expedia, and also directly with airline and hotel chains. There really couldn’t be a better time to be a travel shopper.
But is there still room for the travel market to grow?
Currently, the MENA online travel market is vibrant but still under-penetrated compared to more mature western markets. By most estimates, only 30 percent of travel originating in the MENA region is booked online. This means that there is plenty of time for the market to truly transition towards becoming online-first and grow to its maximum potential.
An what makes Wego stand out from the crowd?
Wego is the only online travel player running a marketplace model. Without Wego, if you wanted to compare all the products and deals in the marketplace you would need to visit dozens of websites or install several different
travel apps. This is assuming you know which websites to look at. Add onto that spending hours and hours searching and comparing what you’ve found. On the other hand, with Wego, you can search the entire travel market with just one app. As new travel booking players join the crowd and are added to Wego’s marketplace, our value proposition actually gets stronger.
What’s the single biggest challenge facing Wego today?
I think the biggest issue facing the online travel industry in the Middle East today are probably still online payments. The region’s credit card issuance rates are low and card transaction failure rates are high. That’s why bank-driven platforms such as SADAD and Knets are a step in the right direction, but they are still not universally accepted or simple to use as digital-only payment platforms such as China’s Alipay or WeChat Pay.
Another problem, and a larger one facing the travel industry, is the sheer amount of friction that visas and airport security add to the process of getting from A to B. Figuring out who is and isn’t an immigration or security risk is fundamentally a big data problem. This issue could be addressed through the better information sharing between travellers, governments, airlines and airports. The industry and governments could make travel so much easier, cheaper, faster and just more pleasant.
What has been the most important/biggest decision you’ve had to make?
For Wego to enter the Middle East. We were initially focused on the Asian markets. But that changed in 2014, when after a few visits to the Middle East I realised that MENA consumers were travelling frequently and spending a lot per trip, but were poorly served in terms of online booking options. The conditions seemed right for the business to move online fairly quickly. Based on these insights, we invested and expanded our footprint to include MENA, which now is a very important part of our business.
How have you fared in 2018 given the regional economic climate?
In 2017 our platform generated just over $500M worth of flights and hotel bookings. This was quite a significant milestone for Wego when we achieved the number in December last year. In 2018, our growth accelerated quite a bit, particularly in the MENA region. Also, we are on track to generate over $1 billion in bookings for the calendar year, 2018. Crossing the $1B mark will be a cause of much celebration across the Wego offices.
What would you say to a new employee about the future of your organisation?
If you’re interested in using cutting edge technologies to build and market cool products that help solve real-life travel problems then you’ve come to the right place. Smart and driven people with a passion for innovation and love of problem-solving, tend to do very well at Wego. People looking to be spoon-fed or who want a comfortable life would be better off working elsewhere.
Following up on the previous question what are some key organisational decisions you’ve made during at Wego?
By design, Wego’s organisation structure is fairly flat, and communications channels are very open. We also have a young and culturally diverse employee base. As a result, great ideas tend to come from all over the organisation - especially from our younger team members. In my opinion, China now leads the world in terms of digital business model and product innovation. So, we feel fortunate to have quite a few staff members who are native Chinese speakers and who can monitor and share good ideas that are seen to be taking off in China.
Where do you see Wego in the next five years? The next decade?
As a product, we plan to continue developing innovative new services which make it easier for people to travel. This is why our product roadmap which extends well beyond 2020 and involves all sorts of product line extensions, development for new platforms and a range of exciting new features. As a brand, I want for Wego to be top of mind when anyone thinks about travel. Wego should also be the very first travel app users absolutely have to re-install each time they setup a new phone. Finally, as a company, I think Wego has the potential to be one of the largest online travel companies in the world - with an emerging markets focus.
“I THINK THE BIGGEST ISSUE FACING THE ONLINE TRAVEL INDUSTRY IN THE MIDDLE EAST TODAY IS PROBABLY STILL ONLINE PAYMENTS”
Online travel agencies at Wego in MENA number over 50, says CEO Ross Veitch