Gulf’s low-cost sector benefits from recession
Some of the GCC’s primary low-cost travel providers have claimed the recession has helped boost their business.Both low-cost carriers (LCCs) and limited-service hotels claims the economic downturn has broadened their customer profile, with corporate clients in particular forced to re-think their travel spend and search for value-for-money options.”When Air Arabia and Jazeera Airways were first launched, their customers were mainly labourers or Europeans who were used to the concept from similar models in Europe,” explained Layia Hospitality CEO Daniel Hajjar.”With time, this has changed and now business executives fly with these airlines.”He said the financial crisis had educated the market that value for money is important “regardless of the economic situation” and that hotel offerings such as Layia Hospitality’s new budget hotel brand - Day & Night - would prove you can get all the services you need at a no-frills price. Jazeera Airways CEO Stefan Pichler concurred with Hajjar and said the recession had made people “care about value for money” and so more businesses were making use of LCCs to help them manage their tight travel budgets.The airline’s customer profile also included holidaymakers, weekend travellers, students and pilgrims, he added.”[As a result of their popularity], I think LCC s in the Middle East will increase their market share from currently 5 % to 15% in the next five years,” he said. If the region adopted an open skies policy, growth would be significantly faster.”A recent ‘Travel Tracker’ report of UAE resident travel behaviour in 2009 by YouGov found respondents were using LCCs more than ever before with the top reasons cited being ‘to get the best value for money’ and ‘to get the best price’. Similarly, the most important influencing factor when booking a hotel was value for money (29%) followed by quality of service (15%). Air Arabia CEO Adel Ali said the “appeal of value-for-money services is growing greater every year as it provides travellers with low-fare offers in these unstable economic times”. In this respect, the recession had a “positive effect” on the LCC market, Ali claimed, with his airline posting its highest growth rates to date in 2009.Premier Inn’s managing director for the Middle East, Darroch Crawford stressed that the recession had forced people to change their misconceptions about low-cost products.”Most have been surprised and delighted by how well these products have been received by their people – in my experience, the low-cost brands are more consistent in their service delivery,” he said. “We are often told that our service is good as many five-star hotels and often more friendly.”Premier Inn currently operates three properties in Dubai and Crawford says around 75% of guests are business travellers.”The remaining 25% comprises those who recognise the value on offer (our rooms can comfortably sleep a family of up to four at no extra cost) and many sporting groups visiting Dubai.”Crawford said he believed there was scope for limited-service properties to account for at least 10% of the Middle East hotel market.