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·
The
Middle East’s contribution to global travel revenues is equivalent to its share
of international startup funding at roughly 5%, according to McKinsey &
Company
· While funding for regional travel entrepreneurs and startups has risen since Covid, experts say a shift in investors’ expectations is needed to fuel growth
Dubai, United Arab Emirates, 9 May 2024:
Experts shone a spotlight on the Middle East’s travel investment ecosystem at Arabian Travel
Market (ATM) 2024, which concludes today, Thursday 9 May at Dubai
World Trade Centre (DWTC) until Thursday 9 May. Panellists speaking during the
exhibition’s entrepreneurship summit said levels of industry funding are
growing in the region but that more needs to be done to support travel
startups.
The Middle East’s contribution to global travel revenues
currently stands at approximately 5%, which is comparable to the proportion of
international startup funding it is attracting, according to data from McKinsey
& Company. While levels of investment have increased significantly in the
wake of the global Covid-19 pandemic, speakers noted that funding for regional
travel entrepreneurs is growing from a relatively low base.
Panellists participating in
the Nurturing
Travel and Tourism Entrepreneurship to Drive Economic Growth summit included
Margaux Constantin, Partner at McKinsey & Company; Danny Cohanpour, CEO of
Trove Tourism Development Advisors; Charaf El Mansouri, Co-Founder and CEO of
Dharma; Mona Faraj, Co-Founder and CEO of ExploreTECH; and Amna Al Redha,
Manager of AviationXLab, which is part of the Emirates Group Future Technology
and Innovations team.
Danielle
Curtis, Exhibition Director ME, Arabian Travel
Market, said: “It is encouraging to hear that travel investment is increasing in the
Middle East, but it’s clear that more can be done to nurture entrepreneurs and
startups operating in the region. While panellists acknowledged that there are
various challenges facing those looking for funding, there is also significant
potential for growth in this space and plenty of room for disruption.”
Summit speakers noted that various hurdles must be overcome
by travel and startup entrepreneurs seeking investment, such as perceived
levels of risk and long wait times on returns. Nevertheless, panellists argued
that companies with genuine value propositions are well-placed to identify and
attract the right backers.
Participants also highlighted the growing importance of
technologies such as artificial intelligence (AI), Web3 and cryptocurrency in
securing financial backing. Although these elements represent secondary focuses
for the majority of travel entrepreneurs, panel members emphasised the
importance of incorporating the latest innovations in business strategies when
pitching to investors.
Commenting on the need for a shift in mindset from funders,
McKinsey’s Margaux
Constantin said: “If I look at our clients who are interested in investing in
travel and tourism in the Middle East, 90% come with the same three parameters
for investment, which are asset-light, EBITDA-positive and
minimum-ticket-size [companies]. The reality is that this intersection is
incredibly thin, so investors are going after the same very small pool of
companies. We need a change in expectations and interests from investors to
fuel entrepreneurship in [the region’s travel] sector.”
The largest edition of ATM to
date will close today following four days of impactful industry discussions and
unrivalled networking opportunities across the MICE, leisure, luxury and
corporate travel sectors. Today’s sessions will focus on the next generation of
travel and tourism talent with the Educating
Young Entrepreneurs: Building a Career in Travel session and the
Network with Future Leaders event.
The latest ATM news stories
are available at https://hub.wtm.com/category/press/atm-press-releases/.
Photo Caption: L-R: Gavin Gibbon, Senior Editor, Arabian Gulf Business Insight (AGBI); Amna Al Redha, Manager, Aviation X Lab; Mona Faraj, Co-Founder and CEO, ExploreTECH; Danny Cohanpour, CEO of Trove Tourism Development Advisors; Charaf El Mansouri, Co-Founder and CEO of Dharma; and Margaux Constantin
