Propelled by rising incomes and a growing appetite for exploration, outbound travel is on the rise in Bangladesh. An increasing number of Bangladeshis are now traveling abroad and spending generously. In 2014, some 1.5 million Bangladeshis visited abroad, according to data from the Bangladesh Bank, National Board of Revenue and Bangladesh Institute of Development Studies. Outbound travel spending rose from $404.7 million in FY15 to $436.4 million in FY16, a 7.83 percent rise from the previous year. It shows a sign of the rise of a new middle and upper class in the country. These numbers are set to rise significantly in the coming years.
The travel agency business has been around forever but digitization of travel business is a relatively recent phenomenon. Over the past years, we have seen a handful of OTAs to start operation in Dhaka. The total number of OTAs, of all sizes, are now somewhere north of 50 in the country. According to industry insiders, OTAs now control about 4-6% of the total travel market in Bangladesh.
Broadly speaking, there are a handful of conditions for an OTA business to succeed such as internet penetration, digital payment, and overall awareness regarding digital shopping. These trends are going in the right direction in Bangladesh. Put that together with OTA, the future of OTA business can only go one direction and that’s exponential growth.
In a recent interview with Future Startup we asked Flight Expert CEO Salman Bin Rashid Shah Sayeem about his take on the future of OTA business in Bangladesh, here is what he has to say.
Future Startup: How do you see the OTA market in Bangladesh now? What’s your take on the competition?
Salman Bin Rashid Shah Sayeem, CEO, Flight Expert: Flight Expert started as a small operation. When we started in Dhaka, OTA was a not a thing yet. Our goal initially was very small – in the first month, our goal was to sell one lakh taka worth of tickets. That was our goal. Fortunately and to our surprise, we outgrew that ambition from day one. That trend has continued since.
The second thing is that we have worked hard to build trust in the market. After us, many new players came and they also worked hard to build trust. This is an expensive and high-end market. A lot of money involved here. A ticket from Dhaka to JFK or London worth a good amount of money. In order to do business here, you have to build trust in the market. Luckily, we have been able to build that trust. People trust us now.
This is not only about us alone. It has happened industry-wide. People now trust OTAs when it comes to managing their travel.
For example, we are among the top ten companies in terms of the online transaction including OTAs, eCommerce companies and all other companies that receive online payment in Bangladesh.
These are some very positive development. When we started, there was very little awareness. Over the past two years, the market has grown. Awareness is there. The trust is there. If you combine these three things, the future can only go one direction – up. So I’m extremely hopeful about the future of OTA business in Bangladesh. This is a tremendous opportunity and we are just getting started.
We have been trying to do is growing sustainably. Building the trust in the market so that it helps us down the line 4-5 years when there is a big business to be built.
OTA took almost 4-5% of the entire travel market in Bangladesh in the last few years. We launched about 22 months ago and most OTAs are of similar age. It means the market is pretty nascent but the growth has been tremendous. Our estimation is that by 2025 OTA should take north of 45% of the market. The signals in the market are very positive.
There are about 50 OTAs operating in Bangladesh at this moment. This tells that there is a minimal level of awareness in the market. This is a welcome development so to say. The thing now we need to pay attention to is offering proper customer service so that people trust OTAs and they use the service.
This an excerpt from our interview with Salman Bin Rashid Shah Sayeem, CEO, Flight Expert, you can read the full interview here.
Cover photo: Photo by rawpixel on Unsplash