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Local OTAs Hit Hard by Coronavirus Outbreak

Travel is one of the sectors that has been hit hard by the coronavirus pandemic. In the last several weeks, local online travel agencies have reported a drastic drop in their business. Some industry insiders reported more than 50% drop in business in the first week and others continue to sound red alarms. As more and more countries shut their border and close their airports, it appears the nightmare for the industry is just getting started. 

The details: In the wake of coronavirus breakout we have seen for the first time in many years the complete shutdown of borders across the world. Countries after countries are implementing strict measures on the movement of people to control the spread of coronavirus. In the last two weeks, things have changed in Bangladesh as well. 

Bangladesh has effectively halted almost all flights from across the world except for a few countries. Borders have been closed. The government has announced the shutdown of schools and colleges. Companies across the board are asking employees to work from home. The country reported its first death from coronavirus a few days ago and both reported and unreported cases continue to grow at an alarming rate. 

The airline industry has been hit hard. People have largely curtailed their travel and movement unless it is something absolutely necessary causing drastic fall in the business of OTAs. 

The industry is already showing the crack. Tour Operators Association of Bangladesh (Toab) recently observed that up to 30% employees in the tourism sector in Bangladesh may lose their jobs due to the coronavirus outbreak. 

Why it matters: Online travel agency is a relatively new sector in Bangladesh. Some of the leading OTAs such as Flight Expert, Go Zayaan, ShareTrip, Amarroom, Avijatrik are just a couple of years old. With the rise of travel and online shopping, the sector has seen excellent growth in the past few years. 

According to some industry insiders, OTAs control some 5% of the total travel market in Bangladesh which is estimated at $5.3 billion. Many local OTAs have raised VC investment in the past few years. 

Depending on how long the outbreak lasts and its impact on the economy, many of the OTAs will be affected dramatically in the coming months. Some of the companies may face layoffs, which has already started to happen in markets like the US, while others will have to curtail operations significantly. Companies have already started to take measures to control costs. Most OTAs in Dhaka have already slashed their advertising and other activities.

Many experts suggest that it would be wise for companies to take measures to improve their capital runway and find ways to raise money early if they are eyeing to raise money. 

Go deeper: Travel-Tech In Bangladesh Attracts Serious Attention From Both Investors and Users

Photo by Frank Vessia on Unsplash

Mohammad Ruhul Kader is a Dhaka-based entrepreneur and writer. He founded Future Startup, a digital publication covering the startup and technology scene in Dhaka with an ambition to transform Bangladesh through entrepreneurship and innovation. He writes about internet business, strategy, technology, and society. He is the author of Rethinking Failure. His writings have been published in almost all major national dailies in Bangladesh including DT, FE, etc. Prior to FS, he worked for a local conglomerate where he helped start a social enterprise. Ruhul is a 2022 winner of Emergent Ventures, a fellowship and grant program from the Mercatus Center at George Mason University. He can be reached at ruhul@futurestartup.com

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