Innovation in Middle East Poised to Be Key Driver for Global Travel Over Next 25 Years

U.S. startups have honed the process of failing fast and learning through minimal viable product adaption — a lesson the Middle East and North Africa (MENA) funding ecosystem should leverage.

The region’s ability to champion travel tech and innovation was under discussion at Skift Global Forum East on Wednesday in Dubai. 

Skift senior hospitality editor Sean o’Neill unpacked travel tech startup pitfalls and opportunities in the region with Charaf El Mansouri, co-founder and CEO of Dharma, Fares Alaboud, head of product at Gathern, and Chris Hemmeter, partner at Thayer Ventures.  

The panelists shared how Abu Dhabi and Dubai, as the equivalent of San Francisco and the Valley for the MENA region, is seeing strong innovation in the business travel and alternative accommodations categories.

Building a Mena Travel-Tech Bridge

“There’s an opportunity to be a bridge to what’s happening in the region and the African continent, which is extremely interesting at a number of levels, not just travel tech, but fintech,” said Hemmeter who believes the region is set to be a “dynamic growth engine for travel for the next 25 to 30 years.” 

Thayer Ventures partners with entrepreneurs to create, develop and build technology companies that will revolutionize the travel and transportation industry.

He noted that startups were looking to do things differently and not just put a spin on travel, the world’s largest industry. 

The tremendous growth in the region also played a key factor, as did its predominantly domestic and regional market. 

“Saudi’s trying to hit 10 percent on its tourism (gross domestic product) GDP, which is really exciting by 2030, with more than 90 percent of all tourism in the kingdom being local and regional,” said Alaboud, head of product at Gathern. 

As the largest accommodation provider, essentially the Airbnb in Saudi Arabia, Gathern has overcome certain challenges in building its peer-to-peer market. 

Education to Overcome Slow Market Adoption

Education for hosts and one-on-one convincing of hotels was not uncommon said Alaboud as they set about increasing market adoption for short-term rentals.

He said variety, as in Europe and the U.S., remains integral, as did dynamic supply, with considerable support from within the region to drive awareness and grow the offering.  

El Mansouri, who founded Dharma with its niche passion-based itineraries as a solution to the high audience acquisition costs online travel agencies faced, said the company moved back to Morocco in 2019 to grow the business.  

The region was the “only people in the world taking a 50-year review on tourism at the time,” he said. 

“We were picked up by Mubadala and their startup program, Hub 71 Abu Dhabi in November 2020 and have been here ever since.”

He also recognized the region has a competitive advantage in seasonality to establish itself in the area of wellness tourism. 

Celebrate Failure and Share Progress Often

When it comes to venture capital, Hemeter said business-to-business, whether software services, platforms or marketplaces is a very different value proposition where return on investment can be truly analyzed. 

When it comes to healthy startup financing, Hemmeter acknowledged Dharma and Gathern as “two extraordinary examples.” 

If the region was serious about collaboration it would need to involve homegrown investors from the region, as well as from the across the world.   

“One of the things that’s unique about Silicon Valley is in a strange way, failure is almost celebrated. So it’ll be interesting to see if that sort of drives the ecosystem here,” Hemmeter added.

In closing, O’Neill wanted to know what would be the key pointers for anybody secretly dreaming of building a startup. 

Hemmeter weighed in: “We live in a highly competitive dynamic world, and as investors, we put money in and we hope to get that money out in six to eight years. It’s not just about the first nine months.”