ATM 2024: Middle East tourism ecosystem lacks innovative investment, say experts
The region's contribution to the global travel stands at just 5% that can be jacked up with right stratagies
Dubai: The Arabian Travel Market (ATM) 2024, hosted at the Dubai World Trade Centre (DWTC), provided a platform for experts to delve into the dynamics of the Middle East's travel investment ecosystem. Discussions during the sessions centered around the region's growing role in global travel revenues and the evolving landscape for travel startups.
Growing investment trends
Panelists at the entrepreneurship summit emphasized the increasing levels of industry funding in the Middle East. However, they also highlighted the need for more robust support systems for travel startups to thrive in the region.
Regional contribution to global travel revenues
Data from McKinsey & Company revealed that the Middle East's contribution to global travel revenues stands at approximately 5%, aligning closely with the proportion of international startup funding it attracts. Despite significant growth in investment post-pandemic, speakers noted that funding for regional travel entrepreneurs is still at a relatively nascent stage.
Key speakers at the summit
The Nurturing Travel and Tourism Entrepreneurship to Drive Economic Growth summit featured prominent figures including Margaux Constantin from McKinsey & Company, Danny Cohanpour of Trove Tourism Development Advisors, Charaf El Mansouri from Dharma, Mona Faraj of ExploreTECH, and Amna Al Redha, Manager of AviationXLab.
Opportunities and challenges
While acknowledging the potential for growth in the travel startup sector, panelists highlighted various challenges faced by entrepreneurs seeking investment, including perceived levels of risk and long wait times for returns.
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 panelists 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.”
Embracing innovation
Participants emphasized the growing importance of technologies like artificial intelligence (AI), Web3, and cryptocurrency in securing financial backing. While these elements may not be primary focuses for travel entrepreneurs, integrating them into business strategies is seen as crucial 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.”
Shifting mindsets for investment
Margaux Constantin of McKinsey stressed the need for a change in mindset among investors to foster entrepreneurship in the region's travel sector. She advocated for a departure from conventional investment parameters to allow for a broader pool of companies to thrive.
Closing of ATM 2024
ATM 2024, the largest edition to date, concluded after four days of impactful discussions and networking opportunities across various travel sectors. The final day's sessions focused on Educating Young Entrepreneurs: Building a Career in Travel session and the Network with Future Leaders event.
As ATM 2024 draws to a close, the event has provided invaluable insights into the evolving landscape of travel investment in the Middle East, setting the stage for continued growth and innovation in the region's tourism sector.