Interview: Jovago Leans On Local Tourism To Grow In East Africa
Africa’s largest hotel booking website, Jovago, is counting on its focus on local travelers across the continent to wave through a slowdown in tourist numbers in East Africa, one of its leading markets, due to increased terrorism threat.
Estelle Verdier-Watine, Jovago’s Eastern and Southern Africa managing director, told AFKInsider in an interview that the travel website, one of the startups owned by Africa Internet Group (AIG) – the continent first tech unicorn, was edging closer to breaking even in the region despite reduced tourism activity in Kenya, one of the region’s largest tourist market.
Earning from tourism in East African countries like Kenya, Tanzania and Uganda have dropped in recent years as the region struggles with a growing terrorism threat and negative reaction by visitors in source markets in the U.S., Europe and Asia after the Ebola virus in West Africa.
“We are focused on the domestic and regional tourism. 90 percent of our customers are from Africa,” Verdier-Watine said.
“Many of the governments in East Africa are doing more and more local tourism. They have realised that they need to have diversified markets. They cannot rely only on the British and the Germans.”
Jovago, one of the fastest growing online travel agencies in Africa, was founded by AIG in 2013.It is also backed by regional telecoms firms MTN Group and Millicom.
The website, which features more than 25,000 hotels in Africa, allows budget hotels across the continent to list on the site for free and charges a small fee for every booking made via the platform.
Bookings to the site have grown 10 folds since it was launched.
Verdier-Watine said that while international tourism was seasonal, local and regional tourists were all year round and that was good for hotel business, which had previously operated at lows of 20 percent occupancy during the low seasons.
She added that local tourism could help boost revenue for East African hotels that have struggled with low occupancy in the last year.
“There is much more potential for local tourism. Hotels may still get 50-60 percent occupancy when it’s low season,” she said.
“(Hotels) that were affected were happy to see that Jovago could still bring more customers, while their tourist agents in Europe who used to bring 20-30 percent of their customers dropped to 5 percent.”
The travel site added 1,000 more hotels in East Africa over the last six month and launched an extranet application for its hotel clients earlier this year, which gives hotel managers real-time access to, and control over, their room rates and inventory.
This gave Jovago space to concentrate on marketing and making sure that more bookings were made to hotels listed on the site, Estelle said, adding that the two year-old startup was looking to focus on marketing this year and has hired in that department while reducing in others.
On average Jovago has about 500 employees across Africa, with the composition of its staff changing towards more marketers.
“We want to increase the booking or business without increasing the team unnecessarily,” Estelle said, adding that the firm expected to break-even this year or early next year
“We have some countries that have break-evened, but as Jovago it should be happening in the coming months,” she said.
Africa’s hotel industry is waking up to online bookings as more and more people connect to the internet using their smartphones. This has seen several internet based booking companies, such as Hotels.ng in West Africa, SleepOut and Jovago, spring up to capture this opportunity.
Investor have also realised the allure of a growing middle class on the continent that is using these online booking sites to decide on their travel across the regions.
“We have more and more people who have a good budget to travel across Africa. The middle class is fast growing and it’s not just about the money, but also about their aspirations. There are more people who want to travel,” Verdier-Watine said.
For 2016, Estelle said Jovago was going to focus on doing more offline marketing, but that will not cloud their aim to achieve profitability for the for the first time since the company was launched in Africa.
Jovago could soon be rebranding to Jumia Travel after its parent company AIG, a subsidiary of Rocket Internet, announced that it will be renaming all its startups in Africa to become part of its flagship e-commerce site Jumia, TechCabal reported.
“We will be balancing investments with our targets so that we become profitable. It’s going to be less radical than the years before and we are going to try to see how we could have more synergy between the different companies of the group,” she said.
“Together we are the biggest e-commerce stakeholder in Africa and we need to leverage on that. That’s going to be our focus in the next six month.”
According to Verdier-Watine, Africa e-commerce market is headed for more consolidation as smaller player seek the financial muscle of larger companies. This, she said, will help improve consumer trust in e-commerce websites as they will be able to meet demands much better.
In May, Ringier Africa and One Africa Media merged to form what they termed as Africa’s largest online classified asset under a company called Ringier One Africa Media. The merged company brought together more than seven online platforms operating across six countries on the continent.
“There is a lot of consolidation in the market. It’s not easy to launch an e-commerce business. There was a lot of small actors and they were not able to build a sustainable model,” Verdier-Watine said.
“We will have fewer stakeholder in Africa, but big ones, trusted ones, which will most likely increase interest in e-commerce as more people gain trust on the industry.”