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Travel Search Engine Wego Labored in Asia But Found Its Footing in the Gulf States

By: skift.com 1 month ago
Travel Search Engine Wego Labored in Asia But Found Its Footing in the Gulf States

Wego got its start in 2005. But it only found a path to scaling up recently when it shifted its focus from Asia to the Gulf States. -Sean O'Neill

News Travel Search Engine Wego Labored in Asia But Found Its Footing in the Gulf States

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Wego

Co-founder and CEO Ross Veitch poses in front of a sign at the offices of Wego, a metasearch engine that debuted in Asia Pacific but is now focusing on the Middle East. Wego



Skift Take: Wego got its start in 2005. But it only found a path to scaling up recently when it shifted its focus from Asia to the Gulf States.

— Sean O'Neill

Despite its name, Wego never went far.

Founded in 2005 as Bezurk, Wego was similar in design to many travel price-comparison search companies launched around the same time.

Yet the Singapore-based company didn’t grab an exit like Kayak, which the Priceline Group bought for $1.8 billion in 2013; or like Skyscanner, which Ctrip acquired for $1.74 billion in 2016; or even like Momondo, which Priceline bought for $550 million a year ago.

Wego competed with HotelsCombined to get traction in Southeast Asia but never struck gold.

“We were way too early with the metasearch model in southeast Asia,” said co-founder and CEO Ross Veitch. “You need a critical mass of suppliers operating at scale to make the marketplace model work. We thought the market would develop faster than it did.”

Veitch thinks Wego now has a path to scaling up after he and founder Craig Hewett pivoted the company to a mobile-first strategy in the Gulf States — a market relatively underserved by the global giants.

Booking.com and TripAdvisor are the only companies ahead of Wego in traffic in the region, according to figures for desktop and mobile for December 2017 from analytics firm SimilarWeb.

But Veitch said, “We believe Wego sends a lot more referrals to flight and hotel partners from the Middle East than TripAdvisor does.”

Between half and two-thirds of Wego’s revenue comes from the Middle East and North Africa, the rest from Asia Pacific, the company said.

“With the benefit of hindsight, when starting in Asia, we should’ve built cash cows in the more developed markets first,” said Veitch.

“Effectively, that’s what we’re doing in the Middle East,” he said. “This nicely profitable market is throwing off cash we can use to subsidize the marketing, engineering, and supplier relationship expenditure in emerging markets.”

Middle East Pivot

In December 2010, Wego launched 34 country sites beyond the handful in Southeast Asia — to see where it might gain traction.

It received the best response in the Gulf States.

The region had been mostly overlooked by Western and Chinese travel giants.

At the time, it only had five or so homegrown online travel agencies — none of which was dominant.

Wego added regional supply and marketing.

In April 2012, it launched the first Arabic language flights and hotels comparison search service, it claimed. Arabic, Farsi, Hebrew languages are all read right-to-left and the user interface conventions are flipped accordingly — something of a headache for Western-trained frontend Web and app developers.

Volumes remained modest but the transaction sizes were notably much higher than the averages Wego had seen in Southeast Asia. One out of every three Saudi shoppers on Wego picked four-star and five-star accommodation for trips involving four or more travelers.

In early 2013, Wego opened a Dubai office, making it a dual headquarters along with its original one in Singapore.

In June it announced a Series B investment round. Tiger Global was the largest investor, Crescent Point the second, and Square Peg the third — though none took a controlling stake.

Today, Wego claims to be the most-visited travel comparison service in the Middle East and North Africa region, with more than 10 million monthly visits.

Veitch estimated the region’s travel spending, offline and online, to be the equivalent of either the United Kingdom’s or Germany’s.

Skeptics might say the middle- and upper-classes in the Gulf States are smaller than that. Since the oil price slide, the growth of the middle class in the region seems to have fizzled out.

Another difficulty might be that none of Wego’s key countries are yet providing enough profit to fund expansion at a pace that can head off competition from larger players, according to the global analysis in Skift Research’s 2017 Outlook on Metasearch in Travel.

Veitch is bullish, though. Neither Skyscanner nor Kayak are significant players in the Gulf.

“The Middle East market is big enough to support a couple of billion-dollar online travel players,” Veitch said, “Wego will be one of them and probably the first.”

He added that the region broadly lacks rate parity contracts between many hotels and online travel agencies, unlike in North America.

That makes comparison search more valuable to consumers because there is typically more variation in the rates on offer among different websites.

Low-cost carriers like FlyDubai, FlyNas, and AirArabia are triggering fare wares, and this also makes metasearch more useful, he said.

Travel price competition is heating up. There are about 40 regionally based online travel agencies in the Middle East — a fast increase from the roughly five only several years ago.

Veitch declined to comment on the online travel scene.

A look at SimilarWeb found that the biggest online travel contenders are Almosafer/Tajawal, CityBookers, Flyin, Rehlat, Tajawal, and Yamsafer.

Travelstart, based in South Africa, has a significant regional presence, as does Cleartrip, based in India.

Fresh Funding

Up until last summer, Wego had raised $45 million.

In September 2017, Wego received an equity investment that included participation by Middle East Venture Partners, which describes itself as the largest venture capital firm in the region and has Mohamed Alabbar as a billionaire stakeholder.

“It was a C round in terms of preference but our fifth funding round in sequence,” said Veitch.

MBC Group, which owns Dubai-based satellite channel MBC, led the round as part of a strategic partnership.

In November, MBC’s TV, radio, and digital channels began to promote Wego.

Veitch said there’s a potentially interesting parallel in how MBC Group used its media assets to build and promote Anghami, a music-streaming service that has more than 36 million users in the Middle East.

Wego said it has now raised $60 million in total funding to date.

Mobile-First Market

The Middle East stands out from most other regions in its pace of mobile adoption.

Smartphone usage in several Arab states in the Gulf, particularly in the United Arab Emirates and Saudi Arabia, is among the highest in the world.

In March 2014, Wego launched the world’s first Arabic language travel metasearch mobile apps.

Today, Wego says more than 85 percent of its search volume from the Middle East is on mobile.

More importantly, the company has become better at persuading consumers to book on mobile.

Today, Wego said its click-throughs from its mobile apps and mobile Web to suppliers is at nearly the same rate as the brand’s desktop website.

Help From Google Tech

Wego got a bump in usage when it adopted a combination of standards Google has championed for optimizing webpages for mobile usage. Its team worked very early on with the Google on the technology.

In early 2017, it rebuilt its mobile website from the ground up with Accelerated Mobile Pages, which reduces page load time, and Progressive Web App technology, which provides a mobile Web experience that is indistinguishable from a native Android app.

In other words, Wego redesigned its mobile site to mimic its travel app using new technology standards.

In the first three months of 2017, the changes led to a 50 percent jump in the number of customers in Kuwait and Saudi Arabia that Wego successfully handed off to suppliers, particularly for flight bookings, the company said.

Until a year ago, many travel and e-commerce websites still relied heavily on single-page methods, which use large volumes of code and can result in slow-to-appear content, according to Alex Painter, senior web performance consultant at NCC Group.

Speed wins

At the 2017 Google I/O developer conference, Wego presented its work.

Wego claimed it decreased page load time from around 12 seconds to between 0.50 and three seconds, as explained in a video made for the conference. It said it supports around 500,000 sessions a day in its peak season.

Wego claimed to be the world’s fastest travel mobile site.

The Google developers accepted Wego’s claim to be the fastest. But it’s hard to imagine that Google’s own travel metasearch wasn’t faster.

Wego’s advantage was short-lived. Others copied the move.

In our unscientific tests last week, Wego’s site did load fast, but not faster than Google’s metasearch results. Several online travel rivals were as fast, too, having adopted the new standards.

But Wego did provide more regionally relevant results on average for a few sample Asian and Middle East itineraries.

A positive side to the new standards being championed by Google is that they provide a high-quality mobile Web experience for parts of the world where users are reluctant to load travel apps because of infrequent usage and constraints on the memory size of their devices.

A downside to promoting mobile Web over apps is that consumers who don’t use apps often turn to Google search to discover travel brands and that can often be more expensive for travel advertisers.

Wego said 55 percent of its overall Middle East traffic came from its mobile apps, which have also been rebuilt for greater speed, while 30 percent of that traffic came from mobile Web, and the rest from desktop users.

The company has a roughly even split in usage by Apple and Android device users. Wego officials wouldn’t say how many times consumers have installed its apps other than that it was an “8-digit figure.”

As it grows, Wego needs to retain its top talent. It lost chief operating officer Graham Hills to tours and activities tech company BeMyGuest. It lost Honey Mittal, a chief product officer who led the mobile revamp, to a non-travel company.

Veitch said the departures were coincidental. “Wego has a pretty deep management bench, and the developers who led the charge on the mobile changes are still driving the innovation agenda at Wego,” he said.

More Funding Needed?

Based on certain referral and transaction data Wego provided, we estimate that Wego’s revenue last year was likely less last year than the $60 million it has raised to date.

For online travel to expand in the region, more venture capital investment is likely required.

This year, Wego’s 110 employees will have to keep looking over their shoulders.

As soon as one of the global online travel companies decides the Middle East market is worth investing in, competition may appear fast and strong.

Being on the ground and understanding the local market gives Wego an edge, Veitch countered.

Payments is one area. Many users don’t have a credit card or do not want to use it online. So Wego asks users up-front what type of payment they are willing to use and then only shows prices inclusive of the payment fees for each, filtering out everything else. ​

Local touches like that can build barriers to entry for outsiders — for awhile, at least.

Wego needs to take the lessons learned from its stumbles in Asia to solidify its head start in the Middle East and North Africa.

“We’ll have to stay heads down, building the brand, for the next few years,” Veitch said.

TravelSearchEngineWegoLaboredAsiaFoundFootingGulfStates