Online presence in hospitality business

Estelle Verdier-Watine is the co-founder and managing director of Jovago.com for East Africa. Jovago.com is Africa’s leading online hotel booking website with offices in Nigeria, Kenya, Senegal, and Algeria. A year ago, Verdier-Watine and her team brought Jovago to the Ethiopian market. The website, according to Verdier-Watine, facilitates the hotel booking process via fast, transparent and easy-to-use services. The website has over 25,000 hotels listed across Africa and over 200,000 hotels around the world. The Africa Internet Group (AIG), which incorporates Jovago, mostly focuses on providing online marketing and businesses platforms across many countries in the continent. The network of AIG includes JUMIA, Kaymu, Hellofood, Lamudi, Carmudi, Zando, Jovago, Lendico and Easy Taxi, a few of which have recently launched operations in Ethiopia. However, building an online marketing platform in Africa is never easy, says Verdier-Watine, since internet penetration is still in its infancy. The same fact holds true for online marketing in Ethiopia. Verdier-Watine sat down with Birhanu Fikade of The Reporter to talk about Jovago’s new method it put in place to tackle these obstacles. Excerpts:

The Reporter: Tell us briefly about Jovago and its role in Africa?

Verdier-Watine: Jovago East Africa was founded three years ago. We started Jovago.com in East Africa with the ambition to make traveling to the region quite easy and affordable. We wanted to make it possible for people within the African continent to travel to other regions. We think there is strong economic growth in countries like Ethiopia. We see a growing middle class and we think that there is a growing aspiration for travel. People want to travel for leisure. They want to go and see beaches. People enjoy visiting historical sites; or perhaps prefer to see wildlife. Hence, the demand for travel, whether travel for leisure or business, is increasing from time to time.

This mostly relates to the growing economies in Africa. Lots of companies are starting in Addis Ababa. Some are in need of expanding to Bishoftu, Gondar or Harar. Therefore, we have to help these people and companies. We make that happen through technology. We have a dedicated website ,i.e. www.jovago.com, where people can easily find all types of hotels and other forms of accommodation. If they indicate where they want to go, the website will help them find one that suits them easily. For instance, they might indicate that they are travelling to Harar. They might also indicate that they are traveling alone or with someone. These sorts of information assist the website to provide the relevant kind of information to travelers. The site specifies room rates which range from five to 150 dollars. Upscale hotel accommodations and rooms are also available to customers. Jovago also provides the online payments and booking mechanisms.

Are you saying that this online service is currently available in Ethiopia?

All the services are available in Ethiopia. We are working with some 600 hotels across the country. We have hotels on our side which are situated in the most remote parts of the country. We will continue to bring hotels onboard. We see our presence is very essential for the growth of the hotel industry. Thanks to technology, locating and booking hotels from a distance have come to be more reliable today. Many hotels in Ethiopia fail to have websites. When they join us at Jovago, it makes it easy for the hotels to be visible for millions of people. We create pages for each hotel and negotiate rates to make rooms more affordable for customers. We provide all possible information about hotels; and that way, we also assist in the decision-making process.

How do you convince managers or owners of hotels to procure the services that you provide when they fail to have websites of their own?

It is quite a challenge. Especially when you think of hotel managers or owners, who are older and who tend to be hardheaded, it is hard to convince them of the benefits of having a website or an online business. We have to approach them as if we were travel agents. People in the hospitality industry, especially those at certain ages, are uncomfortable when you talk to them about online visibility. They are more hesitant than the young generation. Hence, we have to commit ourselves to show that visibility is good and that it brings more guests to hotels. As such we have the mindset of travel agents. 

There was one Kenyan hotel manager who was quite hesitant to start an online marketing business previously. Then we showed him by booking some 500 guests at the beginning. The hotel was not yet convinced as to how we made that happen. But, what we did was just create a page in our website. Behind the website, there are people working. Behind Jovago we have 500 people working in Africa. It’s a very concrete business.

Generally, I think we need many young managers in the hotels. When you are young, at least you are very much into technology. But we need to be patient to see the benefits. We are making little steps towards creating the understanding. We are introducing a system that really works but needs patience for a little while to witness and reap the advantages. Actually, we can’t blame anyone. If people don’t know how a system works, why should they trust that system? But it is a matter of time; when they see it really benefits them no doubt, they will come onboard.

Do the hotels pay for the pages you create on their behalf?

Initially, we were asking hotels to pay small amounts of fees that can cover the costs of the pages created. Because of the lack of trust against the online industry, we were forced to shift to negotiating for commissions whenever we bring business to the hotels. They pay only when the customers really come. In a way, this helps to build trust on the online business.

How did you manage to bring onboard some 600 hotels in Ethiopia within a matter of one year, especially in a situation where there is very poor connectivity?

It was not very technological. It required a face-to-face approach. We walked for miles. We took buses and travelled on planes frequently. We did talks after talks, many phone calls and emails. Most of our emails ended up being unanswered or unread. But at the end, we managed to convince many hotel operators and managers. Currently, we have 25,000 hotels across Africa working with us.

How do you see the progress? Is online marketing a lucrative venture here?

It is not a paying-off job; maybe the next year or the following. Internet is not an easy business. It requires a lot of efforts and a good sum of investment. At the moment, we are not making profit. But, we are on a good track to be profitable. Hence we have to always question the way we work and improve. In Ethiopia, the number of hotels is growing very fast and new hotels are joining the industry. Therefore, we want to make sure that we remain relevant. It’s now a one-time job.

What can you say about the telecom connectivity issue in this country?

One surprising thing when we started the business in Nigeria and Kenya was that we said our service is most likely to serve the Ugandans or Tanzanians who want to book hotels in Kenya. We never thought Kenyans will book hotels in their own homeland online. In fact, we have discovered that in most countries, it’s the local population that makes the most bookings in the local hotels. In Ethiopia, it’s true that due to the low rate of internet penetration, we don’t see similar trends. We have actually lesser local communities booking local hotels than foreigners.

I believe in the near future there will be changes as Ethio Telecom exerts more efforts towards improving connectivity. But, at this time, it’s true that internet is very slow. It’s very difficult to work via internet outside of Addis Ababa. Even in Addis, it’s very difficult to have fast internet services though you have a round-the- clock connection. But, it will not be an everlasting problem. We see there is an interest in e-commerce and that is why the government has devised an e-commerce law. There is a gap in terms of infrastructure but I am sure that changes are coming soon. Therefore, I am confident that by 2018, 50 percent of all hotel bookings in Ethiopia will be done via Jovago. Later on, we expect to reach up to 60 percent.

Currently, how visible is Jovago in Ethiopia? And do you evaluate or monitor all hotel bookings in the country?

Of course, we monitor and evaluate on a daily basis, but I can’t share the numbers. We have a growing rate. It has become an exciting journey. We may not do promotions and advertisements as the big companies do overnight. For instance, in Kenya, we were able to advertise on Television about our services after two years of operations there.

How big is your presence in Ethiopia right now?

We do online marketing. But, we have been doing it on and off for a while. Currently, we are back on track. I think we are at the early stage and we are still building our services. We partner with Google to do the online marketing. We need to make sure that our website is visible and actually appear as first result on Google. That is why we are trying to increase our visibility here. But we are still at the building stage and our services are yet to be developed.

We are introducing a service called WEX. Actually, this is a company with global presence. We are very much sure that the services that WEX provides would help us address the challenges we are facing in Ethiopia. To sell bookings from Kenya to Ethiopia, we were required to spend USD 30. It was killing our business. Forget about the profits, we were making a loss. Hence, we decided to slow down our expansion in Ethiopia until we can find a solution. We partnered with WEX to find a solution for our problems.

We don’t have a national e-payment system. Therefore, how does WEX work in Ethiopia?

Not a lot of people have credit cards in Africa. So, what we did was develop our website first. Then, we arranged various payment systems. Some customers prefer to pay on arrival. Others may not travel with cash. We have made it possible for all to pay via mobile payments, cash, checks, bank transfers and the likes. We made it flexible for customers to pay at their best conveniences. For each booking paid for online, what we do is send our credit card details for the hotel so that the amount can be withdrawn from our own account. Most hotels in Addis have Point of Sales (POS) machines at front desks and without receiving the actual card physically, we can still charge the credit cards in a more safe way. There are a number of restrictions on how much amount and at what time the payments shall be transacted. It is very secure for both the hotels and the guests. Of course, this system has impacted us at first as it takes three or more days for the payments to be actually reflected on the accounts of the hotels. You can imagine how nervous the hotel managers could be and how they will talk to the customer before receiving confirmation about the payments which have been made. We now have a system that makes online payments easy. We give credit card details to the hotels and they can charge it at the time the guest check in and they feel reassured. The money can be reflected within 48 hours or so. That is a big step forward. In terms of cost of the service, it is quite advantageous since it is less than one euro. This is genuine evidence as to how technology can really support the tourism industry and new businesses. But, it has been a tough job.

How is this system performing so far?

It has been less than a month since it has been introduced to a few hotels in Addis. There are some hotels comfortable with the new system. Some need further trainings and followups. We need to work with the banking industry as well. They have to provide more POS machines for hotels. We need to find the right partners in that regard. Hence, it’s going to be another journey. But right now, we think we are on the same page.

What type of travelers are you targeting? Are they business or leisure travelers? Who are your primary targets?

We are targeting anyone in Africa who wishes to travel either for leisure or for businesses. Usually, there is an overlap. There are businessmen who own companies or work in a big company whose job requires them to travel. They also have the purchasing power to go on vacation with their families. There is this middle-class society which we focus on. We don’t target the upscale or very upper class society. That is not our ambition. When you are in that category, you don’t ask much about prices or rates. We are addressing the needs of a population that is price conscious and requires having a good deal out of the transactions. When we see the demographics of our customers, most of our clients are middle-aged businessmen. However, in Ethiopia, we have more women than men in our list of customers.

As a company that works in the hospitality or tourism sector, what can you say about Ethiopia’s image around the world? There is a feeling that the country remains under-marketed or the least promoted. Does that have impacts on your line of business?

I think the government has taken the first key steps. They have identified tourism as a key source of development. They have crafted a tourism master plan. The plan says we need to invest on the tourism industry in Ethiopia. If you want to support job creation and if you wish to have more hard currency to come to the country, it is tourism that can play the role. The government is aware that tourism is a priority sector. We need to be very pragmatic to see things happening in this sector.

I don’t know many countries where the government leads great initiatives like we see in Ethiopia. Anywhere in the world, the private sector is much vibrant than the public sector. I think the government is giving it the go ahead then it has to come from the private sector and companies like us to do our best. We need to bring visibility on the potentials of the country. We are doing that through social media. We have a blog. We talk about the country via Facebook, Instagram and the like. I have never heard anyone who says that I have traveled to Ethiopia and I regretted it. Hence, we need to push people to make more travels.

In the coming two to three years, where do you plan to go with the WEX system? Where will you be?

First, we need to see who uses POS. We need to make sure all hotels acquire at least one. That is what we need to do. When you are in a niche market in terms of local tourism, you have to go the extra mile. We are not banks. But, if we need to be influential in the business we have to go to the banks and have the necessary machines and technologies serve and help the hotels transactions. That, however, makes the job to be difficult but at the same time exciting. In that regard, we run on all sides and talk to different people in different industries to make it happen. The key thing that I have learnt so far is to never wait for the opportunities to come to you. Go ahead and do it; and always question what you are doing. That works.

Do you see the coming of Jovago affecting the business of travel agencies in Ethiopia? Should they be worried about their future?

When we started, it felt almost like that. But, now I think we are helping the travel agents. Many of them are using our platform to book hotels for guests. I think we are helping them to go to the next step. Our approach is that if you are traveling at an affordable price and if you are willing to have everything arranged, go to our website and we will help you find hotels. Over the phone, we will also help you find transport. But, we won’t be the ones organizing and paying for everything. We are targeting people who look for cheap ways of doing that; those looking for conveniences. Unlike the travel agents, we have different service packages and customers. Hence, we are not competing with the travel agents’ businesses. 

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