Overcoming cross-border challenges in the Middle East and UAE's travel and tourism industry
The Middle East and UAE are popular tourist destinations, attracting millions of visitors each year. However, the traditional methods of payment for tourism-related services can be inefficient and costly, both for businesses and tourists. This is where cross-border payments platforms can play a significant role, offering a solution that caters to the unique needs of the travel and tourism industry.
The Middle East and the UAE are popular travel destinations due to their rich history, unique culture, and luxurious experiences. According to the World Travel and Tourism Council (WTTC), the travel and tourism sector contributed to 8.9% of the region's GDP in 2019, generating over $194 billion. In the UAE alone, the industry contributed around 5.2% to the country's GDP in 2019, amounting to nearly $24 billion.
Cross-Border Challenges in the Middle East & UAE's Travel and Tourism Industry
According to a report by McKinsey & Company, traditional cross-border payments can be expensive, with fees amounting to 3-5% of the transaction value. For a travel and tourism business in the Middle East that processes $1 million in international transactions annually, this could translate to $30,000 to $50,000 in fees alone.
The growth of the travel and tourism industry in the Middle East and UAE faces several cross-border challenges, including:
Political Instability: Political tensions and conflicts within the region can impact travel and tourism activities, resulting in fluctuating demand and revenue for businesses in the industry.
Currency Volatility: Currency volatility in the region can lead to increased costs and uncertainty for businesses, affecting their ability to invest and grow. In regions like the Middle East where exchange rate fluctuations are common, this can reduce profitability.
Complex Regulatory Environment: Diverse and complex regulations across different jurisdictions in the Middle East and UAE can create barriers for businesses to operate efficiently and access foreign markets.
Inefficient Cross-Border Payments: Traditional cross-border payment methods can be slow, costly, and complicated, posing significant challenges for businesses in the travel and tourism sector that rely on seamless international transactions. Cross-border payments can take up to five days to settle and this can impact sales, customer satisfaction, and missed opportunities for business growth.
Boutique hotels and growing travel companies in the Middle East who attract customers from all parts of the world but rely on traditional banking services could incur significant losses in revenue and prevent market growth. For example, a resort with annual transactions of $1 million could experience a 5% reduction in profits due to currency volatility, equating to $50,000 a year. Welcoming guests from other parts of the world also causes the hotel to experience high transaction fees of an additional 5%, adding to another $50,000. Finally, delays to payment processing could result in hotel guests cancelling, a further knock to profits. For businesses looking to grow and make their mark on the Middle East’s tourism sector, these fees can significantly impact performance.
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Verto: A Solution for Cross-Border Challenges in the Middle East & UAE's Travel and Tourism Industry
Verto offers innovative solutions to help businesses in the Middle East and UAE overcome cross-border challenges, particularly when it comes to collecting international transactions with our multi-currency accounts. Verto's platform can support the travel and tourism industry by:
Streamlining Cross-Border Payments: Verto enables businesses to make faster and more efficient cross-border payments through its centralised platform, reducing transaction costs and increasing the speed of international transfers.
Facilitating Currency Exchange: Verto's platform allows businesses to exchange multiple currencies at competitive rates, mitigating the impact of currency volatility and helping businesses better manage their finances.
Simplifying Compliance: Verto's compliance-as-a-service solution helps businesses navigate complex regulatory environments, ensuring they remain compliant with local and international regulations while reducing the administrative burden.
Enhancing Customer Experience: By providing efficient and secure financial transactions, Verto enables businesses in the travel and tourism industry to offer a seamless and enjoyable experience for their customers. This helps both acquisition of new customers, but also to build customer loyalty.
Leveraging Verto's Global Accounts for Travel and Tourism Companies
Verto's Global Accounts offer a powerful solution for travel and tourism companies looking to streamline their international transactions and optimise their financial operations. By opening a Global Account, businesses can benefit from a wide range of features designed to simplify cross-border payments and currency management. Some of these key benefits include:
Multi-currency management: Hold and manage 25 currencies in a single account, allowing businesses to better handle international transactions and reduce the impact of currency fluctuations.
Competitive exchange rates: Access competitive exchange rates for currency conversions, ensuring businesses can maximise their revenue and minimise currency conversion costs.
Faster payment processing: Benefit from faster processing times for international transactions, reducing the likelihood of delays and improving customer satisfaction.
Lower transaction fees: Enjoy lower fees for cross-border transactions compared to traditional banking methods, enabling businesses to save money and invest in growth.
Increased security: Ensure secure and compliant transactions with Verto's robust security measures and compliance-as-a-service solution, safeguarding all businesses for full compliance confidence.
Improved cash flow management: Gain better visibility and control over international transactions, helping businesses to manage their cash flow more effectively and make informed financial decisions.
Businesses across the Middle East with a Global Account can receive payments in 25 different currencies to facilitate better global payments*. For domestic collection, businesses collect funds across USD, GBP, EUR, NGN, DKK and KES via a local account with their local bank account details. By opening a Verto Global Account, travel and tourism companies in the Middle East and UAE can overcome the challenges associated with cross-border transactions and unlock new opportunities for growth and success in the industry.
In conclusion, cross-border payments platforms and multi-currency accounts offer promising solutions to the challenges faced by businesses in the Middle East and UAE tourism industry. By embracing the tools that Verto can offer, businesses can benefit from streamlined payment processes, secure and efficient payments, multi-currency support, competitive exchange rates, and improved cash flow. This can help to enhance the overall customer experience, improve the competitiveness of the industry, and unlock new opportunities for growth and development.
*Please note businesses in Yemen will face enhanced due diligence when applying for Global or Local Accounts