The Safarna travel deals portal is closing just 15 months after it was launched by the Irish e-commerce entrepreneur Paul Kenny.
Dubai-based Safarna.com, which was created by the same founders as the daily deals website Cobone, offered discount holiday vouchers.
The founders Mr Kenny, the Safarna.com chief executive, and Pieter Sleeboom, the chief operating officer, as well as their New York-based hedge fund backers Tiger Global Management, did not immediately return emails seeking comment.
A call to the Dubai Internet City office of Safarna.com was answered by a recorded message which said the company was in the process of closing down operations. Customers who had bought vouchers were asked to contact support staff over email.
One UAE customer, Mike Soper, purchased a Dh499 package from the site for a night’s stay in April at an Abu Dhabi hotel only to be told on Wednesday by the hotel that it could no longer honour his booking as its relationship with Safarna.com had ended.
Mr Soper contacted the company via email and Twitter without response. However, yesterday the hotel informed him that the funds had come through from Safarna.com and his booking was once again valid. As of yesterday evening he was still awaiting a reply from either Safarna or Cobone – he had originally been linked to the Safarna site through Cobone.
Safarna.com was supposed to operate as an independent entity from this month.
Last month the Middle East Digital Group, which owns ExpatWoman.com, acquired Safarna’s sister company Cobone. Mr Kenny founded Cobone in 2010. The daily deals website is available in Dubai, Riyadh and Jeddah.
While Dubai SME, an agency under the Department of Economic Development, identified large potential in the online travel agent segment in a 2012 study, it also mentioned that an SME requires a capital investment of at least Dh4 million to Dh5m over three to four years to establish an online travel portal.
The relatively small market makes travel e-commerce challenging in the UAE, according to Amit Taneja, the chief revenue officer at Mumbai-based Cleartrip, one of the largest online travel agents in India.
“In our estimate the addressable population in the UAE is 3.5 to 3.7 million, which is a very small number,” he said. “Coupled with the high costs of setting up, with marketing costs being one of the highest, and the affinity that [expatriates] carry toward their home brands, makes it hard for start-ups to survive.”
Cleartrip, which started in 2006 in India, entered the UAE four years later. The company accounts for more than half of all airline ticket sales across all online travel agents in the UAE, it says.
About 65 per cent of its business comes from air ticket sales and the rest from hotel room sales. Cleartrip.com gives access to 250,000 hotels worldwide and of that total about 700 are in the UAE.
While analysts say large online travel booking websites have increased their market share in the Arabian Gulf, competition is growing in the market.
That is “due to the proliferation of a large number of similar sites, which may eventually lead to some consolidation or closure of the weaker ones”, said Peter Goddard, the managing director at Dubai’s TRI Consulting.
Among the hospitality segments, local hotel chains and independent properties rely more on the versatility of online booking platforms than branded hotel chains.
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