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Phocuswright: Mobile is key battleground, but it’s not all about apps

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By Travolution

By Travolution
Image: Phocuswright’s Marcello Gasdia

Mobile is now firmly established as the key battleground as the world’s biggest online travel firms fight for dominance.

At last week’s Phocuswright conference in Los Angeles, global giants Booking.com, TripAdvisor, Expedia and Kayak all highlighted mobile as vital to success.

Central to this for online agents and metasearch sites is how they use the mass of data available to personalise the mobile experience to tailor results for customers.

In emerging markets such as China and India the channel is essential as consumers are getting online through mobile first rather than via desktop.

Sam Shank, founder of HotelTonight, the mobile-only last minute hotel booking app, said the OTA role was evolving so that they were becoming more like personal travel assistants.

And Darren Huston, chief executive of Booking.com, the commercial engine of the world’s most valuable online travel firm Priceline, said: “Mobile is critical as a new platform to drive transaction but, more importantly, it’s offered everyone a computer in their pocket.

“People now book the first thing they need in a destination and then wander around with a phone.

“Mobile’s transforming the ability to create really cool end-to-end experiences for our customers.”

Dara Khosrowshahi, chief executive of Expedia, said the OTA was benefiting from a growing travel industry and, in particular, the fast-expanding mobile sector.

Kayak founder Steve Hafner said the Priceline-owned metasearch site’s focus was on improving its app and a “very different experience” would emerge in the next six months.

Facebook global head of travel strategy, Lee McCabe, said travel was trailing other online sectors in terms of the app experience.

“The most important thing is convenience: do not make me work too hard; if it’s a transaction app, let me transact quickly and easily.”

A major open question for travel firms remains whether to favour apps or the mobile web, and Phocuswright produced research among US users suggesting the jury remains out.

Marcello Gasdia, Phocuswright senior analyst, said high level of use of mobile apps suggests they are dominant, but firms should not be too quick to discount the mobile web.

Gasdia said most app use involved three activities: checking emails, social media and gaming, with the amount of time spent in Facebook accounting for half an hour a day on average.

“Travellers are doing very few things in apps, creating the illusion they are taking over the mobile web,” said Gasdia.

Travel app usage, whether it involves a metasearch site, an OTA or a hotel or accommodation review or airline site, accounted for just 1% of daily app use.

TripAdvisor was found to be used by 30% of smartphone owners. Of these, 30% used the app and 18% the mobile website. Only 38% of visitors were app-only.

For OTAs, the research found there were nearly twice as many mobile web users as app users, the former averaging seven page visits per session while apps saw five sessions a month on average.

“App users were not opening these OTA apps every single day. Reach was not as high as we anticipated,” said Gasdia.

The Phocuswright research found even among people known to be actively planning a trip in June, OTA app engagement was low at just one in 10.

More than four in 10 did use an airline app, suggesting a “sweet spot” that was driving app adoption for airlines, said Gasdia.

– See more at: http://www.travolution.com/articles/2014/11/19/9043/phocuswright-mobile-is-key-battleground-but-it%e2%80%99s-not-all-about-apps.html#sthash.KT4ElfON.dpuf

Data suggest that leisure travel has recovered

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By Danny King

Girl on vacationU.S. leisure travel’s recovery appears to be widening beyond the wealthiest Americans, resulting in a 7% growth in the number of vacation travelers last year, PhoCusWright reported earlier this month.

In many ways, that figure explains industrywide metrics from sources as varied as ARC and hospitality analyst STR, both of which have reported data that suggest the industry is returning to prerecession levels, in some cases even exceeding them.

The growth reported by PhoCusWright came from across the demographic spectrum as baby boomers resumed prerecession travel habits while more young adults managed to free up enough discretionary income to travel last year.

PhoCusWright also reported that much of this additional travel spending was a result of travelers booking private homes and apartments, while preferred booking methods inched away from online travel agencies (OTAs) and suppliers’ websites and toward metasearch engines.

The overall 7% growth in the number of American adults who traveled for leisure purposes resulted from 65% of all U.S. adults traveling, according to PhoCusWright.

051914PHOCUSWROGHTCHART1Notably, the survey, which polled some 4,100 U.S. adults in early March, revealed that the biggest percentage increases came from millennials: Americans between the ages of 25 and 34 boosted their leisure travel last year by about 11%, while those in the 45-to-64 range increased their leisure travel by 9%.

In a May 13 webinar unveiling the research, Marcello Gasdia, PhoCusWright’s senior analyst for consumer research, reported, “The boomer generation made a huge comeback. This group had the most to lose out from the recession, and close to half of this age group was skipping out on vacations for the entire year.”

Gasdia and fellow analyst Colie Hoffman co-authored the 37-page report for PhoCusWright, whose parent company, Northstar Travel Media, publishes Travel Weekly.

From a retailer’s perspective, Eric Ardolino, president of A&S Travel Center in Wallingford, Conn., observed that many of those who were already spending on travel are now spending more lavishly. That is especially true among professionals whose best earnings years are still ahead of them, he said.

“If I say to them, ‘Do you want to do the $3,000 honeymoon or the $6,000 honeymoon?’ … most people are taking the better trip,” Ardolino said. “These young honeymooners are spending more now than ever.”

The widespread uptick in leisure travel saw the average travel spend for a U.S. household rise by 15% last year, to $3,311. In addition, the number of U.S. adults who took at least three leisure trips last year rose almost 20%, as did the number who spent at least $3,000 on leisure travel.

051914PHOCUSWROGHTCHART3Yet, while the overall picture of the travel economy painted by the research is clearly positive, details about how that money is being spent might cause some consternation among lodging companies and OTAs.

On the lodging front, the portion of U.S. travelers who stayed in a private home, apartment or condominium for leisure-travel purposes last year jumped to 14% from 8% in 2012, while the portion of leisure travelers choosing midscale hotels and all-inclusive resorts fell.

That type of jump in private home rentals turns the spotlight on so-called “shared economy” practitioners such as Airbnb and the car-sharing service Lyft. Both companies increasingly are the targets of demands from local governments and traditional hospitality companies for more regulation.

“There’s been a lot of industry attention, thrusting the sharing model into the mainstream,” Gasdia said. “Whether these accommodations are nibbling at traditional accommodations or creating demand is a highly debated issue.”

Booking methods are also shifting. While the portion of travelers who book travel exclusively online rose 2 percentage points, to 39%, last year, that increase is not necessarily helping the OTAs or suppliers who are hoping to increase direct consumer bookings on their websites.

In fact, a lower percentage of leisure travelers booked airline tickets and hotel rooms through OTAs and supplier websites last year than in 2012, PhoCusWright found, while metasearch sites like Kayak attracted a larger percentage of those bookings. And while overall online bookings continued to increase, the survey found that travel-agency bookings were also up for both air and hotel reservations.

Regardless, the overall rising tide is benefitting the U.S. airline and lodging industries. Moreover, bolstered by a record number of overseas travelers coming to the U.S. last year, hoteliers here recorded 1.11 billion room-nights booked in their 4.9 million hotel rooms, up 2.2% from 2012 and marking a 10% increase from three years prior, according to STR.

“The growth of the domestic leisure travel segment has been an important contributor to the ongoing recovery of the U.S. lodging industry,” said Mark Woodworth, president of PKF Hospitality Research. “While the persistently high levels of unemployment remain troubling, those that have the means to travel have continued to do so.”

051914PHOCUSWROGHTCHART4What’s more, 2013’s trends appear to be flowing over into this year. U.S. hotels boosted first-quarter revenue per available room by 6.8% from a year earlier as occupancy advanced 1.7 percentage points, to 59.2%, while average room rates rose 3.8%, to $112.45 a night, according to STR.

Meanwhile, through April, ARC’s travel agent transactions rose 2.1% from a year earlier, to 52.5 million, the highest January-through-April figures since 2008. Passenger numbers for American, Delta and JetBlue were all up more than 4% through April.

Last week, the trade organization Airlines for America forecasted that air travel this summer will rise 1.5% from a year earlier, to 2.3 million passengers per day, the highest number in six years.

And going forward, the FAA estimated that enplanements for the year ended Sept. 30, 2015 would increase 3.4% from the current fiscal year, to 771.4 million, beating the previous 2007 peak of 765.3 million.

All of which, Ardolino said, is giving the industry reason to believe that it can up-sell products to a wider swath of the U.S. population.

“I have a sign on my desk that says, ‘If you don’t travel first class, your heirs will,’” Ardolino said.

PhoCusWright report on mobile bookings shows rapid growth

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PhoCusWright report on mobile bookings shows rapid growth

By Danny King

Plane and phoneIn the U.S. travel industry, where 2% to 3% growth is considered solid and 5% is exceptional, mobile booking continues to surge at exponential rates, according to a recent study by PhoCusWright.

In 2015, Americans will book $39.5 billion worth of reservations on their mobile devices, accounting for 12% of all travel sales, PhoCusWright reported in its annual Online Travel Overview last month.

Those numbers represent more than a fivefold jump from the $6.15 billion in sales and 2% market share that mobile represented in 2012, and they illustrate the growing ubiquity of the smartphone- and tablet-toting traveler.

“The channel is getting a lot of attention from both OTAs [online travel agencies]and suppliers,” PhoCusWright wrote in its 90-page report. “Every serious player in the online travel space is prioritizing mobile technology development and pushing hard for travelers’ attention in the form of traffic, transactions and app downloads.”

PhoCusWright is owned by Northstar Travel Media, the publisher of Travel Weekly.

Within the travel industry, the hotel sector is leading the way with regard to mobile booking, and that trend is shortening the booking window considerably.

At the annual PhoCusWright Conference in Florida last month, RBC Capital Markets’ managing director, Mark Mahaney, said that as more travelers book with smartphones, the idea of booking either a same-day or day-prior reservation is becoming more of a rule than an exception.

And while surging airfares and the ever-shrinking seat capacity will make many travelers gun-shy about rolling the dice with a last-minute airline booking, a number of hoteliers have demonstrated a propensity to offer last-minute discounts in order to unload unused inventory for the night.

As a result, about 12% of the online bookings directly with hoteliers will be via a mobile device this year, compared with about 8% of car rental bookings and about 6% of airline ticket reservations, PhoCusWright said. And by 2015, about a third of the bookings U.S. hoteliers process online will be made using mobile devices.

“Mobile is creating a new growth engine,” Mahaney said.

Still, airlines are investing big in mobile-distribution technology to capitalize on more computer-tablet use by travelers. As a result, airlines are expected to overtake car rental companies when it comes to the percentage of supplier-direct online bookings transacted on mobile devices.

Additionally, mobile growth has further pitted suppliers, especially hoteliers, airlines and car rental companies, against OTAs. While suppliers have started investing in expanding their mobile presence as a way to limit bookings through the OTA distribution channel, which remains far more expensive for the them, onine giants Expedia, Priceline and Orbitz have managed to stay a step ahead of the suppliers.

Indeed, while OTAs’ mobile U.S. bookings growth between 2012 and 2015 will be slightly slower than total mobile bookings growth, mobile bookings will account for 29% of the OTA market by 2015, compared with 27% for the total online market.

And those numbers may actually be conservative. At Orbitz Worldwide, which accounts for about a fifth of OTA bookings by Americans, 27% of hotel bookings were via mobile devices, CEO Barney Harford said at the PhoCusWright Conference.

What’s more, the mobile booking numbers for hotels don’t include smartphone owners who use “click-to-call” features that provide direct phone access to a hotelier’s call center. So for every hotel booking via smartphone, there were three or four cases where the user clicked through to a call center or booked via another distribution channel, according to PhoCusWright.

Still, PhoCusWright suggested that carriers and hoteliers have left money on the table by not creating online content quickly enough to meet the growing number of both searches and bookings from smartphone and tablet users.

As a result, newer companies like Hotel Tonight have capitalized by creating smartphone apps geared to streamline last-minute hotel reservations. The 3-year-old company had a $45 million funding round in September.

“Mobile is beginning to take off, but there is still much to be done to drive transactions,” PhoCusWright asserted in its report. “For the most part, entrenched players from airlines to hotels to OTAs have not been on the cutting edge of the devices’ capabilities.”

What effect such a surge will have on supplier pricing remains unclear, as the mobile market appears bifurcated. For example, people who book via smartphones appear to be far more likely to make a spur-of-the-moment travel decision. As a result, Harford said that the percentage of Orbitz’s hotel bookings that were same-night reservations had risen to 20% in the third quarter, with 60% of those being last-minute bookings made on mobile devices.

Meanwhile, the behavior of a prospective traveler using an iPad, Nexus or other tablet is more similar to a desktop or laptop user, as the larger screen allows for better pricing comparisons as well as more facility to coordinate a multi-supplier trip. As a result, airline and cruise line suppliers are emphasizing interface redesigns for their websites to better serve tablet users.

Either way, the buzz at the PhoCusWright Conference among both attendees and suppliers was the sense that the proliferation of mobile searches and bookings will eventually enable suppliers and distributors to get past the booking stage.

Sabre Labs’ director, Sarah Kennedy Ellis, told conference members that hoteliers will be able to use GPS-based location features on customers’ smartphones to better locate incoming guests in order to greet them and prepare their rooms accordingly.

Suppliers have another chance to improve the smartphone users’ travel experience via voice-command features, Hudson Crossing analyst Henry Harteveldt said.

“Travel companies’ abilities to make better use of travelers’ locations, to send ‘right time, right place, right price’ offers, will help, as well, especially for ancillary purchases at hotels and resorts and for in-destination services like shopping, dining and entertainment,” he said.

Additionally, more mobile booking may force suppliers and OTAs to better cooperate and share traveler information.

“One possible opportunity is to offer itinerary management that serves the entire trip experience,” PhoCusWright suggested in the report. “Some of the most convenient and fastest-growing mobile travel tools, such as mobile boarding passes and car rental unlocking, will require suppliers’ cooperation in order for OTAs to provide them.”