IN-DEPTH: Google projects that eight percent of mobile users will be booking travel from their smartphones by by next year

Published: 17 May 2011

IN-DEPTH: Google projects that eight percent of mobile users will be booking travel from their smartphones by by next year

By Ritesh Gupta

The travel industry believes the way bookings have migrated from offline to online over the years, one can expect to witness migration of a certain percentage of online travel bookings to move from desktop to mobile in the time to come.

Also, it would not come across as a surprise if many travellers who currently use offline channels go directly to using primarily mobile devices to make their bookings.

“We think these trends will favour larger companies such as ours who have the resources, expertise and ability to spread fixed costs over a large number of transactions since building and maintaining a new distribution method — call this the mobile ecosystem — is not a trivial thing to do if you want to do it in a best-in-class manner,” Glenn Fogel, Head of Worldwide Strategy and Planning & Executive Vice President - Corporate Development, Priceline.com, told EyeforTravel’s Ritesh Gupta in an interview this year.

The industry expects travellers to continue to adopt smartphones and tablets at a rapid pace this year. As mobile payment instruments continue to gather steam, there’s a huge opportunity for developers and suppliers to remove friction for travellers, and, as a result, shift a significant purchase volume from the desktop Web to mobile devices.

Transactions

At this juncture, it is being highlighted that travellers are going to feel more empowered than ever as 2011 progresses.

“For travel specifically, the usage of smartphones by leisure and business travellers is growing at an unprecedented rate,” says Rob Torres, Head of Travel, Google.

“Google reports 300K new Android activations per day and eMarketer notes that 50 percent of all new Internet connections worldwide are coming from mobile devices. The number of searches in the travel category via a mobile device continues to rise this year; the percentage of queries coming from mobile devices now makes up 19.5 percent of all hotel queries. Quite notably, people aren’t just searching with mobile; they are actually completing transactions from their devices. The number of mobile bookings in the travel space has accelerated from $20 million in 2008 to over $200 million in 2010. By 2012 we project that eight percent of mobile users will be booking travel from their smartphones,” added Torres.

“At TripAdvisor, we’ve seen tremendous growth in site usage across mobile platforms over the course of the past 12 months. We first launched our mobile website in December 2009, and in January 2010 we had more than one million unique monthly visitors accessing TripAdvisor’s travel content through their smartphones and mobile devices. Fast forward one year: in January 2011 we saw more than five million unique monthly visitors across TripAdvisor’s mobile apps and mobile website,” according to Mike Putnam, director of mobile product at TripAdvisor. “As consumers continue to upgrade to more enhanced smartphones and mobile devices, we expect them to use travel applications broadly, and that these will become more integrated, social and personal over time.”

Evolution

“Mobile is transforming our lives. We used to have a digital life that we visited online during work hours and in the evening and some weekend hours at home; the majority of our lives took place in physical world around us,” pointed out Torres.

He added, “But I suggest that now, we are increasingly living our lives online. Mobile delivers us on demand navigation, prices of the nearest hotels, and the highest rated restaurant nearby. Mobile is allowing us to maintain digital connectivity at all times. The mobile platform should be considered a connective tissue between the online and offline worlds and shouldn’t be viewed as a stand-alone platform for delivering unique content.”

Rather, the mobile platform is a way to draw together a brand experience overall, for continuity and consistency in the eyes of the consumer. According to Torres, this is certainly a huge perception shift, and it’s transforming how we live our lives - how we shop, how we communicate, and ultimately, how we interact with businesses.

Budgeting and planning

“Costs for using mobile devices are definitely an issue for many travellers though we suspect costs will come down (as technology usage costs have historically declined over time),” says Fogel. “Another cost issue though is for creators of mobile programmes (apps, mobile sites, etc.) as proliferation of different standards makes development more expensive. Hence, large companies such as ours are better positioned because small players may not be able to afford the development and maintenance of apps for multiple platforms.”

He added, “Scale in the world of technology still matters and a small or medium sized hotel might want to think carefully about spending money developing and maintaining multiple versions of its own apps in multiple languages versus simply working with an OTA that has cutting edge technology to book its customers.”

Mobile is growing incredibly fast, and every travel company should take it seriously, says Putnam.

“If a company has a desktop website, it should seriously consider a mobile site. Whether a company likes it or not, their customers are already going to their website using their phones. There are some countries around the world, especially in Asia, where mobile usage actually outnumbers desktop computer usage. Travel companies that do not invest in the mobile web may be left behind in the years to come as smartphones and tablets become even more ubiquitous,” added Putnam.

Mobile apps are a different story and Putnam says every travel company doesn’t needs to build one.

“A few key questions can help make the decision whether to build an app: How much of your business comes from repeat customers? Are your customers using smartphones? Do you have ways to promote your app to these repeat, target customers? And finally, can you build an app that provides something better than what is on your mobile website? If so, I think it's worth looking into an app. For larger travel companies focused on customer loyalty, it probably makes sense. But for a small hotel or travel service provider, I'd recommend focusing on the mobile web instead,” recommended Putnam.

Torres says it has been difficult to speculate on costs for mobile enhancements to websites.

“I can say that Google reports that 79 percent of our top advertisers have not built mobile-specific websites at this time,” shared Torres.

He believes the travel industry needs to catch up.

“We see mobile websites as a no-brainer opportunity for marketers to create a mobile-specific landing page that customers are turning to in increasingly greater numbers. In regard to budgets spent on mobile marketing, travel advertisers are lagging consumers greatly. Google’s mobile traffic is growing at about 20 percent QoQ with travel queries coming from mobile devices making up more than 15 percent of all queries. Yet most travel advertisers are allocating less than five percent of their search budgets to mobile search; so there is certainly room for growth, if capturing consumer mind and wallet share is an advertiser’s objective,” Torres said.

Overall, on how should hotels go about budgeting and planning for mobile website enhancements and mobile marketing initiatives when it comes to their 2011 budgets, Siva Vajjhala, VP & Global Head - Travel & Transportation Industry Group, MindTree says it is a catch-22 situation – “we’ve got to do both”. He added, “It depends where one is on the continuum; my personal order of priority would be to create presence, aid travel planning, market mobile platform, transact and expand offerings. Common business sense says go for the ‘quick wins’ first.”

Online Marketing Strategies for Travel 2011 Conference

Rob Torres, Head of Travel, Google is scheduled to speak at the forthcoming Online Marketing Strategies for Travel 2011 Conference, to be held in Miami (June 7-8). For more information, click here

Or Contact:
Gina Baillie
VP, Marketing,
EyeforTravel
E: gina@eyefortravel.com
T: UK +44 (0)207 375 7197