When it comes to distribution, mobile is growing

This article is part one of a three-part series on distribution. Look to Thursday's newsletter for the second part.

Growth has been significant in mobile bookings as the use of smartphones increases. Mobile channels, including phones and tablets (whether on apps or mobile web), have accounted for 11 percent of hotel website bookings in 2014 and will rise to 18 percent by 2016, according to Phocuswright research. Mobile represented 8 percent of hotel website bookings in 2013.

Online travel agents are generating a large number of mobile bookings, from 14 percent last year to 22 percent by next year but hotels account for the vast majority of those bookings. The majority of those OTA mobile bookings are done at the last minute, too—within 24 hours of check-in. Online agencies recorded $4 billion in mobile hotel bookings in 2013, representing 82 percent of OTAs' total mobile gross bookings. That share is expected to decrease, but by 2016, hotels will still account for more than three quarters of OTA mobile gross bookings.

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While the number of mobile bookings is rising at a blistering pace, the overall base is still small—mobile travel bookings totaled $10.4 billion in 2013, representing 3 percent of the total travel market and 8 percent of the online market, according to a Phocuswright report.

“Any number you look at, mobile is trending upwards,” said Darlene Rondeau, vice president of best practices, online merchandising for Leonardo Worldwide, a technology and online media company for the global hospitality industry. “But everyone has an opinion if mobile booking is going to be mobile web or mobile apps.”

Mobile apps offer the native experience and more flexibility to control the user experience in faster and better ways, said Douglas Quinby, vice president of research for Phocuswright. Pundits will point to data that show the vast majority of time is spent on apps but if you look closer, the apps are email, Facebook, and reading and consuming content and entertainment, he said. According to Phocuswright research, less than 1 percent of the time users spend on apps is spent on all travel apps. Users actually spend more time on mobile web, even when they have the app installed.
“Most of the industry avoids mobile web to their detriment,” Quinby said. “A rich mobile web experience is greatly needed for hotel brands.”
Brands are not moving aggressively enough in mobile bookings despite the fact that there is a lot to be gained from mobile bookings, said Steffan Berelowitz, vice president, digital platforms at Travel Tripper. “Mobile booking is a significant innovation and hotels need to work on presenting an inclusive, seamless mobile booking experience.”

While mobile bookings are steadily rising, travelers are still more comfortable with booking on a computer. “It takes some time for consumers to get comfortable making that shift,” Quinby said. “People are not necessarily comfortable booking with basically just their thumb. It’ll take some time for consumers to be at ease and to adopt mobile booking.”

One aspect for the slowness to adopt mobile bookings, Rondeau said, is the fragmented behavior of the travel sector about mobile.

“Our industry is figuring out what Netflix did long ago,” she said. “Viewers want to continue to watch the same program they started on their television last night on their tablet on the train ride into work the next day. They need to be able to pick up right where they left off. That’s something that the hotel industry hasn’t mastered yet.”

That cross-device tracking will yield a high response rate from consumers, Berelowitz said. Many consumers research for days over several devices before finally booking so it needs to be seamless across the devices. Berelowitz estimated that only 1 percent to 3 percent of hotel brands have that level of sophistication for mobile bookings.