What’s holding back your mobile bookings?
22 JULY 2015 7:46 AM
While mobile’s share of bookings is on the rise, hoteliers have some work to do to enhance the user experience.
GLOBAL REPORT—As mobile device adoption continues to skyrocket, challenges remain in providing a seamless hotel booking process via smartphone and tablet, sources said.
“It’s taken some time for the industry to provide really great, comfortable experiences when (consumers) are shopping and booking on mobile,” said Douglas Quinby, VP of research for Phocuswright. “Likewise, travelers are taking their time getting comfortable booking on mobile.”
In 2016, the research company expects mobile’s share of total bookings to reach 16%, which is double the share of 8% in 2014.
“Mobile is generating a little bit of additive through spontaneity (read: HotelTonight),” Quinby said. “What we’ve seen is the growth has been very fast. It’s going to actually accelerate when consumers in the United States really get comfortable making more purchases over their phone.”
Voice (e.g. calls to the front desk or central reservations) is still the leading booking channel, although traffic has been declining steadily since 2005, he said. Digital channels, on the other hand, are growing fast.
As it stands, the majority of mobile bookings are happening on OTAs, Quinby said. Why? They’ve innovated at a faster pace than hoteliers have.
He detailed four things holding hoteliers back when it comes to getting their share of mobile bookings:
1. A clunky user experience
Figuring out how to address consumer needs during the shopping and booking process within a screen that is one-sixth the size of a computer screen poses challenges, Quinby said.
“A lot of travelers are doing casual browsing whether they’re at home or watching TV or in a meeting at work,” he said. “They do a lot of pre-planning with their devices, but when it comes to putting the money down, they migrate.”
CitizenM has been a mobile-first company since its inception, said the company’s commercial director Lennert De Jong.
“Because we only have hotels in metro cities, we’ve operated an online-only strategy since 2008. We don’t do voice; we don’t do airline crew, no tour operators,” De Jong explained. The owner/operator has seven hotels open and seven under construction with plans to get to double digits in the next couple of years, he said.
About 40% of the company’s website traffic comes through mobile with 20% of those travelers finishing their reservation on their smartphone or tablet. Once CitizenM switched to responsive design a little over a year ago, mobile bookings doubled.
“We terminated some fields that weren’t beneficial to the guest but to us,” he added, which helped improve the user experience.
InterContinental Hotels Group has focused on the user experience by creating an app that is a “one-stop-shop” for guests whether they are researching travel, making a booking, managing their stay or their rewards program, said Michael Menis, senior VP, digital and voice channels.
“We’re consistently adding new functionality to it, including geo-fencing, which allows our hotels to send relevant messages to guests when they are in our near a hotel,” Menis said via email.
On average, 21% of IHG’s direct online bookings come from mobile devices, with 15% coming from mobile and 6% coming from tablet. Seventy-nine percent of online bookings come via desktop, according to Menis.
Additionally, he said the company’s app has helped to grow its revenue. IHG has seen an increase in mobile revenue from $2.5 million five years ago to just under $1 billion in 2014. Menis said bookings made through mobile devices generate more than $100 million per month for IHG.
However, he said it’s important not to discount the importance of desktop bookings. In 2014, IHG generated $4 billion from Web revenues.
2. Tedious payment processing
Payment on mobile devices is this “very unsexy underbelly,” Quinby said.
“When it comes to entering all your payment details, doing it on the phone is still a bit onerous,” he added. Things such as Apple Pay and Touch ID could help.
At Outrigger Hotels and Resorts, roughly 20% of the company’s total bookings are done via mobile device, said Dan Wacksman, senior VP of global distribution for Outrigger Enterprises Group.
“We believe the traffic and booking trend will continue to grow on mobile as people become more comfortable transacting on these devices,” Wacksman said via email.
But this won’t happen unless the website is easy to use, he added. (Think one-click booking without the need to manually enter information.)
Honolulu-based Outrigger Enterprises Group operates and/or has under development 45 properties with approximately 11,000 rooms located in Hawaii; Australia; Guam; Fiji; Thailand; Mauritius; Maldives; Vietnam; and Hainan Island, China.
3. Not easy to navigate
Conversion rates are a pain point for hoteliers, particularly because some of the hotel companies’ mobile websites aren’t easily navigable, sources said.
CitizenM (which stands for “Citizen Mobile”) struggles with conversion, De Jong said. He attributes it to cross-device user engagement.
For example, travelers often start the travel planning process on OTAs, metasearch sites or TripAdvisor via desktop. If they jump to brand.com on their mobile device after dwindling down choices, and the hotel company doesn’t have a particularly navigable mobile site, turning lookers into bookers can be a challenge.
“If we work on (ease of use), people will use less expensive channels (such as mobile) and re-book, instead of shopping around because they’re unsure of the price,” De Jong said.
4. Lack of consumer comfort
A lot of consumers in the U.S. are still booking with travel agents, Quinby said, especially baby boomers.
“Boomers are a big part of our traveler population. Older boomers are less technologically savvy and more likely to use traditional methods,” he added.
In China, it’s a completely different story.
“You’ve got literally hundreds of millions of travelers who are much younger,” Quinby explained. “For a lot of these people, their smartphone is their primary means of access to the Internet.”
Some of the OTAs in China recognize the opportunity and are “very aggressively discounting through their mobile channels,” he added.
“We think China is going to be the first mobile majority,” Quinby said.
During Homeinns Company Limited’s first-quarter earnings call, CEO David Sun said 26% of the company’s total bookings came through its mobile app, which was created in October 2013 and has been downloaded 3.3 million times as of 31 March. (Homeinns had 2,661 hotels in operation in 338 cities in China at that time.)
An additional 3% of the company’s total room bookings came from WeChat, a free messaging and calling app.
“We have enhanced and increased the mobile app and WeChat functionally. And we will continue our efforts to grow the social media and mobile apps, to meet the increasing customer demand for the online option and improve the customer's experience,” Sun said.