Report Shows Travel Companies Missing Out On Mobile Opportunities
By Christine Kern, contributing writer
Travel Companies are slow to jump on the mobile bandwagon
According to a new report by the Boston Consulting Group (BCG) and Facebook, early movers can cement a significant advantage by personalizing the travel journey.
Despite being one of the first industries to be disrupted by digital commerce, travel and tourism has lagged behind, reluctant to leverage the opportunities of mobile technology, a move that has created great opportunities for early movers.
“Early movers in travel, especially those companies that design successful mobile apps, have the opportunity to establish lasting advantage," explained Jason Guggenheim, a BCG partner and coauthor of the report. “Winners will need to understand their customers' mobile-usage trends, tailor their marketing, and even adapt their operating models accordingly."
More than 95 percent of travelers today use digital resources in the course of their travel journeys, and the average customer visits or uses a combination of 19 websites and mobile applications during the course of one trip. Many travelers use digital tools to share their experiences and reactions throughout the process.
Although the average smartphone has between 25 and 40 installed apps, only a handful of travel-company apps are used regularly by consumers, and most travel companies have converted fewer than 20 percent of their PC customers to mobile-app usage. No travel app has established self as the go-to resource on more than 2 percent of smartphones.
Meanwhile, the report states that PhoCusWright expects mobile’s share of U.S. travel bookings to grow from 4 percent in 2013 to 12 percent by 2015, while eMarketer projects the value of U.S. travel purchases made on smartphones and tablets to soar from $26 billion in 2014 to $65 billion in 2018.
Therefore, the report argues, the biggest opportunity for travel companies is to cement relationships with its high-value customers by offering them truly personalized service and experience.
"The tools and capabilities available to travel companies continue to expand as digital and mobile technologies improve," Lee McCabe, global head of travel strategy at Facebook and a report coauthor, said. "This paper reveals the extraordinary role mobile technology can and will continue to play in travel and the tremendous value it can add to travel companies and travelers' experiences. Sophisticated apps, combined with rich data and targeting capabilities, allow for personalized marketing at scale. The ability to perfectly time and tailor messages on the basis of rich data is very powerful from a business standpoint -- for both brand- and direct-response-related objectives."
The report points out that mobile "gatekeepers" have the power and sophistication to vastly augment travel companies' own data-collection and analysis efforts with the vast amount of consumer information they manage. The biggest gatekeepers today are the device manufacturers and the companies behind the main mobile-operating systems and app stores, app-to-app marketers, and social networks and messaging app operators. The top three -- Facebook, Google, and Apple -- currently account for half of total app usage.
Travel companies need to have customers discover and download their apps, engaged with them at various points of the travel experience, and find the app easy and appealing to use, thus encouraging continued engagement.
This means that travel companies need to design apps with functionality that customers -- especially high-value customers -- prize and that other travel companies cannot match, market the app effectively for both ease of installation and engagement, experiment and bring out new functionality quickly to keep the app fresh and make it more useful, and make the experience more personal over time.