REPORT Susan Jennings, [email protected]
App Gives EXPE Lead, Positions it for Growth in OTA Mobile Market
Companies: EXPE, OWW, PCLN, TRIP March 28, 2014
Research Question:
Which OTA company leads in mobile conversion rates, and which is most popular with consumers?
Summary of Findings Silo Summaries . Expedia Inc. (EXPE) was identified most often as leading the 1) Online Travel Agencies way in mobile app popularity and cited as well-positioned for Three sources believe Expedia likely will experience more growth in the mobile platform. Two sources expect more growth, according to OTA, hotel and travel agent sources. industry consolidation, two sources view Expedia as the . Three OTA sources view the risk of cannibalization as low, while mobile market leader and one sees TripAdvisor as the only one said that there has been some cannibalization already market leader. Three sources view the risk of cannibalization as low, while one said there has been and future cannibalization will be incremental. some cannibalization already and future cannibalization . Two OTA sources, one hotel source, and one travel agent report will be incremental. Two sources report mobile bookings bookings via mobile devices at around 20% to 30% of overall comprise about 25% of their bookings.
bookings. Growth rates for mobile bookings will grow, but at a 2) Hotels slower rate. All sources view mobile bookings as a growing trend. Two . Hotel Tonight Inc. is gaining popularity, according to two hotel sources knowledgeable of their own mobile versus online sources and one industry specialist. One hotel source said bookings see some cannibalization occurring. One source said mobile bookings represent 20% of the bookings. Google Inc. (GOOG) has the potential to be a major threat to Expedia leads in mobile growth, according to three OTAs. sources. Three sources reported that Expedia brings in . One hotel source said Expedia offers a slight discount for ads the largest share of their bookings, and six of seven named Expedia the clear leader among online travel that are on its app. agencies. . A survey of 273 U.S. consumers revealed Kayak as the most frequently visited and highest-rated travel app for a mobile 3) Travel Agents device. Expedia was third in both categories behind airline- These four sources were split on whether mobile bookings have cannibalized online bookings. One source specific apps. said Expedia has the highest mobile conversion rates, while another noted that conversion rates for mobile apps likely are single digit percentages only. Two sources view Travelocity as losing market share, while one source sees Expedia gaining. Expedia most Cannibalization Mobile likely to see Risk Bookings Trend 4) Industry Specialists mobile growth One source sees no cannibalization of online bookings by mobile users, while our second source does see some OTAs cannibalization. Both sources expect growth in mobile bookings. One source reports three of 10 mobile searches result in bookings, while the remainder are Hotels voice bookings. One source views direct booking with hotels the major competition online travel agencies face, Travel Agents while our second source sees Expedia and Priceline growing in popularity while Travelocity declines. Hotel Tonight also is gaining market share. Industry N/A Specialists 5) Online Consumer Survey In a survey of 273 U.S. consumers, Kayak was the No. 1 travel app. Weak app offerings from airlines and hotels opened the gates for Expedia, TripAdvisor and Kayak to gain market share in an ecosystem where consumers use an average of 3.5 apps.
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Background Online travel booking continues to be one of the largest and fastest growing sectors of the travel industry, with revenues expected hit $54 billion this summer. Direct and indirect bookings via online travel agencies, along with customer retention, have increased as more individuals use the internet to access competitive pricing. Large industry players also have moved to increase online market penetration through acquisitions and by expanding their service platforms, as evidenced by Priceline.com Inc. (PCLN) shares hitting all-time highs on the back of its Kayak.com acquisition and expansion into metasearch. Priceline rival Expedia also made strategic acquisitions in addition to its pursuit of strategic marketing partnerships, most recently with Travelocity.com LP.
Mobile technology is beginning to significantly disrupt the online travel bookings process. Travelers’ increasing use of mobile devices for bookings has prompted established online travel companies to invest heavily in mobile infrastructure. Orbitz Worldwide Inc. (OWW) recently disclosed that 30% of its bookings are conducted through mobile devices and it expects that number to increase to 50% in the coming years, and Priceline recently announced the launch of its version 3.0 Android mobile app. This trend is reflective of the broader industry, and one that raises important questions about the speed at which large players in the space can respond to and exploit this development.
Online travel agencies also are pursuing partnerships with brick and mortar travel agents to leverage their brand name, generate higher sales volumes, and more effectively compete in the industry. Brick and mortar travel agents benefit from this “franchise” platform by tapping into the buying power of large online travel agencies and capitalizing on brand recognition. One travel agent specializing in cruises and vacations took advantage of an opportunity to become affiliated with Expedia, thus allowing his company to remain afloat and turn a profit as a result.
Current Research In this next study, Blueshift Research assessed which mobile OTA leads the way in mobile conversion rates, and which mobile OTA is most popular with consumers. We employed our pattern mining approach to establish and interview sources in six independent silos: 1) Online Travel Agencies (4) 2) Hotels (7) 3) Travel Agents (4) 4) Industry Specialists (2) 5) Online Consumer Survey (273) 6) Secondary sources (5)
We interviewed 17 primary sources, including 12 repeat sources, as well as 273 consumers via an online survey and identified five of the most relevant secondary sources focused on Expedia.com becoming more mobile friendly and positive signs for Hotel Tonight’s app.
Next Steps We will continue to track consumer interest in using mobile devices to make travel bookings. We will monitor whether consumers still prefer Kayak, as indicated by our online survey, or if Expedia or another brand is gaining ground in popularity and use.
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Silos
1) Online Travel Agencies Three sources view the risk of cannibalization as low, while one said that there has been some cannibalization already and future cannibalization will be incremental at best. Two sources report mobile bookings comprise about 25% of their bookings. Three sources believe Expedia likely will experience more growth in the mobile platform. One source says TripAdvisor Inc. (TRIP) has peaked, while another says TripAdivsor has already won growth in the mobile market. Travelocity is faltering in mobile according to one source, while another sees it investing more in mobile. Two sources expect Priceline to grow its mobile platform, but one sees Priceline faltering on this front. Conversion rates remain low, but one source said TripAdvisor leads the way. Two sources expect more industry consolidation, two sources view Expedia as the mobile market leader and one sees TripAdvisor as the market leader. Orbitz and Travelocity are faltering in mobile, according to one source.
KEY SILO FINDINGS Cannibalization - 3 sources view cannibalization risks as low. - 1 says there already has been some cannibalization, but further cannibalization will be incremental. - 2 sources report mobile bookings to make up about 25% of OTA’s booking. Growth - 3 sources believe Expedia is mostly like to see the most growth in mobile. - 1 source said TripAdvisor has peaked, while another said TripAdvisor has already won growth into mobile. - Travelocity is faltering in mobile for 1 source and investing more in mobile according to another source. - Priceline is held back according to one source, while 2 other expect Priceline to see growth in mobile. Conversion Rates - Mobile conversion rates remain low. - 1 source says TripAdvisor leads the way on conversion rates. Competition - 2 sources expect more industry consolidation. - 2 sources view Expedia as the market leader. - 1 sees TripAdvisor as the leader. - Orbitz and Travelocity faltering according to 1.
1. Marketing executive, tier 1 air-focused OTA; repeat source Mobile bookings are not cannibalizing online travel agencies’ traditional web business, but mobile use fragments the audience focus. Online travel agencies that are strong on mobile platforms are more open to long-term growth, but at Expedia is getting the most this point, mobile is far from being a kingmaker. Priceline and Travelocity are ‘cannibalization’ in the sense of lagging behind Expedia, which leads the way. converting their existing Cannibalization audience to the mobile channel. I . “Mobile is not cannibalizing anyone’s business, but it is further segmenting think that’s a win for them. They the travel market between do-it-yourself technology-savvy younger travelers . . . and the traditional online traveler. At worst what you are seeing is share want to be younger and leverage shifts within those segments as OTAs jockey for position in one segment or their position across more another. But on the whole everyone has mobile and everyone has a contexts where someone might website. Very little pure cannibalization, [a 2 on a 5 point scale] at worst.” be looking for hotel rooms in . “Mobile has definitely cut into the desktop side of the business, but it’s all particular. A lot of last-minute the same revenue pool so I wouldn’t really cast it in those terms. Every room or flight anyone books across all channels is a win for the vendor. booking is mobile. Mobile is not even really more efficient in terms of cost than desktop. It’s Marketing Executive Tier 1 Air-focused OTA
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not like the jump from traditional call centers to web ordering. It’s web ordering wherever the customer happens to be.” . “Priceline skews oldest and seems least impacted by mobile because they don’t need to be. They have Kayak if they want any younger presence at all. On the other hand, keeping their users in the dark requires expensive ongoing marketing. Early adaptors by definition go where the innovation is on their own.” . “Expedia is getting the most ‘cannibalization’ in the sense of converting their existing audience to the mobile channel. I think that’s a win for them. They want to be younger and leverage their position across more contexts where someone might be looking for hotel rooms in particular. A lot of last-minute booking is mobile because you’re in an emergency situation.” . “Either way, mobile is now barely 25% of the business. Growth may be slowing” Growth Mobile is now barely 25% of . “Sure, Priceline can accelerate growth in their mobile business by offering the business. Growth may be incentives for people to get off the laptop. I don’t think they want to do that slowing. at all. Doing that would basically push people off Kayak—cannibalizing that service—or worse, push them aggressively off Priceline.com onto the Kayak Marketing Executive app, where competing services are listed side by side. A loss either way.” Tier 1 Air-focused OTA . “Expedia can accelerate growth by doing what they’re doing. It’s a natural process. They won’t push it because they have no real interest in mobile over desktop. They’re channel neutral but open to the mobile opportunity in the long term.” . “Travelocity seems to be faltering and TripAdvisor might have peaked.” Conversion Rates . “Priceline seems to be softening a little. Expedia has differentiated nicely. As they go, app downloads and usage go, and then flight conversion in particular will follow.” Competition . “I don’t see a winner take all in the next few years. What I see is long-term consolidation as the list of conventional vendors whittles down to two or three. We are almost there but there are still enough pockets of market share to make it a horse race.” . “After we reach that duopoly situation, the market is relatively stable and then only a serious disruptor can change things up.” . “Expedia is probably the dominant player at this point but its share is by no means bigger than everyone else put together. We’re still fragmented. It’s not an industry of thousands of key players but there are easily nine or ten sites that collectively counterbalance each other.” . “I think there are mobile people and desktop people. Mobile people shop on the spot and in advance using their phone. Desktop people shop in advance using their computer and in an emergency will open the app. Those dynamics favor the app as more flexible, and ultimately desktop will die out. For right now, though, the world is maybe 25% mobile people and 75% desktop people.”
2. Web marketing specialist, top-tier European hotel site; repeat source Cannibalization from mobile bookings is less a threat than overly high expectations that the new channel will generate new efficiencies or enriched margins. The online travel industry is divided sharply among those who consider mobile placement an advantage and those who are waiting for the channel to actually deliver results. Efforts to charge a premium or even desktop-equivalent pricing for mobile will backfire. Travelocity and Expedia have the least realistic expectations for mobile in the near term. Hoteliers are not asking whether travelers are booking via desktop or mobile. Airlines likely will balk at premium pricing after a few quarters of poor comparable performance. Cannibalization . “I wouldn’t say mobile is cannibalizing desktop, but it is supplanting it over the long term as web traffic migrates. Probably a 1 score here. The real danger is that people are hoping that mobile will be a revolution like the original online ticket agency model. Anyone betting on that revolution is going to be severely disappointed.” . “Mobile is not disintermediating anyone who wasn’t already taken out of the industry food chain by desktop OTA. Travelers who booked online will book on desktop or mobile. Travelers who preferred a value-added experience will
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still work with personal agents. Travelers who abandon their desktop will shift to mobile. Travelers are not abandoning their phones for desktop. In all cases, the dynamics and the profit margins do not change.” . “Some advertisers understand this and do not care whether the traveler books on a phone, a tablet or a desktop computer. It’s like asking whether bookings happen on a Samsung [Electronics Co. Ltd.] or an Apple [Inc./AAPL] phone, and if so, which model phone it is. It just doesn’t matter to someone trying to fill hotel rooms. The content is identical across platforms and the end result is the same. The technology in the middle is what the advertiser pays the OTA to provide.” Growth . “I think Expedia and Travelocity have the most invested in mobile becoming a second-wave transformational force. They were early in mobile and the apps revitalized their businesses to some respect. Now they are more aggressive about using mobile metrics—downloads, active users—to evaluate their growth as a business. They’re happy to cannibalize their desktop in order to feed mobile, in other words.” . “Priceline has held back across its family of brands. I think Priceline understands best that mobile is just another type of screen that moves with the audience even if there’s no fixed-line computer around. The appeal of Expedia and Travelocity are mobile here is to follow an existing audience everywhere. It doesn’t create a grabbing for mobile faster and new audience or a new business proposition.” giving up momentum in . “The funny thing is that Priceline is growing into mobile about as fast as desktop to do it. Expedia or Travelocity. Obviously as overall page views shift toward mobile screens, everyone is seeing mobile grow as a percentage of overall views. Web Marketing Specialist But Expedia and Travelocity are grabbing for mobile faster and giving up Top-tier European Hotel Site momentum in desktop to do it. That strikes me as wasted effort.” . “I have heard of Travelocity trying to charge advertisers a bit more for mobile because it had such a commanding early position on that side of the business when it came to early downloads of the app. That is going to come back against them if they become overly comfortable with that enhanced pricing or if the advertisers eventually balk at the lack of enhanced results. That may happen as quickly as summer, when it becomes clear that paying extra per click into mobile is not buying them anything.” Conversion Rates . “Conversions are not high on mobile. It’s the old question of whether you’re monetizing a new platform by adding value or just novelty for its own sake. Priceline wants to see results and is happy to coast. Travelocity, and to some extent Expedia, is betting on novelty. Nobody really has superior results on mobile.” . “Hotels don’t care, which means they aren’t going to pay extra for what is to them a cosmetic distinction. Airlines covet conversion so they’re more likely to go straight to TripAdvisor anyway once it becomes clear that the novelty of site-specific mobile is an empty promise.” . “Don’t get me wrong, mobile is great. But it is not better than desktop in terms of routing motivated shoppers to the trips they will buy.” Competition . “We could continue on in the current industry landscape for years, occasionally losing a marginal player to [mergers and acquisitions] or internal weakness that motivates them to accept an [acquisition] offer. It’s a waiting game now, that ultimately belongs to whoever can advertise the most over time to drive travelers across their inventory without bankrupting themselves.” . “The deepest pockets will win but the smaller companies with innovative technology or a relatively strategic position can actually get the best outcomes. Orbitz has strong technology and relationships with the airlines. It’s an attractive merger candidate as long as it can deliver a decent share of market when it’s time to review offers. Other second-tier operators may be in a better or worse position, relatively.” . “The mere fact that we are talking about second-tier operators shows how the industry is slowly segmenting on the way to an end game. Five years ago, we were talking about a top 10. Now there are maybe six key players and two of them, Priceline and Expedia, keep absorbing the others one by one in order to aggregate share.”
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3. Marketing executive, top tier air-focused online travel agency; repeat source Mobile remains a race to scale, and as such hospitality and travel providers are less concerned about raw conversion rates than expanding active user numbers. Inventory is only lightly discounted for mobile, thus reducing cannibalization risk. Hospitality remains a less commoditized category than flight, and therefore hoteliers are reluctant to embrace the smaller screen of phone applications in particular. Airfare-oriented sites have nothing to lose—and a lot to gain—from emphasizing mobile channels, which argues for Priceline and Expedia as winners in this space. Orbitz and Travelocity are falling behind. Cannibalization . “Mobile is augmenting traditional listings, not really cannibalizing them. This is because the airlines in particular want to make sure they’re well represented on mobile simply to be where the travelers are. The hotels are not so much in that place.” . “Because the airlines are so eager to be on mobile, the OTAs don’t have to give them much of a break in order to get them on the platform. It really comes down to a two-channels-for-one deal: bigger audience, more attractive audience in some ways on mobile, but lower ROI because the OTA apps are segmented by vendor. Minimal price breaks mean this business is not cannibalizing the existing channels. The overall spend and the overall revenue remains mostly unchanged, so I’d have to say cannibalization is, at worst, a 2.” . “You can’t compare all fares across the board as easily if you have to check the Priceline app and the Expedia app and the Travelocity app. Ironically enough, the apps undo a lot of the aggregation we have seen in the post-Kayak era. So, that inventory on the apps is great, but it doesn’t get the kind of click-through that it gets on TripAdvisor, for example. You have to promote your inventory on all the individual apps if you want to get them out into that world. It isn’t nearly as efficient on a per-click basis, but it’s strategically desirable. If you are growing your active user stats, the airlines want to be there.” Growth . “Mobile is the future, but how does it work? Comparing alerts from all the Conversion on mobile is not big sites is a pain. TripAdvisor shines there as the aggregator and will drive terrific, but this is essential to faster consolidation in the space. If you’re not on the TripAdvisor app and don’t have a very loyal audience checking your app preferentially, where are exposing your flights to the non- you? You’re vulnerable to a very fickle audience. What this means is that non-TripAdvisor audience. It’s a the big get bigger because they have the audience. The smaller go away.” little beside the point right now . “Priceline and Expedia can grow. Most of the others are growing off a low while the race to mobile base but will hit a wall eventually, maybe in the next year or so.” adoption is going on. In a year . “Hotels aren’t as interested in mobile, and so hotel-oriented OTAs are relatively aloof from all these trends. You can’t show off a luxury room on a or so the space will be 4-inch phone screen and really have it indicate ‘luxury,’ so these advertisers saturated and efficiency are either very value- and utility-focused, which is to say low margins and metrics will kick in. cheap budgets, or not as willing to shift to mobile. They’re more interested with better placement on desktop and on TripAdvisor.” Marketing Executive, Top Tier Air- Conversion Rates focused Online Travel Agency . “Conversion on mobile is not terrific, but this is essential to exposing your flights to the non-TripAdvisor audience. It’s a little beside the point right now while the race to mobile adoption is going on. In a year or so the space will be saturated and efficiency metrics will kick in.” . “Smaller sites are handing out the biggest incentives to the airlines to get them onto their apps and try to build critical mass. They are the ones seeing the biggest ‘cannibal’ trends: everyone below Expedia and Priceline, really. Orbitz and Travelocity in the bulge bracket are especially vulnerable. They are too small to be self-sustaining or prestigious in themselves, but big enough to have a lot to lose from falling back, so they discount and give away the store. For them, cannibalization may be edging up toward 3 whereas the big sites can enjoy something more like a 1. Competition . “Sooner or later it will be a winner take all scenario or at least a small and stable group of brands, kind of like what we have now in cellular telephones where a few mostly utility-oriented giants trade customers back and forth but otherwise own the market. This will take years to play out.” . “If I had to pick a near-term winner it would be Priceline or Expedia. But that’s kind of obvious. The real game is in who can stay in the fight for incremental share the longest. We will see the niche players get acquired or driven out
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of the business first. That will probably drag on for the next year or two. After that, no more niche gains to be had on desktop means every possible advantage comes from shifts in mobile strategy. Start-up mobile-only OTAs will hold the keys.” . “Customers are not checking their apps and then loading the desktop to buy. They’re either buying straight from the app or staying on the desktop. Maybe they’re even doing their initial research on the desktop and buying from the app when they’re out of the house or away from the desktop, whenever it’s convenient.”
4. CEO, European hotel booking agency; repeat source The speed of migration to mobile booking has peaked, and any disruption has played out already. TripAdvisor won. Twenty-five to 30% of bookings are completed online, and future growth will be incremental. Conventional online travel agencies are the losers in any shift toward mobile booking, and efforts to compete aggressively in that channel will only sap their resources. Cannibalization . “Cannibalization already happened. Mobile has emerged from nothing two years ago to 25% to 30% of the online booking audience. That has been a huge growth curve but the fact that it hasn’t been disruptive so far should tell you that attracting the remaining 70% to 75% of the online market is not going to represent a huge qualitative shift in itself.” . “From here, you’ll have incremental shifts that favor [those companies that] thrive on mobile and sap the strength of [companies that] can really only survive in a desktop search-driven environment. Mobile-heavy [companies] Cannibalization already will cannibalize desktop-only [companies].” happened. Mobile has emerged . “There will always be a place for desktop travel booking as long as there are from nothing two years ago to desktops, but it is becoming less prominent as the default channel around the world.” 25% to 30% of the online Growth booking audience. … From . “TripAdvisor may not grow much more into mobile, but it doesn’t need to. here, you’ll have incremental TripAdvisor rules the mobile travel recommendation space because it’s a shifts that favor [those multi-vendor app—you can actually get a sense of everything out there without having to run the Expedia app and the Priceline app and so on—and companies that] thrive on that war is already over. It is unlikely for any of the established competitors mobile and sap the strength of to force an upset there.” [companies that] can really only . “The initial growth of TripAdvisor is over, but the amount of market left to survive in a desktop search- capture is still vast. [A company that] can build the content and the driven environment. audience can compete to help convert that remaining market. I am thinking of Google in particular, if they ever get an integrated travel app together. CEO, European Hotel Booking Agency Given their track record, however, we’re probably at least two years out there because I suspect they’ll want to run it from Google Maps.” . “Growth on desktop is obviously flattening out now that mobile is taking whatever organic new customers they would ordinarily have gotten. Here in Europe, mobile is the dominant ecommerce platform, so OTAs that were looking here for traditional desktop growth are going to be disappointed.” . “OTAs that try to aggressively shift toward mobile are going to waste their resources. There is no loyalty forcing someone to use their app and as far as I know very little way to run a trip across all the apps to get the best fare. People have been trained to search all the sites for the best fare. They do not stick with Priceline, for example, because it had the best fare last time, so why load the Priceline app this time and scan their fares only?” . “All the advertising Priceline and Expedia do is to drive people to the website, to encourage travelers to at least make that site part of their due diligence process. And because a trip is usually a unique event, it’s hard to set preferences and use the app for what it does best, which is push alerts when something in the market changes and new fares appear or disappear. Travelers have been trained to know that fares disappear as flights fill up and rooms disappear as hotels get full, so they jump on the best deal they see when they’re ready to buy. They don’t monitor the market waiting for value.”
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. “Priceline and Expedia are perfectly fine businesses, but they either need to innovate their business models or else embrace the TripAdvisor approach and pool their inventory on one app.” Conversion Rates . “Conversion on TripAdvisor is fantastic. The ads are getting more targeted and keep feeding only the most motivated buyers to … listings.” . “The other apps, I’m not sure how well they do. It seems that it would be a lot of back-and-forth as people open one app, close it, open another, write down the best deals across all the apps and ultimately reopen the app that had the best one overall. I don’t know how their systems account for these multiple visits built into one transaction.” Competition . “There is a lot of room for the traditional OTAs to drift as mobile takes the upper hand. There is also a lot of room for the OTAs to innovate and make better apps that address the limitations of the mobile computing environment and also the opportunities presented by following users wherever they go.” . “Do the OTAs evolve into discount trip providers and warehouse cheap deals right before they expire, for emergency cases? I can see that happening. Then you would benefit from a kind of alert-driven product and the companies could re-differentiate themselves to actually build loyalty.” . “In the meantime, TripAdvisor has become the hub and the OTAs are increasingly paying for the privilege of remaining at the table. I don’t think that’s a sustainable position. It looks defensive.”
2) Hotels All sources view mobile bookings as a growing trend. Two sources knowledgeable of their own mobile versus online bookings see some cannibalization occurring. One source says mobile bookings represent 20% of the bookings. Expedia leads in mobile growth, according to three sources. Hotel Tonight is gaining popularity according to two sources. Expedia is the only online travel agency that informs hotels whether a booking was made via mobile or online. Three sources reported that Expedia brings in the largest share of their bookings, and six of seven named Expedia the clear leader among online travel agencies. One source reported that Expedia has offered a slight discount for ads that direct users to its app. One source says Google has the potential to pose a major threat to online travel agencies.
KEY SILO FINDINGS Cannibalization - 2 sources who commented see some cannibalization of websites by mobile bookings. Growth - Expedia is in the lead for mobile growth according to 3 sources. - Hotel Tonight is gaining popularity rapidly, according to 2 sources. - 1 source said mobile bookings represent 20% of its bookings. - All sources see mobile bookings as a growing trend. Conversion Rates - Only Expedia shows hotels if bookings were made via mobile or online. - 3 sources report Expedia bringing in the most bookings. - 1 source says Expedia is currently giving a slight discount for ads that are on the app. Competition - 6 of 7 sources view Expedia the OTA leader. - 1 source says Google poses a potential threat to OTAs. - 1 source says Expedia’s reservations system can directly tie into that of hotels.
1. Reservations manager at a Las Vegas hotel and casino Expedia is the name most consumers seem to know and trust, but since all online travel agencies have mobile apps, it holds no advantage in that respect. This hotel prefers Expedia because the technology ties into their reservation system, resulting in slightly better ease when working with these bookings than the others. Expedia is growing its share of the
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online travel agency market through the acquisition of other popular brands. This hotel does not track hits vs. bookings, and has no information on conversion rates. Furthermore, there is no distinction between bookings from a mobile app or an online website. Cannibalization . “We do not track between mobile app and desktop reservations. We have no reason to differentiate between the two. It comes in as a booking from whichever company, and that is all that matters to us.” Growth . “Mobile apps increase exposure for all the OTAs. Now a consumer can book from pretty much anywhere. But ultimately it does not give any OTA an advantage because they all have them.” . “Expedia is probably growing most, but it has more to do with their acquisitions than with any consumer preference.” . “It seems like maybe Orbitz was down a little for a while, but they have regained that ground recently. I would not say anyone in particular is losing any share. It is a broadly spread market with a lot of players.” Conversion Rates . “We do not see conversion rates. We do not track hits at all, only bookings.” . “For the consumer, it is all about brand awareness. Everyone has an app now, so it there is no advantage to any one company in that respect.” Competition . “Expedia seems to own more brands that consumers know and trust, so they will likely be the leader in a year.” . “Expedia has a technology advantage for this company. Their reservation system can tie in directly to ours so there is less re-entry or tracking to confirm their bookings. But really it is a minimal advantage and the consumer would never be aware of it.”
2. Web marketing director at a Miami hotel; repeat source Expedia has the largest share of the bookings among online travel agencies, especially following its acquisition of the popular Hotels.com LP. Orbitz, Priceline and Travelocity may have lost some share, but this measure fluctuates and is difficult to discern in the short term. Brand recognition is key to the consumer. All of the online travel agencies have mobile apps, and consumers increasingly are using apps in place of traditional online bookings. Mobile apps may account for 20% of all online travel bookings currently, but only Expedia’s are traceable because the source offers a different discount for these bookings. Otherwise, all online travel bookings, whether mobile or online, look the same. Cannibalization . “Bookings are all the same. We do not see a differentiation between mobile bookings and online bookings.” Hotel Tonight is growing rapidly. Growth It has been around for a couple . “Mobile apps help increase exposure for all of them by ease of access, but it is through all the brands. All the competitors have apps so it plays no part in of years but it is definitely their growth potential.” getting more relevant. . “Hotel Tonight is growing rapidly. It has been around for a couple of years but it is definitely getting more relevant, especially for filling rooms last Web Marketing Director, Miami Hotel minute. It offers something a little different because it only shows hotels with rooms available tonight. We offer them a 20% discount on any last minute rooms.” . “Trends are changing, and bookings from mobile apps is definitely a growing trend. I expect probably 20% of our OTA bookings are from mobile devices now. But it is a growing trend for sure.” Conversion Rates . “Only Expedia shows if it is a mobile booking vs. an online booking, and that is just because we offer them a mobile discount. So we know when that discount comes through on a booking that it is a mobile booking.” . “Most of them, Travelocity for instance, does not show if it is a mobile booking or an online booking. It looks the same to us.” Competition . “Maybe Orbitz, Priceline and Travelocity are losing some to Expedia, but they all fluctuate over time. It is hard to see any of them really gaining or losing any significant share for the long term.”
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. “Expedia, since they picked up Hotels.com, has the largest share. I think they are probably a favorite among consumers too.” . “We love them all [OTAs], but Expedia is the leader.” . “Brand recognition is key. Expedia has the name people know and trust.”
3. Reservation Manager at a Boston Hotel Among several online travel agencies, Expedia is by far the biggest, but their growth may have more to do with acquiring other brands than growing share among consumers. Mobile apps are a growth opportunity for all the players because it increases access for the consumer, but this source does not see any one online travel agency benefitting more than any other. No distinction is made between mobile app bookings and online bookings. Hotel Tonight was noted as a growing online travel agency, however this source could not distinguish any other player losing share as a result. Cannibalization . “I do not see any difference between online bookings and mobile app bookings. I am sure bookings from mobile apps are a growing trend, but I We are doing more with Hotel cannot differentiate for you.” Growth Tonight because their name is . “Mobile apps are important and a growing trend. It is important to all of the growing some, but they are not OTAs to be more accessible, and they all have the potential to grow exposure really taking share from anyone with apps. I would include Priceline and Expedia and all the others too.” that I can distinguish. . “I really am not aware of any shifting share. We are doing more with Hotel Tonight because their name is growing some, but they are not really taking Reservation Manager, Boston Hotel share from anyone that I can distinguish.” Conversion Rates . “Expedia is the top OTA for bookings for us, but we do not distinguish between a mobile booking or an online booking. They look the same to me.” Competition . “A bunch of OTAs are out there, but Expedia is by far the biggest. Of course they are acquiring their competition so that may be a bigger piece of their growth than really gaining consumer share.” . “I do not see anything shifting much over the next year in terms of a market dominator. I expect all the competitors will still be in the game.” . “I do not really have a favorite OTA. They are all about the same to work with.”
4. Assistant reservation manager at a Galveston resort; repeat source Expedia is the largest online travel agency, but they also own several other brands. Reservations made online and from mobile apps look the same, so there is no differentiation between the two for this source. Mobile apps are increasing exposure and more guests are using them, but since all the online travel agencies have them, this source does not view mobile apps offering any particular online travel agency an advantage. This location receives reservation bookings from all the online travel agencies, and has no preference for working with a particular agency over any other. This source does not track the volume of reservations from each online travel agency. Cannibalization . “There is no difference in the reservation from a mobile app or online. It looks the same to us.” Growth . “All the OTAs have mobile apps now. I am sure it helps increase their exposure. I really am not aware of a consumer preference between a mobile app or online booking. The reservations all look the same to me. It is just another medium to make a connection.” . “There is definitely an increasing trend for consumers to use mobile apps now, but since all the OTAs have them, I do not see any advantage to any one competitor.” Conversion Rates
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. “Expedia probably brings us the most reservations, just because they own so many of the OTA brands. We really see them all, and I am not aware that we track the overall comparison.” Competition . “Expedia is the biggest and owns several brands, but there are a lot of others out there too, and we really see them all.” . “We do not have a favorite for sure. They are really all very similar. I would not say anyone is easier or more difficult to work with.”
5. Revenue manager at a San Antonio resort and spa Online travel bookings are parceled out among numerous companies, and continually vary in volume. This source does not track a comparison between online travel agencies. Online and mobile bookings look the same, but because mobile apps are growing in popularity, all the online travel agencies have some potential to benefit, but no market shift is evident at this time. Cannibalization . “I am not aware of any difference in the bookings.” Growth . “Yes, Expedia, Priceline, all of them can increase their growth with mobile apps. They all have the same opportunity. I am not seeing any shifting market share based on it at this time.” . “Our volume of bookings continually varies and comes from a wide variety of sources including many OTAs. We appear on numerous OTA sites and none stands out as either gaining or losing share for now.” Conversion Rates . “I only see bookings. I cannot tell what comes in online or from a mobile app.” Competition . “OTA bookings are parceled out among a number of OTA companies, and no one in particular stands out.” . “I expect more and more people are using mobile apps, just because it is a growing trend, but I think all of the OTAs will benefit.” . “Working with all the OTAs is very similar, very automated. I really do not differentiate between one company and any other.”
6. Manager of a California resort; repeat source Mobile booking not pose a long-term threat to traditional online travel agencies, but rather keeps them relevant in an increasingly wireless world. While desktop bookings are falling as a proportion of the overall online travel business, the same companies still are booking the revenue. Online travel agencies that are successfully migrating their business to mobile platforms naturally are experiencing some erosion in desktop bookings, but overall user numbers are climbing. This source is not aware of any online travel agencies that are actively shunning mobile in an effort to protect their desktop channel. Cannibalization . “Quite a bit of business is moving from desktop to mobile apps. I don’t Mobile is probably displacing know exactly how much because we don’t break down our referrals that desktop by at least one out of way, but it’s pretty obvious that mobile bookings have gone from a very low five, two out of five travelers. base to a substantial part of the flow in the last few years. I think that’s Everyone has a phone. deliberate on the OTAs’ part.” . “How much of this is cannibalization, I don’t know. Maybe a 3 out of 5 in Computers are not as universal terms of migration, the OTAs shuffling their audience from place to place. I and are not always with you. If don’t know if they’re losing anyone. Maybe to TripAdvisor. They’re practically you’re selling to modern losing us to TripAdvisor. I would much rather list with them directly than go people, you need to be on the to a Priceline or an Expedia to take our money and list on TripAdvisor.” phone.
Manager, California Resort
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. “What would scare me is working with someone who is aggressively not on mobile, who is saying, ‘we want to stay on the computer and leave the phones to kids and TripAdvisor.’ That person is not going to be around in five years. Everyone we work with is not that person.” Growth . “Mobile is probably displacing desktop by at least one out of five, two out of five travelers. Everyone has a phone. Computers are not as universal and are not always with you. If you’re selling to modern people, you need to be on the phone.” Conversion Rates . “We don’t break out our mobile/desktop but TripAdvisor is obviously the name on mobile in terms of reach as well as quality of traffic.” Competition . “TripAdvisor is still the [company] to beat. Priceline is up a bit, Expedia is doing well. The others are soft. By Priceline and Expedia I mean their whole site families, Hotels.com and [Priceline’s] Booking.com [B.V.] and Kayak. Those are actually doing much better than the core sites.” . “We like TripAdvisor, obviously. On the whole I’m tired of paying a premium for the OTAs to handle our inventory and move us toward TripAdvisor when I could just go direct to the source of the eyeballs.” . “But people get nervous if there’s only one or two vendors. It’s important to keep four or five brands on the shelf so people can cross-compare and make sure they’re getting the best deal. Priceline, Expedia, two or three others. That’s the long-term future of that side of the industry. It just depends on how many companies are behind those four or five brands at that point. Right now, Priceline, Expedia, Hotels.com and Booking.com are only two companies. Add Kayak, still two companies.”
7. Chief marketing officer, boutique New York City hotel; repeat source Mobile is an existential threat to all traditional OTAs’ walled gardens. Those willing and able to transition from consumer brands to a mid-market service provider role can survive and even prosper. Those that insist on spending to feed their insular audience numbers are doomed to irrelevance. Google remains a threat to online travel agencies and could provide an opportunity for hoteliers looking to manage their online profiles without paying multiple layers of intermediaries. Multi-brand online travel agencies seem eager to consolidate their activities. Cannibalization . “Mobile has cannibalized the traditional OTA to the extent to which the TripAdvisor app has intercepted a share of the overall travel audience and budget. I don’t know who has lost out to mobile in particular, but you can see the general cycle of winners and losers, and I bet mobile is part of that.” . “In terms of who, exactly, has lost business due to mobile, I don’t know who’s in trouble right now. But in the future they all need to change their models away from the independent stand-alone site toward either a Expedia gives us a slight deal content-rich approach that organically brings people in or else seek better on the ads that go through the placement on the content hubs that appear. Content means TripAdvisor, app because they’re promoting and maybe someday Google as well, if Google ever does anything with the content it put together years ago now.” that. . “So those companies eager to play with TripAdvisor are, I think, the Chief Marketing Officer companies that will thrive or at least survive. Those that you don’t see on Boutique New York City Hotel TripAdvisor because they don’t have the will or the funds will sputter on mobile and probably fade out eventually across the board.” . “Call cannibalization a 2 right now and a 4 over the next five years. It’s not so much that mobile is eating the traditional website’s lunch now, but that the traditional site-versus-site model is dying and will eventually be eaten.” Growth . “In mobile I think Expedia is the hungriest. Nobody else seems especially eager to grow their app side beyond passive promotion and racking up the millions of downloads.” . “What’s interesting is that Expedia is hungry to grow Expedia and not any of its peripheral brands. I think the notion of segmented audiences is under pressure. Now they’re trying to consolidate not only audiences under one in-house
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balance sheet but also consolidating the traveler-facing brands. We might see Hotels.com, Booking.com and similar sites fade away.” Conversion Rates . “We don’t really look at mobile or desktop. We feed the same inventory across the combined network in each OTA’s case, and they come back to us with our cost and overall efficiency. Expedia gives us a slight deal on the ads that go through the app because they’re promoting that. We didn’t ask for it, and we don’t ask for mobile or desktop as a matter of preference. We just ask for placement and clicks and, we hope, moving the inventory.” Competition . “In the next year things will stay fairly similar in terms of the industry landscape: too many OTAs, too few spots on the page. There’s really only Google is a real dark horse room for five vendors before travelers feel overwhelmed with the choices. here. To turn organic search As long as we pick a few of those vendors, we’re okay. But we definitely will, because the vendors who aren’t in that group are not going to be a into a TripAdvisor-like hub consideration. They’re already becoming less relevant once they drop out of would throw a real monkey the top five.” wrench into the industry status . “Top five are in no particular order Expedia, Hotels.com, Booking.com, quo. Priceline and Travelocity. Between that and direct listings on TripAdvisor, we have all the real bases covered. Everything else is deep discount for Chief Marketing Officer properties in trouble. We’re not in trouble.” Boutique New York City Hotel . “I like the hotel-oriented brands no matter who owns them. People still associate Expedia and Priceline with tickets. They might buy the deal, but they are just as likely to go elsewhere for the full hotel selection process.” . “Google is a real dark horse here. To turn organic search into a TripAdvisor-like hub would throw a real monkey wrench into the industry status quo.”
3) Travel Agents These four sources were split on whether mobile bookings have cannibalized online bookings. One source believes 25% of bookings are via mobile devices, and expects another 20% growth. One source reports travel agents are seeing an overall increase in business, particularly for near-term trips. One source expects Expedia and Priceline to see growth from mobile bookings while one source does not believe online travel agencies will see growth from the mobile booking business. One source said Expedia has the highest mobile conversion rates, while another noted that conversion rates for mobile apps likely are single digit percentages only. Two sources view Travelocity as losing market share, while one source sees Expedia gaining. One source said Hipmunk Inc. is gaining market share.
KEY SILO FINDINGS Cannibalization - 2 sources reported no cannibalization. - 2 sources see some cannibalization. Growth - 1 source reported that travel agents are seeing increased business, especially for near-term trips. - 1 source believes 25% of bookings are on mobile devices, and expects another 20% growth. - 1 source says Priceline and Expedia likely will expand their growth via mobile bookings. - 1 source does not believe online travel agencies will see growth from mobile booking business. Conversion Rates - 1 source says Expedia has the highest mobile conversion rates. - 1 source says conversion rates for mobile are probably in the single digits. Competition - 2 sources view Travelocity as losing market share. - 1 source sees Expedia as gaining market share. - 1 source says Hipmunk is gaining market share.
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1. Travel agent and owner of an East Coast-based agency focused on cruises and land-based tours; repeat source This source’s business is booming, as travel agents are seeing a resurgence in business. His clients are not booking travel via mobile apps; most are busy and turn to him for help and options. Thus, he does not believe mobile bookings are hurting desktop bookings or the online travel agencies who have mobile apps. Mobile, in this source’s opinion, is not a threat to any of the online travel agencies. Expedia is trending up in popularity due to pricing, while Orbitz and Travelocity are losing steam. A year from now, he expects Expedia to remain as the most popular online travel agency. Cannibalization . “I would not think Priceline, Expedia and other online travel agencies are taking a hit due to the shifting emphasis on mobile, as long as they have a Travelocity and Orbitz are both mobile app people can use. If anything I would say their business is increasing.” trending down in terms of . “I do not think mobile bookings are hurting PC/desktop bookings.” consumer popularity. … . “I do not think mobile is anything to worry about for any of the OTAs.” Expedia is trending up in terms Growth of consumer popularity. They . “I am seeing shorter turnarounds, with people wanting to travel within the next 60 days.” are trending up because of . “We are in a resurging industry it seems. People have gone through the their pricing. We are coming to system, and have gotten burned. All are coming back to us [travel agents] a time when we will see now. And the younger generation has not gone through pain and suffering Expedia plateau and start to moments.” drop. . “I do not know if Priceline and Expedia can accelerate growth in their mobile businesses. Mobile apps are a good source for people who want general Travel Agent & Owner information before they can get into the fine details of a trip and before they Tour Travel Agency, East Coast get on their computer.” . “Travelers still want to speak to a human. Mobile apps will not be a big deal in terms of bookings.” Conversion Rates . “Expedia probably has the highest conversion rates for mobile bookings.” Competition . “Travelocity and Orbitz are both trending down in terms of consumer popularity. And Priceline as well, you do not see much advertising.” . “Expedia is trending up in terms of consumer popularity. They are trending up because of their pricing. We are coming to a time when we will see Expedia plateau and start to drop.” . “I still expect Expedia to be the most popular OTA with consumers one year from now.”
2. CEO and founder of a cruise-only agency; repeat source Online travel agencies may not want to miss the boat in terms of having mobile apps, but this source expressed doubt whether they are an effective marketing tool. These apps, now and in the foreseeable future, will not bring in much business to online travel agencies. People use smartphones especially for communicating; thus, Priceline and Expedia likely will not realize much growth in their mobile business. These online travel agencies all are vying for a piece of a very small pie. This source contended that there will be no winner-take-all in the mobile app business and that one year from now, the online travel agency landscape will look much the same. Cannibalization . “Consumers are not looking for travel arrangements on their mobile devices and then booking online. They use the cell phone or the smartphone for communicating. I will get emails or requests, just got three or four today, which were sent from iPhones. Under 5% of people would book their travel on a mobile device.”
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. “I do not think mobile bookings are hurting PC/desktop bookings. I do not think there are enough mobile bookings. They are not generating enough in the cruise industry, maybe an airline seat, but again, you have to have good eyesight to read the mobile devices” Growth . “Priceline and Expedia cannot accelerate growth in their mobile business.” . “Mobile apps are simply convenience for bored people with nothing to do. It is not that people will not use them, but is it going to be an effective marketing and business tool? Maybe 50 to 100 years from now when our whole society is different, but not in the foreseeable future.” Conversion Rates . “I do not think there are any or many conversion rates for OTAs with a mobile app. This is all single digits if anything. These mobile apps—whether it is for the online travel agencies of the cruise lines—are not getting much of an attention hit, because it is not profitable. It is like taking a bucket of mud and standing five feet from the wall. They are throwing mud to the wall and whatever sticks to the wall, they say, ‘We have got success.’” Competition . “Celebrity just announced their mobile app to travel agents. They are afraid they are going to miss out on something.” . “What I have seen and learned about these apps is that it is another part of advertising, at least in the cruise industry. [It is] another marketing tool, an advertising tool. If an idea works others will copy it.” . “Online travel agencies are all going up and down. Consumers and suppliers are the winners. The reason you go to Priceline or Expedia is to get the cheapest price. You do not care if you book a hotel in New York and the place is full of bed bugs and cockroaches. They are selling the commodity and selling the commodity at a good price. Let the consumer beware. Priceline keeps cutting their profit margins to get the business and the volume.” . “The OTA/booking app world is not a winner-take-all scenario.” . “One year from now there will be absolutely no change from what there is today in terms of OTA popularity.”
3. Travel advisor from the Northwest; repeat source Mobile bookings are rising as consumers, particularly younger travelers, use portable devices more frequently, and as mobile applications improve. This switch to mobile is affecting desktop bookings for online travel agencies. Still, Priceline and Expedia can accelerate growth in their mobile businesses by offering specials and coupons. Travelocity may be decreasing in popularity, while Hipmunk is gaining users and will continue to do so. Overall, she expects another 20% increase in mobile bookings soon. Cannibalization . “Many consumers use devices to search, as well as book, if they are At least 25% bookings [are comfortable using that device. Depending upon the age group, the younger done on mobile apps] right generation will use their devices, while older travelers may not be as comfortable doing so and will research and finish the booking on their now, but some OTAs offer lower computer. Some feel like they have more control on a computer and are prices on mobile bookings. I less apt to make a mistake with the touch of a finger. How many of us think computer booking will haven’t touched the wrong spot on the screen before and said, ‘oops?’” decrease, and we will see . “[On a scale of 1 to 5, with 5 being the most effect, 1 reflecting little effect] I another 20% increase in think online travel agencies like Priceline and Expedia are at a 3 right now [in terms of the hit due to the shift to mobile]. But it will increase rapidly in mobile bookings rather soon. the future.” Travel Advisor, Northwest Growth . “At least 25% bookings [are done on mobile apps] right now, but some OTAs offer lower prices on mobile bookings. I think computer booking will decrease, and we will see another 20% increase in mobile bookings rather soon.” . “Priceline and Expedia [possibly can accelerate mobile booking growth by] offering ‘specials’ during specific hours, or coupons.” . “Many consumers know that if they go to the company’s own website instead of a booking site, they might get a better internet rate. And to get redirected to a partner site from an OTA can be frustrating. But consumers always
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have their iPhone with them so the market will improve as OTAs optimize their mobile sites and they become personalized for the consumer.” Conversion Rates . N/A Competition . “Travelocity may be trending down in terms of consumer popularity. I do not think it has increased its brand strength like some OTAs.” . “Hipmunk is trending up in terms of consumer popularity, because it is easy to use. Hipmunk may be the most popular among consumers one year from now.” . “As of now, all OTA apps have their pros and cons, but this could change drastically in the future as they improve.”
4. President of a travel agency in Florida; repeat source Online travel agencies like Priceline and Expedia are feeling some pinch from the switch to mobile, as increasing numbers of consumers use mobile apps for travel-related bookings or research. Mobile bookings are hurting desktop bookings somewhat, but it is early in the game. Most of this source’s clients will research travel on their desktops or mobile devices, but turn to the travel agent to do the actual booking and add value to their travel plans. She fully expects Priceline and Expedia to accelerate growth in their mobile businesses, particularly if they keep costs to consumers down. Eventually, she expects a winner to emerge, but a year from now it is wide open as to which online travel agency will be the most popular. Cannibalization . “Consumers are researching travel on their mobile apps. Many of our clients are doing this research and then coming to us to book and add value.” . “My educated guess is that online travel agencies [on a scale of 1 to 5, with 5 being a large impact and 1 reflecting no impact], are at a 2 or 3 right now in terms of a hit to their business due to the shifting emphasis to mobile, as we are still in the early adapter stage.” . “Mobile bookings are hurting PC/desktop bookings a bit now. More to come.” Growth . “Of course Priceline and Expedia can accelerate growth in their mobile businesses, if they keep making it cheaper. This is a transactional approach to travel. Keeping the process user-friendly and the price point cheap is the objective here.” Conversion Rates . N/A Competition . “The OTA/booking app world is probably close to a winner-take-all scenario. It is similar to Wal-Mart and Amazon, who offer the cheapest prices, brand value, highest yields per transaction. It is about how long can you go and survive until the competition gives up and you have control.” . “The OTA that may be the most popular among consumers one year from now may not exist yet.”
4) Industry Specialists One source sees no cannibalization of online bookings by mobile users, while our second source does see some cannibalization. Both sources expect growth in mobile bookings. One source reports three of 10 mobile searches result in bookings, while the remainder are voice bookings. One source views direct booking with hotels the major competition online travel agencies face, while our second source sees Expedia and Priceline growing in popularity while Travelocity declines. Hotel Tonight also is gaining market share.
KEY SILO FINDINGS Cannibalization
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- 1 source sees no cannibalization, because true booking on mobile is inconvenient. - 1 source sees some cannibalization, with more and more businesses continuing to move to mobile. Growth - Both sources expect growth in mobile bookings, one sees rapid growth. Conversion Rates - 1 source says 3 of 10 bookings from mobile are via a mobile reservation, the rest are voice reservations. Competition - 1 source considers that the main competition is direct-booking with hotels that are more inclined to book directly to avoid paying an online travel agency. - 1 says Expedia and Priceline are improving in popularity, while Travelocity is trending down. Hotel Tonight may gain market share.
1. Executive of a company that provides marketing research and consultancy services to the hotel industry The game-changing shift to mobile is happening extremely fast. However, the technology being deployed by the travel industry lags behind mobile device capabilities and user demands. Online travel agencies hold a temporary advantage over hotel sites, but that will not last. To date, new, third-party mobile apps do not pose a threat to either online travel agencies or hotels. Cannibalization . “For true mobile bookings of hotels, the technology is not there. For instance, you can used Orbitz.com on your mobile device. But if you want to make a booking, they ask you to enter your credit card number. And you’re standing at a street corner outside our office at 49th and Broadway. How do you do that? Or you want to book on Marriott’s mobile app, but you’re not a Marriott Loyalty member. They ask you to enter your credit card information. You have to push all these numbers on a small screen. You have to put on reading glasses. It’s a very cumbersome process.” Growth . “This is happening extremely fast. In our client base, nearly 40% of all Website visitors are non-desktop or laptop devices. Last year at this time, it was 20, 22%. You’ll definitely see more than 50% next year at this time. Of this 40%, 25% are smartphones and 15% are tablets. But when you talk about bookings, 15% of total bookings are on these devices, but only 3, 4% are from smartphones. The rest are from tablets.” Conversion Rates . “In the conversion to mobility, there are two contradictory phenomena. OTAs are more innovative, more nimble, more tech savvy than major hotel brands. They move faster with apps. In this respect, mobility is a major advantage for them.” . “On the other hand, mobility is a major disadvantage to them. And that has to do with booking patterns. [A user] goes to TripAdvisor, sees the same rate at Expedia. With mobile, the inclination is to call someone. And with this, the technological advantage that OTAs have had disappears. OTAs have less experience in a voice channel, not better than Marriott or Hilton. The way they handle the phone, knowledge of the property. If I call someone when I’m on my mobile device, and remember, seven out of ten prefer to call, who will I call? Expedia? Hilton? Or the property itself? I call the property itself. I call the local number. But many times, that is outsourced to the central call center of the hotel [brand] and I don’t even know it.” . “In hospitality, out of ten bookings that come from mobile, seven are from voice. That’s how it works. For some big loyalty brands, it’s closer to 50-50.” . “We were able to track conversions. We found that in digital marketing campaigns, 44% of all bookings and revenue came via voice, but were directly related to our campaign. In an email marketing campaign, 73% of revenue came via the voice channel. In social media, 91% of revenue came from the voice channel.” Competition . “Hotel Tonight? That’s based on last-minute discounts. All hotel brands have banned their franchisees from being on Hotel Tonight.” . “OTAs have a temporary advantage, maybe a year, before the industry itself catches up. We have a client in New York City. They charge $800 a night, and have two room nights average stay. If it’s booked through Expedia, they have to pay $400. If it’s booked through the hotel site, they pay $10. $10 versus $400. Guess how much hotels love OTAs? Hotels may be slower adopters than OTAs, but they’re adopters.”
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2. Editorial director/editor-in-chief of two print magazines covering travel industry; repeat source Mobile will soon represent the dominant mode of booking, though it will not necessarily hurt desktop bookings. Travelocity is trending down in terms of consumer popularity because the company is outsourcing to Expedia, which appears to be doing better business than in years past. Priceline is trending upward, and Hotel Tonight could gain market share in the next year. Cannibalization . “Mobile bookings are certainly hurting desktop bookings, though I’d simply Mobile bookings are certainly say more people are shifting from desktop to mobile [rather than hurting]. hurting desktop bookings, That’s been a continuing trend and most believe mobile will soon represent though I’d simply say more the dominant mode of booking.” Growth people are shifting from . “I think growth can be expected.” desktop to mobile [rather than Conversion Rates hurting]. That’s been a . N/A continuing trend and most Competition believe mobile will soon . “Travelocity is trending down since it now outsourcing to Expedia.” . “Expedia and maybe Priceline are trending up. I’d think you would really represent the dominant mode need to get surveys on that.” of booking. . “New OTAs that are hotel specialist booking sites like Hotel Tonight might start to grab larger market share.” Editorial Director/Editor-in-chief Two Travel Industry Print Magazines . “Consumers are looking for information and then booking using their mobile devices if that’s how they prefer to seek out and book travel.” . “OTAs are not necessarily liked by any hotel chain, but are a necessary evil since they help fill hotel rooms. But any OTA that manages to produce a decent rate for a hotel chain would be better liked.”
5) Online Consumer Survey In a survey of 273 U.S. consumers, Kayak was shown as the number one travel app. Weak app offerings from airlines and hotels opened the gates for Expedia, TripAdvisor and Kayak to gain market share in an ecosystem where consumers use an average of 3.5 apps. Travel apps are shown as being most effective at driving bookings to that companies website, but apps also raise bookings for specific airlines, hotels, and other company sites. Company websites are not driving travel bookings through apps.
KEY SILO FINDINGS Kayak is viewed as having the best travel app and is used most by consumers; airline and hotel apps are viewed as the worst travel apps, showing an open market for travel apps . Kayak (18.6%) is the most used travel app followed by an airline specific app (15.1%), Expedia (14%), and TripAdvisor (14%). (Q3) . Kayak (17.6%) is viewed as having the best travel app, followed by an airline specific app (12.9%), Expedia (11.8%), and TripAdvisor (10.6%). (Q4, excluding other) . Specific airline apps (16.5%) are viewed as having the worst travel apps, followed by Specific Hotel apps (14.1%), Priceline (9.4%), and Hotwire (8.2%). (Q5, excluding other)
The majority of consumers do not use travel apps. Those who do use an average of 3.5 apps to gain preliminary information for their travel needs, led by Expedia, TripAdvisor and Kayak. . The majority of consumers (68.5%) do not use a travel app when comparing fares and hotel rates. (Q1)
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. Consumers use an average of 3.5 travel apps. (Q2 analyzed) . Travel apps are being underutilized to book trips through their apps. o Consumers that start their search on a travel app will book that trip through that travel app 1-20% (32.5%), 0% (20%), or 41-60% (16.3%) of the time. (Q6) . The top three travel apps are Expedia (43%), TripAdvisor (38.4%), and Kayak (37.2%). (Q2)
Travel apps are most effective in driving bookings to their own company’s website, but are as effective at driving booking traffic through the app itself as they are to driving traffic to specific airlines or hotels, and can push minimal traffic to other company sites. . Travel apps are driving the most traffic and bookings to their own company’s website. o Consumers that start their search on a travel app will book that trip through the company’s corresponding website 1-20% (21.3%) or 41-60% (22.5%) of the time. (Q7) o 53.8% of consumers booking through websites after using an app have the highest effective rate over 41% compared to the other methods of booking travel plans. (Q6-10 analyzed) . Travel apps are just as effective at driving consumers to book through the app as they are to driving bookings to specific airlines or hotels. o 35.1% of consumers book their travel plans through an app after starting their search on that app 41% or more of the time, which is approximately the same as the 38.8% of consumers that book their travel plans through a specific airline or hotel after using a travel app. (Q6-10 analyzed) o Consumers that start their search on a travel app will book that trip through an airline or hotel 0% (22.5%) or 1-20% (22.5%) of the time. (Q9) . Travel apps are aiding the flow of consumer traffic to other company’s websites. o Consumers that start their search on a travel app will book that trip through a different companies website 1-20% (36.3%) or 21-41% (20%) of the time. (Q8)
Company websites, including airlines and hotels, are not driving mobile app bookings. . Consumers that start their search on a computer will book that trip through a travel app 0% (61.3%) or 1-20% (21.3%) of the time. (Q10)
1. Do you use travel apps on a mobile device when looking for the best fares and hotel rates?
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2. Which online travel apps do you use? (select all that apply)
3. Which online travel app do you use most frequently?
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4. Which company has the best travel app for a mobile device?
5. Which company has the worst travel app for a mobile device?
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6. When starting a search on a travel app, how often do you do the booking through that travel app? (i.e. Kayak app and book with Kayak app)
7. How often do you start your search on a travel app, then book via computer using that same company? (i.e. Kayak app then go to Kayak.com to book)
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Online Travel Booking
8. How often do you start your search on a travel app, then book via computer using a different company? (i.e. Kayak app then go to Expedia.com to book)
9. How often do you start your search on a travel app, then book directly with the airline or hotel?
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10. How often do you start your search on a computer, then book using a travel app? (i.e. Kayak.com then go to Kayak app to book)
Secondary Sources The following five sources show Expedia.com becoming more mobile friendly, Booking.com being the best travel booking site, and positive signs for the Hotel Tonight app.
Online Travel Booking Sites The following three sources show Expedia.com revamping its website to be more mobile friendly, Booking.com topping online booking sites for travel, and Booking.com experiencing tremendous mobile growth.
March 25 Tnooz article Expedia.com revamped its entire website to increase performance on mobile devices and tablets, showing faster loading time, and quicker response time while using the site. . “Online travel agency Expedia.com today unveiled a fresh homepage design for its US website.” . “The Expedia homepage redesign features a “fully responsive design”—meaning it works better on tablets and smartphones, and validates the streamlined look pioneered by mobile-first companies like Hotel Tonight and Hipmunk.” . “Regular users may notice that the booking wizard is now front and center—moved from its former left-hand corner position—and now pops up in “just over one second,” rather than the previous “more than 2 seconds.” . The makeover is touted as the most “major” revamp since 2002. Perhaps it means that this has been the biggest increase in speed performance in more than a decade: the company claims the homepage loads “nearly twice as fast as before.” . “The project’s completion is a milestone for the checkout, data strategy, analytics platforms, and user experience experts on the brand’s product team.” . “It’s biggest push was to allow users to search flights and hotels immediately. Internal research released last January claims that users do an average of 48 queries across the Internet before booking a flight.” . “A global roll out of the design is set to appear later this year.”
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Feb. 24 Skift article Booking.com is shown as the top online bookings site for travel, which does not include app activity. . “We’re starting 2014 by looking at the top online booking sites in travel. Keep in mind this does not account for direct sites of travel brands (airlines/hotels) themselves, which we have done in separate lists previously. Also, our threshold is roughly 5 million visits per month, and does not count any app activity, hence sites like HotelsCombined.com, Hipmunk and others don’t show up.” . “Booking.com is still the king in travel, by a large margin over Expedia and TripAdvisor. . “Adding up Booking.com’s sister sites Priceline.com, Agoda [Company Pte. Ltd.], and Kayak, the Priceline family is the Sinaloa cartel of travel—to use a timely phrase.” . “TripAdvisor.com still is bigger than Expedia.com on a standalone basis, but Expedia’s family of sites, including Hotels.com and Hotwire.com brings it neck and neck with the TripAdvisor family of sites.” . “Orbitz and Travelocity are not among the top ten booking sites in travel anymore, and will likely to have tough road going ahead.” . “Airbnb is now among the top 15 travel booking sites on the planet, a huge feat for a company that created a whole new market.” . “Homeaway.com and VRBO.com, part of the HomeAway Inc. family, are the largest alternative accommodation sites on the planet.” . “Top 10 sites in order: Booking.com, TripAdvisor Family, Expedia Family, Hotels.com, Priceline.com, Agoda.com, Hotelurbano.com, Kayak.com, Travel.yahoo.com, and cheapoair.com.”
Feb. 24 Travel Daily News article Booking.com is seeing mobile bookings continue to skyrocket. . “Booking.com continues to see strong growth in mobile bookings. The total transaction value of mobile accommodation bookings more than doubled from over $3 billion in 2012 to over $8 billion in 2013. Looking back at the 2011 figure where Booking.com saw $1 billion in mobile bookings, it is clear that mobile accommodation booking continues to grow rapidly year on year.” . “Booking.com has more than 425,000 accommodations across 25 different accommodation types, bookable via all devices, which is more than any other accommodation site. The seamless booking experience across Booking.com's mobile and desktop devices combined with the quality of our highly rated apps, has driven customers increased usage of their mobile devices,” says Booking.com CMO, Paul Hennessy. “We're seeing a shift in consumer behaviour from simply booking last minute accommodations on mobile devices to planning, researching, booking and utilizing post booking functionality on our mobile platforms. That's why we recognize the importance of delivering a world class, end to end experience that works well for both immediate and longer term bookings.”
Hotel Tonight The following two sources show Hotel Tonight seeing massive returns after linking with Facebook Inc. (FB), TripAdvisor’s app being the best travel app connected to Facebook, and Hotel Tonight’s app being selected as one of the best apps to save you money on a trip.
March 20 Tnooz article The head of travel at Facebook shows Hotel Tonight as seeing massive returns after linking up with the company. Although TripAdvisor is seeing gains TripAdvisor’s app is viewed as the best travel app connected to Facebook. . “Lee McCabe has been the global head of travel at Facebook, the social network with 1.2 billion users, since October 2012. A veteran of Expedia, he knows the travel industry well.” . “He had a lot to say about mobile, particularly about how Facebook can help travel companies maintain engagement with their own branded mobile apps. He also thinks travel suppliers still haven’t fully grasped how mobile will upend their digital marketing strategies.” . “A recent PhoCusWright report shows that mobile travel bookings will be 12% of bookings—not just online but the total travel market—in the US next year.” . “We’re moving away from this world where people will browse 20 to 30 different websites. Surfing, browsing, and searching. We’re moving toward apps. On mobile devices, apps offer a superior user experience than the web does.
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That’s why show something like 80% of the typical mobile user’s time is spent on apps. A huge chunk of that, maybe 25% of that mobile usage, is Hotel Tonight, the same-day time spent on Facebook’s own app, people’s window on the world.” . “[A]ll these travel companies want to, first, develop a good app that people booking app, is a good example like, and, second, do everything they can to get as much penetration on as of a company we’ve had a much mobile real estate as possible.” positive case study with. It was . “First mover advantage is going to count. Once a user has an app that he or able to get a 10 times higher she is happy with, the opportunity or inclination for switching will be low. This is where the world is moving. Especially for apps about travel click-to-install rate using bookings.” Facebook’s mobile app install . “So there’s just a huge window of opportunity now to 1) land-grab that as ads. quickly as possible, which Facebook will play a big part in facilitating; and 2) keep people active on the app—and again, we’ll play a big part in that—in Tnooz Article both cases via ads in News Feed that encourage people to take action in travel brands’ apps.” . “Another thing the industry isn’t grasping is that apps are about more than just about smartphones. Today we think of apps only about smartphones or tablets. But in the next five years, all the new devices will be app-driven. In-car platforms, like Apple’s CarPlay, that will all be app-driven.” . “Hotel Tonight, the same-day booking app, is a good example of a company we’ve had a positive case study with. It was able to get a 10 times higher click-to-install rate using Facebook’s mobile app install ads.” In-Facebook apps were . “Mobile app install messages can appear in News Feed. When Hotel Tonight designed for engagement. The advertises. We display an ad unit that says something simple like “Hotel best practice in travel, by far, is Tonight—Install now”. Clicking on the link takes users to, say, the Android or TripAdvisor. Its app has driven Apple store for easy installation. That is working really, really well.” . “We recently released “mobile app engagement.” So once users have substantial engagement and installed your app, it’s important to keep people aware of it and to maintain has helped in inspiration and usage. So rather than the call-to-action being “install now”, it can be “book brand awareness. now.” An example might be Hotel Tonight. The ad in the News Feed references a specific hotel, it says “book now,” and if you click on that, Tnooz Article Facebook can deep-link you straight into the Hotel Tonight app’s checkout process for that specific property.” . “In-Facebook apps were designed for engagement. The best practice in travel, by far, is TripAdvisor. Its app has driven substantial engagement and has helped in inspiration and brand awareness.”
March 25 The Economic Voice article Hotel Tonight is shown as the best app to help save you money on a trip as it compares hotels around you, so you can pick the best one for your needs. . “Part of the fun of taking a road trip is the planning that goes into it. Taking your car in for servicing, creating a playlist, and stocking the cooler with snacks are all errands that will help your trip run a little bit more smoothly. However, setting a budget is also an important part of the planning process. It’s all too easy to get a little too carried away at the first few souvenir stands or roadside cafes, and find that you spend the latter half of your trip living on instant noodles. Fortunately, there are a number of smartphone apps that can help you stay firmly on budget. Try downloading the following mobile apps before you hit the road, and hopefully you won’t be scrounging for change in the backseat.” . Hotel Tonight: “Lodging on the open road can be tricky, simply because you have so many options! Some prefer to sleep under the open stars, while others may prefer to wait for posh hotels after a day spent sitting in the car. It’s good to plan ahead, but if you find yourself stuck in the middle of nowhere you may feel like you don’t have control of your options anymore. The Hotel Tonight app can help you compare options in your immediate vicinity, so that you can find something with availability that fits within your budget even at the very last minute.”
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Online Travel Booking
Additional research by Cheryl Meyer, Lisa Bullock and Emily Carr
The Author(s) of this research report certify that all of the views expressed in the report accurately reflect their personal views about any and all of the subject securities and that no part of the Author(s) compensation was, is or will be, directly or indirectly, related to the specific recommendations or views in this report. The Author does not own securities in any of the aforementioned companies. OTA Financial Group LP has a membership interest in Blueshift Research LLC. OTA LLC, an SEC registered broker dealer subsidiary of OTA Financial Group LP, has both market making and proprietary trading operations on several exchanges and alternative trading systems. The affiliated companies of the OTA Financial Group LP, including OTA LLC, its principals, employees or clients may have an interest in the securities discussed herein, in securities of other issuers in other industries, may provide bids and offers of the subject companies and may act as principal in connection with such transactions. Craig Gordon, the founder of Blueshift, has an investment in OTA Financial Group LP. © 2014 Blueshift Research LLC. All rights reserved. This transmission was produced for the exclusive use of Blueshift Research LLC, and may not be reproduced or relied upon, in whole or in part, without Blueshift’s written consent. The information herein is not intended to be a complete analysis of every material fact in respect to any company or industry discussed. Blueshift Research is a trademark owned by Blueshift Research LLC.
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