The Mobile Travel Landscape 2016 A Multi-Region Report

May 2016

Written and Researched by Cathy Schetzina Walsh Agenda

1. Introduction

2. Device Matters

3. In the Loop: Mobile Through the Travel Life Cycle

4. Booking: How High?

5. Mobile Winners and Losers

© 2016 Phocuswright Inc. All Rights Reserved. 2 About Phocuswright

Phocuswright is the travel industry research authority on how travelers, suppliers and intermediaries connect.

Independent, rigorous and unbiased, Phocuswright delivers qualitative and quantitative research on the evolving dynamics that influence travel, and hospitality distribution. Our marketplace intelligence is the industry standard for segmentation, sizing, forecasting, trends, analysis and consumer travel planning behavior. Every day around the world, senior executives, marketers, strategists and research professionals from all segments of the industry value chain use Phocuswright research for competitive advantage.

The company is headquartered in the with Asia Pacific operations based in India and local analysts on five continents.

Phocuswright is a wholly owned subsidiary of Northstar Travel Media, LLC.

© 2016 Phocuswright Inc. All Rights Reserved. 3 Copyright

All Phocuswright Inc. publications are protected by copyright. It is illegal under U.S. federal law (17USC101 et seq.) to copy, fax or electronically distribute copyrighted material without explicit permission. You may not copy, reproduce, modify, republish, upload, post, transmit, or distribute, electronically or otherwise, any Phocuswright research report in any form or by any means without prior written permission from Phocuswright Inc. Any unauthorized use of the materials may violate copyright, trademark, and other applicable laws and could result in criminal or civil penalties. © Phocuswright

© 2016 Phocuswright Inc. All Rights Reserved. 4 Introduction After years of soaring mobile adoption…

© 2016 Phocuswright Inc. All Rights Reserved. 6 Mobile is nearly ubiquitous among travelers in key markets. Smartphone Ownership Among Leisure Travelers

77% 80% 78% 81% 96%

US UK FR DE CN

Question: Which of the following web-enabled devices do you own/use? Select all that apply. Base: Leisure Travelers: U.S.: (N=1,003); U.K.: (N=1,008); FRA: (N=1,007); GER: (N=1,007); CHN: (N=1,014) Source: Phocuswright's Search, Shop, Buy: The New Digital Funnel

© 2016 Phocuswright Inc. All Rights Reserved. 7 Many travelers have multiple web- enabled mobile devices to choose from.

+

(And maybe even)

Source: Phocuswright Inc.

© 2016 Phocuswright Inc. All Rights Reserved. 8 With experience under their belts, travelers are beginning to establish clear mobile habits and preferences. But what they’re choosing to do on mobile depends in part on who they are and where they live. In every region, mobile is disrupting competitive dynamics among suppliers and intermediaries, shaping the customer experience and swaying purchase decisions. Mobile Travel Landscape 2016 surveys Phocuswright’s latest mobile data to answer key questions and highlight the most important mobile travel trends across regions

© 2016 Phocuswright Inc. All Rights Reserved. 12 Key Findings Mobile Adoption

• Roughly 80% of leisure travelers own a smartphone, and tablet ownership ranges from 45-60% across markets.* • For travelers who own multiple devices (smartphone, tablet and laptop/desktop), mobile is capturing a growing share of time spent online – especially among millennials. • Wearable ownership is low – just 3-4% in and roughly 15% in the U.S. – but travelers in both regions plan to purchase a wearable device in the next few years. • Travelers are increasingly comfortable planning travel via mobile, but smartphones and tablets still lag PCs in ease of use.

China, , , U.K., U.S. Source: Phocuswright’s The Mobile Travel Landscape 2016

© 2016 Phocuswright Inc. All Rights Reserved. 13 Key Findings (cont.) Mobile Usage • Mobile travel booking incidence remains low in most markets, especially Europe (3-5%). The exception is China, where more than one quarter of leisure travelers booked via mobile in the past 12 months. • Travelers are more likely to use mobile when choosing a destination, comparing/choosing travel products, during travel and to share trip experiences on social networks.

Booking • By 2017, roughly one quarter of online bookings in the U.S. and Europe and more than one third in Asia Pacific (APAC) will be transacted via a mobile device.

Source: Phocuswright’s The Mobile Travel Landscape 2016

© 2016 Phocuswright Inc. All Rights Reserved. 14 Key Findings (cont.) Booking (cont.) • China leads all markets in mobile booking, and is set to become the first true leapfrog market: by 2017, 60% of the country’s online bookings will be made on a mobile device. • In contrast, France and Germany lag in mobile bookings. By 2017, just 20% and 24% of the countries’ online bookings, respectively, will be transacted via mobile. Channels and Products • Travelers across markets are more likely to use intermediaries (OTAs and metasearch) versus suppliers to compare and choose travel products on mobile devices.

Source: Phocuswright’s The Mobile Travel Landscape 2016

© 2016 Phocuswright Inc. All Rights Reserved. 15 Key Findings (cont.) Channels and Products (cont.) • For mobile booking, OTAs are dominant in the U.S. and Asia Pacific, while suppliers have an edge in Europe due to strong direct air and rail bookings. • Product popularity for mobile booking varies by region. In the U.S. and APAC, travelers are most likely to book , while air bookings are dominant in Europe. Apps vs. Web • Travel apps are more popular for travel shopping in China and the U.S. than they are in Europe. • When travelers do download a travel app, the most important factor influencing app selection is ease of use.

Source: Phocuswright’s The Mobile Travel Landscape 2016

© 2016 Phocuswright Inc. All Rights Reserved. 16 Device Matters Are we there yet? Most travelers own a mobile device … but has the mobile-first era truly arrived?

© 2016 Phocuswright Inc. All Rights Reserved. 18 Roughly 80% Tablet ownership ranges from of leisure travelers 45-60% own a across markets. smartphone.

Question: Which of the following web-enabled devices do you own/use? Select all that apply. Base: Leisure Travelers: U.S.: (N=1,003); U.K.: (N=1,008); AUS: (N=1,011); FRA: (N=1,007); GER: (N=1,007); RUS: (N=995); CHN: (N=1,014); BRA: (N=1,000) Source: Phocuswright's Search, Shop, Buy: The New Digital Funnel

© 2016 Phocuswright Inc. All Rights Reserved. 19 Ownership of Smartphones and Tablets Across Markets

96%

81% 80% 78% 77%

61% 59% 53% 49% 44%

Smartphone Tablet China U.S. Germany France U.K.

Question: Which of the following web-enabled devices do you own/use? Select all that apply. Base: Leisure Travelers: U.S.: (N=1,003); U.K.: (N=1,008); AUS: (N=1,011); FRA: (N=1,007); GER: (N=1,007); RUS: (N=995); CHN: (N=1,014); BRA: (N=1,000) Source: Phocuswright's Search, Shop, Buy: The New Digital Funnel

© 2016 Phocuswright Inc. All Rights Reserved. 20 For travelers who do own multiple devices (along with a desktop/laptop), mobile is capturing a growing share of time spent online.

Time Spent Online by Device (U.S. Travelers) 50% 47% 2014 2015 31% 27% 24% 22%

Desktop/laptop Smartphone Tablet

Question: Please take a moment to think about how much time you spend online throughout the day on the following devices. Please assign an approximate percentage of time spent online for each device. Assign a percentage to each row using whole numbers. Base: Multiple device owners, 2014:(N=1,331); 2015:(N=979) Note: Totals may not add to 100% due to rounding. Source: Phocuswright’s U.S. Traveler Technology Survey 2015

© 2016 Phocuswright Inc. All Rights Reserved. 21 Especially among millennials.

Time Spent Online by Device, European Travelers

14% 14% 13%

9% 18% 55+ 18-34 54% 35-54 32% 68% 78%

PC Smartphone Tablet

Question: For all of the time you spend online, approximately what percentage of that time do you spend using the following devices? Assign a percentage to each row using whole numbers Base: European travelers 2013: (N=3,456); 2014:(N=4,120) Source: Phocuswright’s European Traveler Technology Survey 2015

© 2016 Phocuswright Inc. All Rights Reserved. 22 Smartphones and Tablets are Different Animals

Highly portable and convenient Less convenient to carry during But the phablet trend toward larger during travel travel/sightseeing smartphones is blurring the lines

Smaller screen not ideal for Larger screen makes it easier to plan Larger smartphones are still highly planning complex trips complex travel on tablet versus portable and convenient during smartphone travel or sightseeing, but are easier Popular for updating social network to use for complex travel planning status on-the-go Ideal for rich media than their smaller counterparts.

Smartphones are more popular More popular than smartphones in than tablets for travel planning Europe for travel planning in U.S. and China

© 2016 Phocuswright Inc. All Rights Reserved. 23 Devices Used for Travel Shopping

71% 70% 66% 65% 65% Tablets trump smartphones for 53% travel shopping in European markets

34%

18% 18% 12% 14% 9% 10% 9% 11%

PC Smartphone Tablet China France Germany U.S. U.K.

Question: What sources of information do you recall using to compare and choose leisure travel prices and products, such as airline tickets or rooms? Select all that apply. Base: Leisure Travelers: U.S.: (N=1,003); U.K.: (N=1,008); AUS: (N=1,011); FRA: (N=1,007); GER: (N=1,007); RUS: (N=995); CHN: (N=1,014); BRA: (N=1,000) Source: Phocuswright's Search, Shop, Buy: The New Digital Funnel

© 2016 Phocuswright Inc. All Rights Reserved. 24 What about wearables? It wasn’t love at first sight … In Europe, just 3-4% of travelers owned one in 2015. U.S. travelers have been faster to adopt wearables, including smartwatches (13%) and fitness trackers (17%).

Source: Phocuswright’s U.S. Traveler Technology Survey 2015 and Phocuswright’s European Traveler Technology Survey 2015

© 2016 Phocuswright Inc. All Rights Reserved. 25 But, led by the U.S., many in both regions plan to purchase a wearable device within the next few years. Current and Future Wearable Device Ownership (European and U.S. Travelers) 64% 60%

51% 44%

26% 21% 22% 19% 15% 10% 10% 10% 9% 9% 5% 5% 4% 5% 5% 4%

Will definitely Will likely purchase Will likely purchase Will likely purchase Not likely to purchase this year this year next year within next few purchase in the years next few years France Germany U.K. U.S. Question: Please select the statement that best describes your perspective wearable devices (e.g. Google glass or smartwatches) Base: European travelers (France N=1,328 ; Germany: N=1,405 ; UK: N=1,387) Source: Phocuswright’s European Traveler Technology Survey 2015

© 2016 Phocuswright Inc. All Rights Reserved. 26 Travelers have gotten more comfortable planning travel on a mobile device, but smartphones and tablets still lag the PC in ease of use. U.S. Travelers European Travelers 3%2% 2% 3% 1% 1%

7% 6% 8% 7% 14% 33% 39% 23% 22% 31% 57% 66% 4% 5% 39% 36% 15% 22% 29% 18%

20% 27% 28% 32%

Very easy Somewhat easy Neutral Somewhat difficult Very difficult Question: Please indicate your level of satisfaction/difficulty in planning your vacations online using each of the following devices. Please rate on a scale of 1 to 5 where 1 is very difficult and 5 is very easy. Base: European “mobile planners” (N=2,021); U.S. vacation planners; desktop/laptop (N=1,815); smartphone (N=1,428); tablet (N=974) Source: Phocuswright’s European Traveler Technology Survey 2015, Phocuswright’s U.S. Traveler Technology Survey 2015

© 2016 Phocuswright Inc. All Rights Reserved. 27 Smartphone European frustrations Travelers include… Unable to open multiple windows Small screen size 26% 48% Mobile websites/apps Awkward to type inferior to PC 35% 24%

Slow connection High roaming fees 33% 24%

Question: What, if anything, frustrates you when using websites/apps on your mobile phone for travel-related activities? Please select all that apply. Base: European travelers who conduct any travel-related activities via mobile phone (2015: N=2,668) Note: France, Germany and U.K. markets combined Source: Phocuswright’s European Traveler Technology Survey 2015

© 2016 Phocuswright Inc. All Rights Reserved. 28 Despite the growing pains, many travelers would be comfortable planning a vacation using only a smartphone.

I would be very comfortable researching and booking a vacation online using only a smartphone

14% 15% 19% 27% 24%

Completely Somewhat Neutral Somewhat Completely disagree disagree agree agree Question: Please indicate your level of agreement with the following statements. Base: U.S. online travelers (N=1,904) Source: Phocuswright’s U.S. Traveler Technology Survey 2015

© 2016 Phocuswright Inc. All Rights Reserved. 29 Has the mobile-first era arrived? Travelers are comfortable on mobile, but not always happy. For travel companies, there is still work to be done in optimizing – and fully leveraging – mobile devices. In the Loop: Mobile Through the Travel Life Cycle Mobile is playing a role in every phase of the travel life cycle.

Dream

Share Search But what impact is it having?

Experience Shop Buy

© 2016 Phocuswright Inc. All Rights Reserved. 32 Mobile booking is important…

© 2016 Phocuswright Inc. All Rights Reserved. 33 But transactions are just a small part of the story.

67% Booking still low, 64% especially in Germany, France and U.K.

37% 31% 27% 28% 26% 23% 20% 18% 18% 19% 17% 18% 17% 12% 9% 5% 4% 3%

Destination Selection Shop Buy Share China U.S. U.K. France Germany

Question: Which of the following, if any, have you done online (via desktop or laptop computer, tablet or smartphone) for your leisure travel in the past 12 months. Select all that apply. Base: Leisure Travelers: U.S.: (N=1,003); U.K.: (N=1,008); AUS: (N=1,011); FRA: (N=1,007); GER: (N=1,007); RUS: (N=995); CHN: (N=1,014); BRA: (N=1,000) Note: Totals may not add to 100% due to rounding. Source: Phocuswright's Search, Shop, Buy: The New Digital Funnel

© 2016 Phocuswright Inc. All Rights Reserved. 34 Travelers are more likely to use mobile… When choosing When deciding among travel During Travel When sharing where to go products and sellers experiences

Alex Hill @alexhilltelly Two nights in Notting Mobile can Hill = €220 for a two bed apartment. impress by Hotel Room = €370. enhancing Thanks @ the guest Devices Used When experience. Choosing Destination Used smartphone to update social networks with 58% trip-related posts

40% 19% 31% 12% 9% 9% 20% A superior mobile Smartphone app and website China U.S. U.K. 33% can sway purchase 16% 14% 11% 11% decisions. 17% 12%

Tablet France Ger Source: Phocuswright's Search, Shop, Buy: The New Digital Funnel

© 2016 Phocuswright Inc. All Rights Reserved. 36 Travel companies are increasingly focused on in-trip mobile services. Travel-Related Smartphone Functionality Used While Traveling

45%

31% 26% 22% 19% 20% 16% 13% 15% 12%10%12% 12% 10% 10%10% 9% 8% 7% 7% 6% 6% 4% 4% 4%

Check-in for flight, Reference existing Use as a boarding pass Book another hotel or Purchase extra services hotel, train or car hire travel reservation or ticket for flight or flight from travel providers information train (e.g., checked baggage, in-flight Wi- U.S. U.K. France Germany China Fi)

Question: Did you do any of the following online via your smartphone while traveling during this trip? Select all that apply. Base: Smartphone Owners: U.S.: (N=810); U.K.: (N=773); AUS: (N=799); FRA: (N=782); GER: (N=801); RUS: (N=837); CHN: (N=981); BRA: (N=895) Source: Phocuswright's Search, Shop, Buy: The New Digital Funnel

© 2016 Phocuswright Inc. All Rights Reserved. 37 Suppliers are leveraging technology to ease travel pain points and deliver innovative experiences.

Barcode Boarding Virtual Reality Lucy Pass (VR Room ) In-Room Controls Keyless Entry

© 2016 Phocuswright Inc. All Rights Reserved. 38 OTAs are looking beyond core travel products to in-trip products and services – a strategy that is already key in APAC.

The next step? Personalized concierge-style

services delivered during travel, including travel notifications, Movie tickets Mall discounts activities recommendations and Visa services WiFi cards contextualized in-trip offers. Local guides Airport pickups

© 2016 Phocuswright Inc. All Rights Reserved. 39 What is mobile’s greatest impact so far? Influence. Mobile has the power to sway current and future purchase decisions, drive personalization and define the guest experience. Booking: How High? Mobile bookings continue to rise, comprising a growing share of the online travel market across regions.

How high can they go?

© 2016 Phocuswright Inc. All Rights Reserved. 42 By 2017, roughly one quarter of online gross bookings in the U.S. and Europe and more than one third in APAC will be transacted via a mobile device.

Mobile Bookings as a Share of Online Bookings in Leading Regions (%), 2015 and 2017 36%

24% 24% 26% 17% 17%

2015 2017 APAC* Europe U.S.

Note: *Mobile Bookings Calculations for APAC includes China, India and Japan only. 2015 and 2017 projected. Sources: Phocuswright’s U.S. Online Travel Overview Fifteenth Edition, European Online Travel Overview Eleventh Edition, Asia Pacific Online Travel Overview Eighth Edition

© 2016 Phocuswright Inc. All Rights Reserved. 43 Mobile is having the biggest impact in APAC, driven by mobile-travel engagement in China.

42.9 43.9

25.5 2015 2017 18.5

12.2 12.2 7.9 7.3 7.7 3.2 3.1 4.6 4.6 3.3 1.3 1.6 2.6 1.6 2.4 1.8

APAC Europe U.S.

Note: 2015 and 2017 projected. Source: Phocuswright’s U.S. Online Travel Overview Fifteenth Edition, European Online Travel Overview Eleventh Edition, Asia Pacific Online Travel Overview Eighth Edition

© 2016 Phocuswright Inc. All Rights Reserved. 44 Mobile arrived in APAC while the online market was still maturing, and mobile is rapidly becoming the primary online booking channel in China, with other markets to follow.

Mobile messaging platform WeChat’s APAC OTAs, including India’s , “My Wallet” shopping channel, drive bookings with mobile-only deals, including flights and car rental, generally a contrast with the west is wildly popular in China

Source: Phocuswright’s Mobile Travel Landscape 2016

© 2016 Phocuswright Inc. All Rights Reserved. 45 In 2016, China will become the first true leapfrog mobile market: a majority of online bookings will be made on a mobile device.

© 2016 Phocuswright Inc. All Rights Reserved. 46 The mobile share The U.S. is slightly ahead of of China’s online Europe in mobile, where markets travel market will like France and Germany lag. jump from less In France, only 20% of online than 1% in 2012 to bookings will be transacted via 60% by 2017. mobile by 2017.

© 2016 Phocuswright Inc. All Rights Reserved. 47 Mobile Share of Online Travel Gross Bookings by Country, 2015 and 2017

China 45% 60% India 13% 25% Japan 26% 35% APAC France 15% Europe 20% Germany 17% U.S. 24% 18% 2015 25% Scandinavia 16% 2017 21% 16% 23% U.K. 21% 29% U.S. 17% 26% 0% 10% 20% 30% 40% 50% 60% 70%

Note: 2015 and 2017 projected. Source: Phocuswright’s U.S. Online Travel Overview Fifteenth Edition, European Online Travel Overview Eleventh Edition, Asia Pacific Online Travel Overview Eighth Edition

© 2016 Phocuswright Inc. All Rights Reserved. 48 Online Penetration Mobile is playing a key role in APAC < U.S. & Europe Asia Pacific as the region’s online markets mature. But online penetration still lags the U.S. and Europe, slightly tempering mobile’s role in APAC’s overall travel market.

© 2016 Phocuswright Inc. All Rights Reserved. 49 Mobile Share of Total Travel Market by Country, 2015 and 2017

China 12% 24% India 5% 11% Japan 9% 13% APAC France 6% Europe 9% Germany 7% U.S. 11% Italy 7% 2015 10% 2017 Scandinavia 10% 14% Spain 7% 11% U.K. 12% 17% U.S. 7% 12% 0% 10% 20% 30% 40% 50% 60% 70% Note: 2015 and 2017 projected. Source: Phocuswright’s U.S. Online Travel Overview Fifteenth Edition, European Online Travel Overview Eleventh Edition, Asia Pacific Online Travel Overview Eighth Edition

© 2016 Phocuswright Inc. All Rights Reserved. 50 What share of travelers has booked via mobile? In Europe, mobile In most markets, incidence is low, but China is an exception. More than one quarter of booking is the country’s young, tech-savvy traveler in the low population booked travel via mobile in single- the past 12 months. digits.

Source: Phocuswright's Search, Shop, Buy: The New Digital Funnel

© 2016 Phocuswright Inc. All Rights Reserved. 51 Mobile Booking Incidence Among Leisure Travelers 26%

9%

5% 4% 3%

China U.S. U.K. France Germany

Question: Which of the following, if any, have you done online (via desktop or laptop computer, tablet or smartphone) for your leisure travel in the past 12 months. Select all that apply. Base: Leisure Travelers: U.S.: (N=1,003); U.K.: (N=1,008); AUS: (N=1,011); FRA: (N=1,007); GER: (N=1,007); RUS: (N=995); CHN: (N=1,014); BRA: (N=1,000) Note: Totals may not add to 100% due to rounding. Source: Phocuswright's Search, Shop, Buy: The New Digital Funnel

© 2016 Phocuswright Inc. All Rights Reserved. 52 When travelers do book via mobile, what drives the decision?

© 2016 Phocuswright Inc. All Rights Reserved. 53 In the U.S., confidence and ease of use are the top drivers for booking air and hotel via mobile. Mobile Booking Drivers, Air and Hotel (U.S. Travelers)

Used to purchasing on my phone 39% Booking online travel with smartphone is as easy as with a desktop or laptop 39% Found a great deal on my phone, booked on the spot 36% Travel app makes it easy to book 36% Typically book on my smartphone 36% Enjoy trying new things on smartphone 35% Needed to book at last minute 29% Not sure 5%

Question: What are some of the reasons you used a smartphone to book hotels or flights online in the past 12 months? Select all that apply. Base: Smartphone bookers (N=711) Source: Phocuswright’s U.S. Traveler Technology Survey 2015

© 2016 Phocuswright Inc. All Rights Reserved. 54 What’s the outlook for mobile booking growth? All signs point to a continued rise, and in leapfrog markets, mobile is likely to dominate online bookings. Across markets, widespread ownership of mobile devices, relatively higher travel planning incidence – especially among millennials – and an ever-improving user experience suggest that there is plenty of room for growth. Mobile Winners and Losers As mobile’s footprint grows, so does its potential to influence competitive dynamics within the travel marketplace.

Who’s Winning on Mobile?

Channels Products Apps vs. Web

© 2016 Phocuswright Inc. All Rights Reserved. 57 For mobile shopping… intermediaries rule. Qunar’s Hotel OTAs have bet big on Booking Path mobile, and their efforts are paying off

Metasearch players are targeting mobile with assisted bookings

Source: Phocuswright Inc.

© 2016 Phocuswright Inc. All Rights Reserved. 58 Flight and Hotel Shopping Via Smartphone, by Channel (Smartphone Owners) Flights Hotels

18% 18% China China 64% 63% 13% 10% U.S. U.S. 33% 30% 4% 2% Germany Germany 20% 15% 9% 6% U.K. U.K. 18% 16% 9% 2% Supplier France France 14% 10% OTA

Question: Which of the following travel websites or apps did you use to shop for flight(s)? Please indicate if you used each website on your desktop computer, smartphone or tablet. Select all that apply. Base: Online Flight and Hotel Shoppers: U.S.: (N=440); U.K.: (N=393); AUS: (N=574); FRA: (N=359); GER: (N=394); RUS: (N=365); CHN: (N=628); BRA: (N=560). *Smartphone and Tablet are based on only those who own the device. Source: Phocuswright's Search, Shop, Buy: The New Digital Funnel

© 2016 Phocuswright Inc. All Rights Reserved. 59 For travel booking, the story is more mixed.

Source: Phocuswright’s Mobile Travel Landscape 2016

© 2016 Phocuswright Inc. All Rights Reserved. 60 Which travel products sell best on mobile?

It varies by market. In the U.S. and APAC, OTAs transact roughly two thirds of mobile gross bookings.

In Europe, OTAs’ mobile share is just 43%, due in part to strong direct air and rail bookings.

Source: Phocuswright’s Mobile Travel Landscape 2016

© 2016 Phocuswright Inc. All Rights Reserved. 62 Hotels, a key mobile focus for global OTAs, are the most popular mobile product in the U.S. and China.

Source: Phocuswright’s Mobile Travel Landscape 2016

© 2016 Phocuswright Inc. All Rights Reserved. 63 Hotel and Air Booking, Hotel Stayers/Flyers Only (U.S. Travelers)

Smartphone Tablet 33%

26% 26%

20%

Hotel Air

Question: Which travel products have you researched or booked online using your tablet/smartphone during the past 12 months? Select all that apply for the products you researched or booked. Base: Hotel stayers (2015 N=1,524; 2014 N=2,438; 2013 N=1,969) Source: Phocuswright’s U.S. Traveler Technology Survey 2015

© 2016 Phocuswright Inc. All Rights Reserved. 64 But in Europe, where the hotel landscape is highly fragmented, air and rail suppliers come out on top.

Source: Phocuswright’s Mobile Travel Landscape 2016

© 2016 Phocuswright Inc. All Rights Reserved. 65 And while mobile air booking hasn’t caught on everywhere, flight shopping is popular across markets.

Air travel’s simplicity makes it easy for travelers to check routes and prices via mobile.*

*Ancillaries could Flight shopping on complicate things… ’s

© 2016 Phocuswright Inc. All Rights Reserved. 66 Flight and hotel shopping via tablet (Tablet Owners)

54% China 52%

55% Germany 26%

45% France 15%

25% U.K. Air 26% Hotel 36% U.S. 34%

Question: Which of the following travel websites or apps did you use to shop for flight(s)? Please indicate if you used each website on your desktop computer, smartphone or tablet. Select all that apply. Base: Online Flight Shoppers U.S.: (N=440); U.K.: (N=393); AUS: (N=574); FRA: (N=359); GER: (N=394); RUS: (N=365); CHN: (N=628); BRA: (N=560). *Smartphone and Tablet are based on only those who own the device. Source: Phocuswright's Search, Shop, Buy: The New Digital Funnel

© 2016 Phocuswright Inc. All Rights Reserved. 67 App vs. Mobile Website

© 2016 Phocuswright Inc. All Rights Reserved. 68 Travel apps are more popular for travel shopping in China and the U.S. than they are in Europe, where mobile websites are dominant.

2% 2%

China 5% 41% 42% 9%

Germany 4% 7% 37% 27% 18% 7%

France 7% 19% 28% 19% 15% 12%

U.K. 4% 14% 41% 14% 19% 7%

U.S. 5% 19% 40% 17% 14% 5%

I only used apps I mostly used apps I used both apps and mobile websites I mostly used mobile websites I only used mobile websites Don’t know/not sure Question: While shopping for this trip online with a mobile device, how often did you use apps (instead of mobile websites)? Base: Mobile Shoppers: U.S.: (N=280); U.K.: (N=193); AUS: (N=283); FRA: (N=175); GER: (N=183); RUS: (N=260); CHN: (N=683); BRA: (N=365) Note: Totals may not add to 100% due to rounding. Source: Phocuswright's Search, Shop, Buy: The New Digital Funnel

© 2016 Phocuswright Inc. All Rights Reserved. 69 In the U.S., travelers were roughly equally likely to book via app versus mobile website. Mobile Booking: App vs. Mobile Web (U.S. Travelers)

Last Mobile 48% Last Mobile Hotel Booking 52% 50% Air Booking 50%

Mobile website Application

Question: Thinking back to the last time you booked a hotel or flight online with your smartphone, did you use an app or mobile website? Base: Smartphone bookers (N=711) Source: Phocuswright’s U.S. Traveler Technology Survey 2015

© 2016 Phocuswright Inc. All Rights Reserved. 71 OTAs’ powers of comparison are a draw for mobile shoppers, and the big global players often have more resources to devote to customer acquisition. For suppliers, though, in-trip services are a potent hook for app downloads.

And once an app is downloaded, it has the potential to influence the trip life cycle, foster loyalty and capture bookings the next time around.

© 2016 Phocuswright Inc. All Rights Reserved. 72 In the U.S., for example, where OTAs dominate mobile shopping and booking, the top travel app is an airline, not an OTA.

#1 travel app among U.S. travelers

© 2016 Phocuswright Inc. All Rights Reserved. 73 Travel App Popularity, Smartphone Only

(U.S. Travelers) American Airlines 27%

21% , TripAdvisor 18% United Airlines Hilton HHonors 16% IHG, Hotels.com, Uber 15% CheapOair, , Hyatt Hotels 14% Travelzoo, Booking.com, 13% Kayak, Southwest Airlines HotelTonight, U.S. Airways 12% Fly Delta, TripCase, 11% Hotwire, Marriott International Starwood Priceline.com, Lyft, 10% Hotels & Resorts, Airbnb , Air , 8% Enterprise Rent-A-Car Hostelworld, CheapTickets 7% JetBlue, , , 6% Hipmunk Avis Car Rental, 5% Getaways 4% Hertz Rent-A-Car 3% Couchsurfing, TripIt, 2% , HomeAway & VRBO, GateGuru, Virgin Atlantic Booking Now, SeatGuru

Question: Please take a moment to think about the travel-related apps you have on your smartphone. Which of the following, if any, do you have? Select all that apply. Base: Smartphone owners (N=1,521) Source: Phocuswright’s U.S. Traveler Technology Survey 2015

© 2016 Phocuswright Inc. All Rights Reserved. 74 In Europe, app popularity varies by market. Top Free Travel Apps,* Europe France Germany U.K. (#3) (#3) (#1)

(#4) (#6) (#2)

(#6) (#8) (#4)

(#7) (#9) (#7)

(#13) (#13) (#8)

*Top free Google Play Apps, Travel and Local category (April 16, 2016). Includes travel suppliers, intermediaries, metasearch and marketplace apps only. Source: SimilarWeb

© 2016 Phocuswright Inc. All Rights Reserved. 75 For travel companies competing to drive app downloads, though, one factor matters most: ease of use. Easy to use 51%

Popular travel brands I know and trust 40%

Best prices 35%

Same providers I typically book with 34%

Same travel brands I used on a PC 32%

Question: Why do you use these particular travel apps? Select all that apply Base: Use Travel Applications (N=1,081) Source: Phocuswright’s U.S. Traveler Technology Survey 2015

© 2016 Phocuswright Inc. All Rights Reserved. 76 Who wins on mobile? Market, product, brand and context matter, but usability is paramount. Travelers want mobile websites and apps that are meticulously designed and easy to use. The mobile landscape is set. Travel companies have mastered the mobile basics, but significant work remains. The next group of mobile travel standouts will leverage:

• Localization and market-specific targeting • Personalization • On-demand mobile services • Context awareness • An increasingly connected mobile ecosystem (e.g., deep linking) • Emerging technologies including mobile wallets/stored value, messaging/AI, beacons and more

The race is on to develop the next generation of mobile travel services. U.S. Traveler Technology Survey Sixth Edition

Phocuswright fielded an online consumer survey November 13-21, 2015 through Global Market Insite, Inc. The survey targeted the general U.S. population that traveled for leisure and plans travel online. To qualify for participation in the study, respondents were required to:

• Have taken at least one leisure trip at least 75 miles from home in the past 12 months that included paid lodging and/or air travel • Have used the Internet to select a destination, compare and choose leisure travel products, book travel, or share travel experiences in the past 12 months; and • Have played an active role in planning their leisure trips in the past 12 months

Phocuswright received 2,029 qualified responses, and the respondent pool can be projected with confidence onto the U.S. online traveler population. The error interval for analysis is +/-2.2% at a 95% confidence level. Respondents who qualify for the survey are referred to in this report as “online travelers.”

© 2016 Phocuswright Inc. All Rights Reserved. 79 European Traveler Technology Survey 2015

Phocuswright fielded an online consumer survey through Global Market Insite, Inc. The survey targeted French, German and U.K. consumers who travel for leisure and plan travel online. To qualify for participation in the study, respondents were required to:

• Have taken at least one leisure trip at least 100 kilometers from home in the past 12 months that included paid lodging, air and/or rail travel • Have used the Internet to select a destination, compare and choose leisure travel products, book travel, or share travel experiences in the past 12 months; and • Have played an active role in planning their leisure trips in the past 12 months

Phocuswright received a total of 4,120 (France N=1,328, Germany N=1,405, U.K. N=1,387) qualified responses, and the respondent pool can be projected with confidence onto the French, German and U.K. online traveler populations. The error interval for this analysis is +/-2.7 for France, Germany and the U.K. Respondents who qualified for the survey are referred to as “European Travelers.”

© 2016 Phocuswright Inc. All Rights Reserved. 80 Search, Shop, Buy: The New Digital Funnel

Phocuswright fielded an online consumer survey between December 12-17, 2014 through Global Market Insite, Inc. in eight countries targeting the general adult populations who have Internet access and travel for leisure. To qualify for participation in the study, respondents had to indicate they had taken at least one leisure trip at least 75 miles from home in the past 12 months that included paid lodging and/or air and/or rail travel (rail not required in all markets). An additional screener required consumers to have played an active role in planning their leisure trips, and go online to either research travel destinations, and/or shop or book travel and/or share their travel experiences. Qualifying respondents are referred to as “Leisure Travelers.” Responses are weighted to represent the adult online population that travels for leisure. The term “lodging” is used in relation to this survey to refer to the broad range of paid accommodations, including hotels, other nightly priced lodging products, timeshares and vacation rentals.

© 2016 Phocuswright Inc. All Rights Reserved. 81 The Mobile Travel Landscape 2016 A Multi-Region Report May 2016 Written and Researched by Cathy Schetzina Walsh