Hotels need to be in the app game or risk losing ground to tech-forward competitors.
by Beth Kormanik
iPhone apps
You may be right if you think the apps for smartphones like the iPhone or Android are passing phases. But that doesn’t mean you can afford to sit this one out.
PhoCusWright’s senior corporate and technology analyst, Norm Rose, said the market is only growing for consumers who use smartphones, and they want to use them to make travel decisions. Rose presented his conclusions in a Webinar this week called “The iPhone and the Future of Mobile Travel Applications.” He also is co-author of PhoCusWright’s Mobile: The Next Platform for Travel.
Rose predicted that the craze over apps may last only four or five years, but they will be crucial. Hotels and other hospitality-related industries need to plan a smart mobile strategy that will bridge the near- and long-term. Part of that is cementing your mobile brand in the minds of consumers so they stay loyal to your brand in the future.
“The message for the travel industry is the mobile revolution is not just another channel,” Rose said. “Most have thought it as just another touch point, when in fact it’s a new platform. It enables different and innovative personal interaction and the information needs to be filtered in a certain way for it to be relevant.”
An instructive example of what happens when established companies fail to innovate can be seen in the rise of Expedia and Travelocity at the start of the dot-com boom.
When hotel chains failed to deliver robust Web sites with online booking capabilities, they opened the door for online travel agencies to enter the marketplace and earn the loyalty of customers. The same thing could happen with mobile apps.
In May 2009, Apple’s App Store listed more than 2,000 travel applications, making travel the fifth-largest category. When travel-related apps such as subway maps or weather forecasters are added, it rises to the No. 4 spot.
“Travel companies need to drive the development of location and situation-centric travel downloadable apps to ensure that third parties don’t emerge as new players in the travel distribution chain,” Rose said.
He cited Choice Hotels as a good example of a chain offering one application that serves multiple brands. He said it was an easy-to-use site that offers hotel options based on location. Alternative lodging options also are taking advantage of the app craze, he said, citing InnTouch Bed and Breakfast Locator and Hostel Hero.
The sheer number of smartphones in use is one reason why hotels cannot afford to cede the ground to new competitors. There are 4 billion mobile devices in use today, Rose said, and an additional 1 billion to come in the next few years. It took 100 years for land line phones to spread to more than 80 countries worldwide, he said, while their wireless descendants did it in 16.
PhoCusWright found a direct correlation between smartphone owners and frequent travelers. Its most recent consumer technology survey, released in May, showed that people who take more than four leisure trips annually are more likely to have a smartphone. Similarly, people who use social networking sites such as Facebook and Twitter also tend to be on the cutting edge of mobile technology and take an average of 4.7 trips a year.
Meeting these travelers on their own technology terms can be the key to capturing their business.
Many already are using their smartphones as travel aides. PhoCusWright’s research found that 10 percent of respondents had visited a travel-related mobile web site, while 9 percent had used their smartphones to purchase travel or make a reservation. Another 7 percent had used their phones to make changes to an existing reservation. Six percent had downloaded travel-related mobile applications, and 4 percent had used their phone as a boarding pass.
Mobile travel apps should offer three key benefits, Rose said. They should empower mobile travelers, build ancillary revenue for the travel provider, and improve travel efficiency.
For hotels, that means offering self-services such as making and changing reservations, cancellations and mobile concierge services. The mobile concierge in particular can empower travelers because they do not have to go to a certain part of the hotel or stand in a line to get the information they need. Hotels could also potentially save on personnel costs if this information is available on a mobile device. Hotels can build ancillary revenue by selling services such as spa treatments or restaurant reservations, or encouraging guests to use these outlets with coupons.
Eventually, Rose said hotels will be able to offer mobile check in and check out, and even offer a way to have secure entry to the guest room through a mobile key chain. In Japan, hotels are experimenting with having mobile devices control in-room lighting and entertainment.
“There’s no doubt in my mind mobile is here and now,” Rose said, “and the opportunity to make money around it and make the experience better for the frequent traveler is real.”
