Travel is on the move—again. Travel companies can’t afford to stand still.
The travel industry has been upended more than most by digital technology. More than 95 percent of travelers today use digital resources in the course of their travel journeys: dreaming about, planning, booking, experiencing, and reflecting on their trip. The average customer visits or uses a combination of 19 websites and mobile applications during the course of one trip, and many travelers use digital tools to share their experiences and reactions throughout the process.
Until recently, the travel revolution played out primarily on personal computers (PCs). Online travel agencies (OTAs) grabbed about a third of U.S. online bookings while search engines and metamediaries, companies that act as single points of contact between suppliers and intermediaries on the one hand and online customers on the other, inserted themselves as major influencers in the travel journey. Now the landscape is shifting again, this time to mobile platforms. IDC expects the number of U.S. mobile users to grow at an annual rate of 9 percent for the next several years. The number of Internet-connected mobile devices worldwide will increase by 16 percent per year, led by strong growth in developing countries, according to Ovum. Meanwhile, PC sales are in steep decline. PhoCusWright expects mobile’s share of U.S. travel bookings to grow from 4 percent in 2013 to 12 percent by 2015, while eMarketer projects the value of U.S. travel purchases made on smartphones and tablets to soar from $26 billion in 2014 to $65 billion in 2018.
This shift presents multiple challenges. For one thing, travel companies need to address a fast-growing sales-and-marketing channel. For another, mobile usage adds complexity to the relationship between travel companies and their customers as travelers use multiple devices—starting on a PC, moving to a smartphone, then to a tablet, and back to the PC, for example—to dream about, plan, and book their trips. In 2013, almost half of all travelers using digital resources began the dream phase of their travel journey on one device and completed it on another. This makes it increasingly difficult for travel companies to follow individual travelers’ identities throughout their journeys.
We believe that the impact of mobile technology on the travel industry will be at least as far-reaching as that of the PC and the Internet. Suppliers and intermediaries—including OTAs, metamediaries, and search engines—need to come to grips with mobile’s transformative potential in all of its present and future manifestations: smartphones, tablets, “wearables,” “drivables,” and innovations still in development, such as virtualization. For many travel suppliers, this shift means an opportunity to strengthen or reestablish customer relationships that have been eroded by online intermediaries. For intermediaries, it means rethinking their offerings to protect the positions they have established on the PC. In both cases, companies will need to understand their customers’ mobile-usage trends, tailor their marketing, and even adapt their operating models accordingly to win. They will also find themselves working with a shifting universe of “gatekeepers,” whose influence over how consumers use their mobile devices, including where they spend their time and the apps they access, can be compared (albeit imperfectly) to the role of search engines on PCs.
This report examines the changes under way and offers some suggestions on how travel companies can make the most of the opportunities they present.