Mobile devices drive online travel bookings

More American consumers who book travel online are shopping those trips on their mobile devices, then booking them on the desktop websites for OTAs, hotels, airlines and car rental companies, according to a report released last month by Phocuswright and Millward Brown Digital.

As a result, a higher percentage of visitors to OTAs and supplier websites are following through and booking travel because more of those visitors already conducted the travel-shopping process on their mobile devices.

Last year's shop-to-book conversion rate jumped 17% for hotel desktop websites, 7% for OTAs and 2% for airlines, even as the percent change in monthly unique visitors dropped for airlines and OTAs and rose only slightly for hotels.

Photo Credit: Source: Phocuswright/Millward Brown Digital

In a July 9 webinar in which the report's results were presented, Douglas Quinby, Phocuswright's vice president of research, said that many travelers will use their smartphones to research travel and then migrate to desktop to complete the purchase.

"All of this planning that's taking place on other devices is going to mean that travelers are a little bit more focused, a little bit more qualified and have honed in on what they want when it comes time to actually make that purchase," Quinby said.

Meanwhile, airline-ticket shoppers on OTAs are far more likely to jump to the carriers' website for booking than hotel-room shoppers, suggesting both the greater hold OTAs have over the hotel industry and the perceived benefits of booking on airline websites.

Photo Credit: Source: Phocuswright/Millward Brown Digital

About two-thirds of airline shoppers on OTAs switch to carriers' websites to book, while less than half of hotel-room shoppers on OTAs switch to hoteliers' websites for bookings. By comparison, about one in six airline website shoppers switch over to OTAs to book their flights, while one in four hotel website shoppers do the same.

The discussion of online hotel bookings on hoteliers' websites vs. OTAs has gained relevancy in recent years, as hoteliers have made a considerable effort to drive more online traffic through their own websites to reduce distribution costs. Notably, the world's largest hoteliers in 2012 debuted to help drive hotel-room bookings away from OTAs. And Marriott International, Hilton Worldwide and Starwood Hotels began to offer free WiFi at their hotels to loyalty members who book directly through company channels. (Starwood and Hilton's free WiFi offer also extends to travelers who book through travel agents who use certain portals.)

With airline tickets, Quinby says OTAs face an uphill battle securing more bookings than with hotel rooms.

Photo Credit: Source: Phocuswright/Millward Brown Digital

"The gap in benefits and comfort for booking on the airline site vs. the OTA is so much greater [because of factors such as] loyalty-program membership, miles and ancillaries," Quinby told Travel Weekly. "Travelers tend to be more brand loyal to airlines than hotels, simply by virtue of the fact that there are only four major carriers."

At stake is a U.S. online travel market that will account for 45% of domestic travel spending this year, up from 41% three years ago, according to Phocuswright.

In fact, U.S. annual online-travel spending will have surged 37% between 2012 and 2016, to $166.2 billion. During that same time period, online spending on airline tickets will have advanced 28%, while online hotel-room spending will have climbed 55%.

OTAs will continue to account for about two-thirds of that U.S. online-spending number, spurring a battle for supremacy between Expedia Inc. and Priceline Group, Nos. 1 and 2, respectively, on the 2015 Travel Weekly Power List. Expedia earlier this year acquired smaller competitor Travelocity for $280 million and has a pending $1.34 billion agreement to buy Orbitz Worldwide. Such an acquisition would give Expedia and Priceline a combined share of the U.S. OTA market "well into 90%" and put smaller competitors "very much in a compromised position," Quinby said.

Meanwhile, the popularity of "alternative accommodations" sites such as Airbnb and HomeAway is growing rapidly. Granted, they still account for a relatively small slice of that online travel market: last year's alternative accommodations website visitor traffic was about half of hotel website traffic and less than a quarter of OTA traffic, while the number of Americans who visit Airbnb's mobile website is about one-sixth of Expedia's mobile-visitor numbers and a third of Marriott's.

Photo Credit: Source: Phocuswright/Millward Brown Digital

Still, the average monthly number of visitors to alternative accommodations sites jumped 24% from 2013, according to the Phocuswright and Millward Brown Digital report, in part fueling the recent multibillion-dollar valuations of Airbnb (for more on the share economy, see "Sharing-economy awareness soars, young usage up").

And that jump isn't just from Airbnb loyalists. Of OTA visitors who shopped for hotels in February (the most recent month tracked), 15% "cross-shopped" on Airbnb, according to the study. That represented a jump from just 4% cross-shopping done by OTA hotel shoppers last July.

During that same time period, OTA hotel shoppers' "cross-shopping" on metasearch leader Kayak (which is owned by Priceline Group) doubled.

"Cross-shopping is surging," said Ryan Williams, vice president of travel at Millward Brown Digital, in the July 9 webinar. "People are increasingly finding what they're looking for on those competitive sites."

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