Is Your Hotel Losing Money on Mobile?
Remember when you booked a hotel room online for the very first time? It may have been in the late 90s, when online booking was a brand new thing. You probably used one of those old desktop computers with a tube monitor and dial-up connection. You may have wondered if your reservation would be honored when you arrived at the hotel.
By now, most of us have completed hundreds of online travel reservations. Far from being exotic or dangerous, we consider cyberspace to be the safest and most effective place to book a hotel room. Using OTAs or direct booking platforms is the rule. Giving someone your credit card details over the phone is exception.
As travelers grew more accustomed to booking hotels with desktop and laptop computers, hotels and OTAs have worked hard to improve their booking portals. Easy booking is a valuable amenity in itself.
The ability to book on laptops and desktops was, however, only the first step. Smartphones and tablets have since exploded onto the scene, claiming a greater proportion of online activity - including hotel reservations.
And yet, the hotel industry as a whole has been slow to respond.
Recent data from the travel analytics company Phocuswright shows that mobile bookings have already become the preferred method for people aged 18-34 (i.e. millennials). We can only assume that as more people become comfortable with researching and booking on their phones, more reservations are going to come in this way.
Is your hotel in a good position to capitalise on the growth of mobile booking? Probably not - at least compared to the big OTAs. Further research (including this report by Criteo, a Paris-based advertising company) demonstrates that OTAs are in prime position to capture the lion's share of mobile bookings. Why? Because they're investing in apps. They're creating mobile booking experiences that are robust, fast, secure, and easy-to-use. Meanwhile, suppliers (that's you, the hotel manager) are overly-reliant on desktop/laptop computers for direct bookings, and have barely scratched the surface of mobile.
Earlier this year, at Phocuswright's Europe conference, a lot discussion on mobile bookings came from a source you might not expect: Facebook. Nikhilesh Ponde, the company's head of global travel strategies, cited a growing imbalance between the number of bookings being made through smartphones and the meager amounts of cash hotels are spending to promote through mobile channels. He argued that hotels should adopt "open architecture" to connect with travelers through the few apps they use most, such as Messenger. According to Facebook, two billion messages per month are being exchanged between individuals and travel brands on the Messenger app. This is an extraordinary piece of data. It also looks like someone is jockeying for position in the mobile bookings market.
It goes without saying that hoteliers should be open minded about how to capture mobile business. If connecting with travelers on Facebook Messenger can do that, we should develop best practices to that end. We should, however, be wary of anyone who seeks to broaden the divide between suppliers and bookings. Mr Ponde said that Facebook wants to help travel brands "to drive business growth by reaching (their) customers directly"; but let's not forget that Facebook caters to OTAs as much as anyone else.
As hotel bookings tilt increasingly toward the mobile space, hotels are at risk of losing more business to powerful OTAs with the funding and talent to build cutting-edge mobile booking platforms. Much has been written in the last few years about the gap between OTA and direct bookings, and how to narrow it. Unless hotel owners and managers look seriously at ways to accelerate and facilitate direct bookings in the mobile space, the gap may grow wider than ever.
For further industry insight, please click below.
Dean Minett
Director - Minett Consulting
Minett Consulting
