January 31, 2008

Mobile Booking Hype?

Is mobile travel technology bringing the next wave of travel e-commerce?

The numbers look convincing. The International Telecommunication Union (ICT) states that in 2008, 50% of all (over 3.4 billion!) people will use a mobile phone. Compare that to 10% of the world with Internet access, and it would seem wise to back a technology with 5 times the number of users. However, there are several factors that mobile technologies need to overcome in order to facilitate large ticket e-commerce.

The booking technologies that companies are proposing are relatively straight forward. Soren Langelund, Asia regional director for Mobile Travel Technologies shed some light into this area:

"Asia's airlines, hotel groups and travel intermediaries can enable their customers to make new bookings and self-manage existing reservations via SMS, via the browsers on their mobile phones or via a downloadable mobile application. This provides a highly convenient service when users are on-the-go or have no access to an Internet-connected PC. "Online" travel is no longer just for PC Internet users."

Now this sounds very promising, and I am fully supporting the advancement of mobile technology (I have an N95 to prove it), however, finding what is needed for a consumer to perform all of these tasks, not just technologically, but psychologically and economically as well, will shed some light into the viability of these new technologies.

Firstly there has to be a willingness to book travel tickets via electronic means. The current trends for online booking are showing a decline in the number of users that are willing to book online. The decline was cited by PhoCusWright, which found that online travel booking by Internet-using travelers had fallen to 62% in 2006 from 68% in 2005. Bookings among those who usually arranged travel offline increased to 31% in 2006 from 25% in 2005. Henry Harteveldt from Forrester summed it up in the Times when he said,

“Customers are tired of spending two or three hours trying to find the airline or hotel or vacation package that meets their needs,"

There will be great advances in semantic Internet booking technology that will bring lost customers back to online booking, but the point is, there are few great interfaces that will continue to retain customers and force growth. Can you see a mobile device with the capabilities for powerful online booking if there are still major issues surrounding booking through PCs?

Secondly, there has to be trust in the medium. The publics trust in online bookings and reservations has taken quite some time to develop. Every time my Mom hears a story on the news about a computer virus, she will give me a call and warn me that my information is not safe. This conception is common. Can you see the public willing to shell out thousands of dollars though a mobile device? News stories like this one do not help.

Thirdly, there must be usage of a mobile Internet connection, that is if the program/app is to book live inventory. The fact is, most people use their mobile phone for talking, based on ComScores Oct 2006 research, U.S. mobile Internet usage is at 19% and Europe averages 29.2%. I am sure that these numbers are slightly higher in recent months, however, average people are not using their phones for complex operations. I was only able to find research on the G8 countries as the mobile Internet penetration rates are lower elsewhere. So I am curious as to how we will see killer mobile apps for travelers without a large mobile Internet user base.

I got the opinion of Fred Ghahramani, founder of airG, owners of the worlds largest mobile community. Here are his thoughts on mobile travel bookings,

"It's possible that I'm completely missing the point, but for most people purchasing an airline ticket is an expensive out-of-pocket investment - something that the average person does maybe once a year. So they'll probably take their time, do their research, shop around, and these are all things that are done on a PC or in person at a travel agent. In contrast, most transactions generated on a mobile phone are impulse buys, a ringtone here, a small video there etc. Now there's definitely going to be really busy people out there that travel in high frequencies for business that are not spending their own money, but most people like this already have in place a support network of secretaries, assistants, and corporate travel agents. For these reasons, I can't really see buying airline tickets on your mobile phone to become a mass market practice. Now there will always be other applications, perhaps skytrain tickets, movie tickets, etc, so it should be interesting to see the market develop."
As devices become more robust, and as data access rates lower, mobile computing will be ubiquitous with travelers. In the immediate future I can see apps for directions, local tours and attractions, recommendations, destination information etc, but I have difficulties seeing mobile bookings for large ticket items. You can see some examples on the iPhone app site. Apple currently has 42 apps dedicated to travel, one by Travelocity. Am I wrong? Do you book large ticket items over your phone? Let me know what you think.

ReadSpeaker AudioFeed - Podcast of this blog


Happy Hotelier said...

Well Phil

The presentation at PhoCusWright got me thinking...and in the car on my way back I received a reservation from a lady by telephone, because she couldn't see anything on my hotel website with her Blackberry.

At least one thing learned from ITB 2008: Look into making my website readable by Mobile devices.... Groan

Thanks again for all your efforts!

Philip Caines said...

Hi Guido,

I was thinking about this topic on my way home as well. I had three connecting flights, and it would have been great to have a reference program on my phone to tell me the updated gate info ect, just to help stream line the entire ordeal. I am warming up to the concept, but one step at a time. It was good to meet you at ITB!