Romance + Revelry = Mobile hotel bookings?

E-commerce used to be a desktop only activity however the rise of the smart phone has given consumers the ability to make last minute and/or spontaneous purchases. One industry that is benefiting from this trend is the online travel agencies. They are benefiting as bookings not advertising drive their revenues. A typical problem for most companies is that while mobile drives extra traffic it tends to be at lower average sales levels due to the smaller advertising and screen. This is a problem these agencies tend not to have as their money is made when a room is booked and because they are last minute purchases the revenue tends to be incremental and does not cannibalise desktop revenues.

This is backed up by the CEO of Expedia (EXPE) Dara Khosrowshahi, "most of our sites are seeing 20 percent or more of their transactions coming from mobile, it’s by far our fastest-growing channel.” Note mobile includes tablets. "Approximately 70% of our mobile hotel bookings occur within 24 hours of stay furthering our belief that mobile represents an incremental opportunity," said Expedia spokeswoman Mallory Seubert.  This is great news for the online travel agencies as last minute bookings tend to go direct to the hotels, now users can use apps on their phone to compare prices based on their current location at the last minute.

The major beneficiaries are EXPE the owner of Expedia, hotel.com and Hotwire and Priceline (PCLN) the owner of Booking.com and Agoda. The main difference between the two is that EXPE is a more US centric business while PCLN is more dominant in Europe. The trend to mobile has pushed PCLN into action acquiring Kayak for $1.8 billion due to Kayak's expertise and growth in mobile downloads and the ability to grow Kayak internationally.

Source: Priceline

EXPE has released the most interesting study teaming up with Harris to commission a study into the trend.Their findings suggested that mobile usage tends to spike around holidays late at night such as New Years.

The most common reasons to book a room was necessity, they had too many drinks and could not find a way home.

“The next most common reason was personal, they had found love (or believed they had) and choose to explore those emotions immediately, in a nearby hotel room. “(Wording straight from the Harris study.)

The study went further onto say that their busiest periods were Valentine’s day, St. Patricks Day and the weekend after New Years Eve suggesting that romance and revelry were the key ingredient to mobile bookings. Here’s to hoping a mobile booking for all on New Years Eve!

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive is long PCLN

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