Mobile devices and metasearch engines provide the hotel industry’s biggest opportunity for increasing bookings in 2014, according to executives speaking at the Expedia Partner Conference.
Editor’s note: This article was originally posted on 23 December 2013. The article was chosen as part of Hotel News Now’s look back at 10 years of the hotel industry.
LAS VEGAS—Metasearch and mobile have the momentum as key influences on the hotel industry going into 2014.
The topics were a familiar thread of conversation during this month’s Expedia Partner Conference, with a backdrop of confidence for the upcoming year.
“(Personal computers) are now a minority of connected devices in the world,” said Mark Okerstrom, executive VP and CFO of Expedia Inc. “All eyeballs are moving to digital mobile.”
Okerstrom said the growth of mobile in the U.S.—it now owns a 20% share of the market—outpaces the growth of all other consumer media categories, including television, online, radio and print.
“That media consumption is now going to translate into how consumers are buying,” he said.
Okerstrom said hotel roomnights booked on Expedia via mobile are up more than 135% this year, and the company expects another 100% increase in 2014.
Johan Svanstrom, president of the company’s Hotels.com and Venere.com business units, said more than 50% of the 2014 traffic on Hotels.com will come from mobile devices.
That carries over to business travelers, said Rob Greyber, president of Egencia, which is Expedia Inc.’s corporate travel business unit.
“Business travelers are emboldened by the technology they have available literally at their fingertips,” he said. “More than 90% of business travelers are traveling with a smartphone; more than 60% are with a tablet. The majority of them are traveling with three or four devices.”
He said more than 20% of business travel trips are changed mid-trip, which makes the impact of mobile technology even more profound.
“A significant percentage of hotel rooms are booked with mobile, and most are booked within 10 miles of the hotel,” he said.
Mobile on the rise
The rise of mobile technology has led to incremental hotel room sales, said John Kim, senior VP of global products at Expedia Inc.
“From the desktop to the tablet it’s probably cannibalization,” he said. “On the actual phone we’re seeing a definite trend (of incremental sales).”
Dara Khosrowshahi, CEO of Expedia Inc., said the length of stay at hotels is shrinking in large part because mobile is encouraging more last-minute reservations.
Okerstrom provided tips for hoteliers when considering their mobile strategies, including:
• Have a dedicated handset experience. “You don’t want to take a PC experience and translate it to the mobile device,” he said.
• Incorporate responsive design into the platform. “A page that can detect the kind of device you are using at the time is important,” he said. “You’re going to have (more) fragmentation of devices going forward.”
• Be wary of apps unless you can provide large-scale results. “Apps are important but very difficult to get scale,” he said. “A really good mobile web experience is good enough.”
The metaseach revolution
The rise in popularity of metasearch engines continues to impact the industry—even down to the relationship between online travel agencies, such as Expedia, and their hotel clients. These websites amalgamate searches for hotel rooms across multiple websites to give consumers one list of results. They allow a quick comparison of hotel room prices posted across the Internet.
“Metasearch absolutely exploded on a year-to-year basis,” Okerstrom said. “Twenty-eight percent of consumers like to search multiple sites for hotel stays.”
Expedia Inc. got into the metasearch game with its acquisition of Trivago, and Okerstrom promised the site will become more visible in the United States by launching television commercials in 2014.
In the meantime, the metaseach playfield often pits Expedia against its own clientele when both are trying to have listings at the top of any listing.
“We’re going to try to outbid you,” Khosrowshahi said when asked about that by an attendee during a town hall session. “We compete very aggressively in metasearch. We view it as a customer-acquisition channel.”
The CEO said Expedia bids for listings based on predicted gross profit—the margin it makes on the transaction.
“Meta is both a challenge and opportunity,” Svanstrom said. “There is something with the meta proposition that consumers like.”
Svanstrom said meta sites are competing for the same eyeballs Expedia Inc.’s business units try to attract, so they are competitors and business partners at the same time. He also believes mestasearch sites are a permanent fixture in the hotel-booking landscape.
“But there are a lot of things the metas don’t do; they don’t have full booking process, the content and all of that,” Svanstrom said.
“The advantage that we have as an OTA is that we have so many properties and so many eyeballs that we can spread out cost base across a lot of bookings that happen in the system,” he said.