Mobile Technology’s Impacts on Travel

The Internet has changed how people travel given rise to many new travel tech companies providing the same services as the traditional travel industries but with more efficiency, lower prices and increased volume discount for consumers. There are 3.9 billion smartphone subscriptions worldwide in 2016, this figure is expected to grow to 6.8 billion by 2020, or a 70 percent of the world population will be using smartphones (Ericsson, 2016). According to TripAdvisor, 42 percent of travelers around the world have used a smartphone to plan or book a trip, while 55 percent say they used a laptop. Nearly 72 percent of travelers use their smartphones to look for destinations while on vacation, 67 percent use it to find things to do and 64 percent use it to read reviews in 2015. 20 percent of travelers booked via a mobile app because it was easier or faster to access and 29 percent felt obtained a better price (TripAdvisor, 2015). In order to capture this market opportunity, many companies are developing their own mobile applications allow them to increase their brand’s presence and engage more productively and profitability with current and future customers, and those companies that are not mobile-ready will lose consumers and stay outside the game.

Without doubt, the increasing use of mobile technologies is due to its convenience. For example, many travelers now are not needed to plan trips in advance they used to make prior to departure, due to GPS systems or location-based services on smartphone apps provide access to real-time data, travelers can now postpone their travel decision (e.g., finding attractions, restaurants, and souvenir shops) (Xiang, Magnini, & Fesenmaier, 2015). According to Apteligent (2016), travelers are considering three points when using a mobile app:

 Speedy app responsiveness and load time (86% of respondents).

 Simple payment process (70.9%).

 Easy to navigate interface (62.6%)

It is expected global travel and tourism sales will continue growing from US$2,260 billion (2013) to US$2,840 billion (2017), while global online travel sales accounted for US$590 billion in 2013, 25% of total sales and is expected to increase to almost 30% of total sales in 2017 (Euromonitor International, 2014). In the aspect of mobile travel bookings, Criteo (2015) examined more than 1 billion bookings generated by hundreds of online travel agencies and travel suppliers worldwide. The study shows the share of mobile bookings worldwide has nearly doubled, increasing from 12 percent to 23 percent between 2014 and 2015. This mobile adoption is also benefiting all travel sub-categories (apartment, hotel, car, air, etc.). Apartment rentals segment is leading with 31 percent mobile bookings, hotel accommodation with 28 percent, car rental segment is growing the fastest, growing from 18 percent to 26 percent YOY, and flights with 17 percent.

Travelers’ mobile use behavior differs for certain bookings (Figure 4).

  Figure 1: Share of Bookings by Device for Main Travel Categories

During the spring and summer seasons, the share of bookings generated from smartphones is about three times higher (from 19 percent to 26 percent from January to June) for OTAs compare to hotel suppliers, while suppliers don’t pass the 7 percent during the entire period.

Mobile technologies are affecting traveler’s decisions, because they are not constrained to limited information as in few years ago. Dal Fiore, Mokhtarian, Salomon, and Singer (2014) pointed out 4 benefits using mobile technologies:

 Increased capacity: mobile technology enables us to be reachable and to access work resources everywhere, it permits us to spend time in places to which we would not have considered travelling otherwise.

 Increased knowledge: Information and Communication Technology (ICT), especially the Internet is helping to reduce information asymmetry, because we can now access all kinds

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of information and communication resources, it makes us more informed about places we might consider going and things we might consider doing, and can create the desire for entirely new trips.

 (Perhaps) reduced obligations: mobile technology enables us instantly to communicate with our travel destinations and meeting peers, it delivers us more flexibility vis-à-vis our obligations towards them, typically in the form of cancelling, rescheduling, or changing the location of meetings.

 (Perhaps) increased preferences: mobile technology improves our feeling of personal safety when travelling, or fulfils our social needs of maintaining contact while away it might increase our preference to travel.

In a study conducted by Deloitte (2015) revealed that 72 percent of travelers research destinations when planning a trip and 59 percent compare prices, which 56 percent of travelers think price is the primary driver when choosing a travel company. It is expected the growth in the global metasearch industry will continue, generating an annual growth rate of more than 40 percent from 2014 to 2017. As an example of this metasearch market, Trivago and Skyscanner reported year-on-year revenue increases of 68 percent and 42 percent, respectively, in 2014.

Due to the increasing use of smartphones, travelers have more options when booking and search for destinations, they have access to more information and look for answers to their doubts.

Consumers’ decision making when planning a trip is being influenced by other consumers’ opinions, 46 percent search for feedback and comments by other people, 42 percent choose review websites as resource when planning a holiday and 59 percent say review websites have the most influence on their booking decisions. Fotis, Buhalis, and Rossides (2012) obtained a similar result, he found that 45% of travelers search for ideas on where to go for holidays.

The information generated by other consumers is opening untapped markets and new travel destinations. In this aspect, travel business should increase their presence in social media and encourage a better engagement with consumers. Social media has become an important information resource providing travelers advices about destinations, hotel, restaurant, etc. Social media can have positive impacts on travelers’ decision as reducing risk, facilitate booking decision and help them to know more about the destination. It was found that travelers has changed their choices after reading reviews on social media, 42 percent of UK holidaymakers booked their original choice after using social media and 58 percent changed at least once, 35 percent changed their choice of hotel, 15 percent switched airline or the agent/operator they planned to book with and 12 percent choose a different country after consulting social media (World Travel Market, 2010). It is estimated that online reviews influence over US$10 billion a year in online travel purchases (Vermeulen &

Seegers, 2009).

Social media is being used not only before planning a trip, but especially after holidays are more used for experience sharing with friends or other travelers. This has increased the effect of social media in many aspects of tourism; the ratings, the comments, and the experience shared will strongly affect travelers’ final decision, because they generate interest to others and therefore become part of viewer’s travel plans. The information shared online by own relatives and friends is considered as most trustworthy, followed by information provided by other travelers, whereas advertisement in mass media are the least trustworthy (Fotis et al., 2012).

The travel experience is divided in three phases (Gretzel, Fesenmaier, & O'Leary, 2006): 1) the anticipatory phase; 2) the experiential phase; and 3) the reflective phase. During the anticipatory phase, we have just seen that travelers look for information in social media and review websites, but during the experiential phase tourists are interacting with the destination, trying to know more about the environment, in this phase mobile technologies become also important because they provide location-based services that can facilitate more detailed information about nearby places including souvenir shops, restaurants, bus stations, and even a restroom, that tourists maybe did not know before during the anticipatory phase (D. Wang & Fesenmaier, 2013). Kramer, Modsching, ten Hagen, and Gretzel (2007) found that travelers’ choices can be spontaneously changed during the experiential phase by the use of smartphone applications.