Relying on mobile for capturing incremental revenues

As devices like the iPad and Android tablets become more popular, there is a significant opportunity to monetize them in future.

It is being acknowledged that the focus for mobile has turned and monetization is pulling ahead as the primary driver. Mobile provides unique opportunities to improve the traveler experience, which can lead to customer loyalty. It can also be a great mechanism to capture incremental revenues through upsell of ancillary revenues and reduce operating costs through self-service. This is the primary lens through which travel companies should view monetization, says Glenn Gruber, AVP, Market Development, Travel Technologies, Ness Technologies.

Revenue Expectations

Jeroen Van Velzen, CEO, Sound of Data says mobile will not be a key revenue generator for most travel industry players in 2012.

“For online players, we see revenue percentages between 3-6 percent created for mobile – depending on markets, not including tablets. That might be key revenue for some, others might invest in other distribution technologies that will bring them more revenue,” said Van Velzen, who is scheduled to speak at the forthcoming Travel Distribution Summit Europe 2012, to be held in London (April 17-18) this year.

He acknowledged that the overall sentiment is an overhyped expectation of the revenue potential for mobile in travel. “It’s still a fairly immature distribution channel,” he further added.

Mobile can be a great channel for generating ancillary revenues. For instance, when it comes to guests staying in a hotel, hoteliers can take advantage of mobile coupons to promote the onsite restaurant, spa, and services.

“Our company is built on the fact that mobile will be the primary device for travel suppliers for informing, communicating, and transacting with travelers. According to us, mobile should be first and foremost a service channel and can only become a successful sales channel if you get the service part right. So the only sale you’re going make is the sales that is being perceived as a service,” explained Van Velzen.

The right approach

Travel companies are slowly taking control of how to go ahead with ancillary services selling via mobile phones and tablets.

Van Velzen recommend the following steps:

First, the customer is expecting mobile offerings to be part of a complete mobile experience. A lot has been said about “less is more” on mobile, but we see customers moving towards expecting a more comprehensive service offering. So we are moving form “less is more” to “light; not less.”

Meaning the mobile customer expects to get the core functions of you as a supplier.

“We launched an itinerary management app with some additional services with one of our OTA customers and the single biggest question was ‘Why can’t I book my flights using the app?’ So if you feel ancillary sales is the low-hanging fruit, you will have a hard time explaining to your customer why your core offering is not available on mobile. The minimum viable mobile product for most customers is a lightweight offering of the core offerings that you have available on other channels as well,” shared Van Velzen.

Van Velzen further added: “Every mobile ancillary opportunity you feel you have for a customer should be packaged in a service offering. So you will have to find out for what specific customer in which moment in time in which specific context your offering is perceived as a service. Furthermore, mobile is generally more attractive for last-minute ancillaries. And then the obvious stuff: make sure you transfer personal details to the mobile environment prefill all the booking data you gathered on that same customer. Start with products that do not need credit card confirmations like insurance and restaurant reservations.”

Key considerations

According to Paul Hastings-Gayle, head of distribution, HostelBookers.com, the key considerations while going for ancillary services selling via mobile phones and tablets should be as follows:

1. Make sure detailed and extensive research of your own market is undertaken.

2. Clear objectives for being in the mobile market are established from the outset.

It is so easy to follow the crowd or, due to fear or “follower pressure,” move into this space without business clarity.

“Getting the objectives absolutely clear from the outset allows the rest of the project to be about excellence in execution against the objective. Should a company offer full/partial product/services? An app/simple a mobile friendly site? Prioritize existing/new customers? See this as part of an overall marketing/acquisition strategy? Where, when, and how is success to be measured? Looking into the mobile and tablet market is the same as moving into any other new channel/territory the same level of analysis and business questions need to be considered,” said Hastings-Gayle.

Conclusion

Too many companies still try to do too much with mobile. Less is definitely more when it comes to mobile. Of course, you can still do a lot but you have to meter the data flow and focus heavily on efficient user interface.

Travel companies believe that consumers are ready and anxious for these types of services to be offered. The hospitality industry is very intrigued with the mobile service opportunity.

At the same time, companies are generally unfamiliar with mobile and their organisational structures make it difficult for them to move quickly in the adoption and deployment of new technologies and services. As such, they will require a good amount of education and a strong industry first mover to spur the industry into wholesale adoption.