ARCHIVES: This is legacy content from before Industry Dive acquired Mobile Commerce Daily in early 2017. Some information, such as publication dates, may not have migrated over. Check out our topic page for the latest mobile commerce news.

Millennials’ mobile booking preferences pressuring brands to improve apps: report

Millennial consumers’ reliance on low-cost online travel agencies will force established brands such as American Airlines, United Airlines and Starwood to double down on making their mobile applications more appealing to the demographic, according to a Strategy Analytics report.

Those under 35 years old severely under-index in airline and hotel app usage but over-index on online travel agencies such as Airbnb and Kayak, posing a big challenge for hotels and airlines, according to the Travel Demographics Report Series published by Strategy Analytics. The report’s conclusions point to how technology that eliminates booking friction will accelerate the movement to mobile, increasing the importance of making apps attractive to millennials, a big buying group in the years ahead.

“With solutions like Apple Pay – once it’s fully integrated with travel sites – it could be argued it’s easier to book on mobile than on a computer,” said Josh Martin, director of analytics research for Strategy Analytics, Newton, MA, and the report co-author. “I expect we will see continued movement towards solutions that make booking easier on mobile and it presents an opportunity for airlines and hotels to engage in renewed consumer outreach.”

Booming agencies
In an encouraging industry observation, those aged 26 to 35 over-index on travel apps. Much of this usage is focused on local travel apps or online travel agencies, pointing to a boon for the agencies, but a problem for hotels and airlines.

Airbnb app.

Continuing to offer new services and integrating new technology is no longer a luxury but a requirement, according to the report.

“There are likely more fundamental questions that need to be asked alongside – why are people not using my app?” Mr. Martin said. “They include the rewards system for engendering loyalty amongst travelers. Are the rewards enough to make even infrequent travelers loyal?” he asked. “Can travel be brought more local so brands are not only a part of the travel planning experience but perhaps have a role in day to day planning?

“I think finally the question is can a company really make travelling that much easier with an app or service that it becomes a true product differentiator?” he said.

The report’s conclusions show that online travel brands are benefiting from moving away from transactions to influencing all parts of the travel experience, including loyalty programs, personalized messages and real-world sales.

Although streamlining the mobile commerce experience is still a big priority for many, brands such as Expedia, Travelocity, Kayak, Orbitz and Priceline are also looking at how to leverage other media to gain market share.

For instance, Expedia has been playing up content instead of commerce in its application. Last spring, Expedia rolled out a new feature called Media Lounge within its app that recommended  other travel-themed apps.

United Airlines mobile app.

Moreover, Expedia pulled its Expedia Rewards loyalty program into the app so that travelers could redeem points for making mobile bookings.

Similar to Expedia, Kayak also offered additional app features including flight trackers and a tool to manage itineraries. Kayak’s app also pulled in other interesting information into the app, such as baggage fees, weather and images of destinations. The paid version also included maps of airport terminals.

Kayak’s mobile site is a streamlined version of the app, with the features primarily tailored towards consumers looking for flight, hotel or car information.

If established brands such as American Airlines, United Airlines, Marriott and Starwood lose the mobile battle for the next generation, it will re-establish the power structure in the travel industry.

“If Kayak, Expedia, Orbitz and others become the gatekeeper for consumers with travelers simply opting for the cheapest option for each trip then partnering with those companies becomes more attractive,” Mr. Martin said. “It certainly doesn’t diminish the role hotels and airlines play in travel but it does introduce new companies that marketers need to add to their outreach plans.

“This is especially true with the influx of mobile-first OTAs that are helping to define the experience on mobile,” he said. “If brands have limited budgets or limited appetite for partnerships then perhaps those dollars and time get invested in other brands rather than the established players.”

Generating revenue
Despite a shifting industry power structure, an abundance of revenue-generating opportunities beyond just travel still exist.

Expedia Media Lounge feature.

If consumers do not use airline apps, or rarely use them, someone else can control that experience and generate money, further eroding the direct relationship a hotel or airline can offer a partner. 

“So, it’s about both today and the future,” Mr. Martin said. “Understanding how apps provide new marketing opportunities and revenue while also playing a critical role in the customer experience and potentially customer loyalty.”

Final Take
Michael Barris is staff reporter on Mobile Commerce