Here are more reasons to prepare for mobile to imminently overtake desktop for online travel bookings, along with more signs that travel can obviously learn something from retail which far surpasses it with mobile sales.
It may be surprising to some that, in 2016, more than half of all travel bookings still occur offline by phone or by retail travel agents.
But the 50/50 split is more than a respectively number: By 2020 the travel industry will have the highest percentage of online payments in relation to all sales than any other industry on Earth.
Some 44 percent of travel sales and bookings are expected to occur online through either desktop or mobile devices during the next five years, according to data from Euromonitor International. That’s four times more than the retail industry (11 percent) and nearly five times as much as restaurants and dining (seven percent).
Global travelers will book about $278 billion worth of travel online during the next five years, smaller than retail ($792 billion) but another affirmation that travel is one of the world’s most lucrative industries for digital commerce.
Euromonitor also projects the lodging and accommodations will have an 8.6 percent compound annual growth rate through 2020, compared with 1.2 percent compound annual growth for offline accommodation bookings.
Michelle Evans, Euromonitor’s digital consumer manager, said online travel agencies are leading the overall growth in online and mobile travel bookings but that U.S. direct lodging bookings also “show promise” (see other examples of this in Chart 4 below).
“Over half of mobile buyers turn to their phones for every step of the path to purchase,” said Evans during a Euromonitor webinar last week discussing consumer trends in digital commerce.
“Of course it’s important to note that’s only two to seven percent of all consumers using mobile. So encouraging consumers to browse and compare prices via mobile is certainly a key lynchpin to the mobile purchase.”
It’s clear from these projections and in the charts below that the travel industry needs to make stronger concerted efforts to compete with industries like retail and dining to get more consumers buying travel on the devices they carry everywhere.
Chart 1: This chart considers only mobile payments and illustrates how top industries fit into all mobile payments made around the world. Retail will still account for the lion’s share of mobile bookings by 2020 when considering all global industries. Mobile travel purchases and bookings will make up about 15 percent of all mobile payments made by 2020 if transport, lodging and ticketed attractions and entertainment are added together.
Chart 2: It’s clear from this chart that the U.S. will have some of the lowest percentages of transport, lodging and attractions and entertainment proximity, or mobile near field communication (NFC), payments–those made with digital mobile wallets like Apple Pay. Countries like China and Japan will also have low percentages for proximity travel payments while the UK and Russia will have much higher percentages for such payments.
Evans said it’s naive to discredit plastic credit cards, “Card-issuing banks still have a lot of say in how the space is going to develop. Obviously they’ve spent a lot of years sending money safely and efficiently so I do not think they’re out of this space yet.”
Chart 3: Below are some of the markets that will have the highest percentages of online travel bookings by mobile devices by the end of this decade. More than 40 percent of Sweden’s online travel sales, for example, will be made on mobile devices in 2019.
Chart 4: These are five markets Euromonitor is highlighting as promising for all digital and online payments by 2020, including all devices and desktop. Though it’s interesting that direct airline or lodging bookings are considered promising for these five countries there are a myriad of factors that could refute that projection.
“Even though digital commerce is a relatively new concept, it is unfolding differently across various markets,” said Evans. “The commonality is that digital commerce is growing fast, but that growth is taking different shapes. Therein lies the challenge of identifying the next digital commerce opportunity.”
Evans added the U.S., China and Brazil’s outlook is “also promising” for online bookings through both online travel agencies and directly through brand.com sites.
Chart 5: Some social media mobile apps like Facebook and WeChat have “book now” buttons that entice travelers to book travel on their devices. While this data below is from 2014 and isn’t specific to travel, Evans said it still represents which markets are most comfortable with buying something via social media in 2016.
Source: Euromonitor International
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Photo Credit: Expedia on a mobile phone. PlaceIt by Breezi