Skift Take

People in the West traditionally have used mobile phones as a research tool and a desktop for transactions whereas in the East, since people mostly skipped the offline era, users began directly in the digital age through mobile. Companies looking to boost mobile commerce need to create unique touchpoints and tailor their product offerings to achieve a greater sales mix.

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The use of mobile devices to make online transactions is increasing remarkably and mobile continues to have a growing influence on how consumers plan and book travel. Yet mobile conversions still lag behind desktop. In this report we aim to estimate the size of mobile commerce globally as well as understand the regional variations in mobile commerce penetration in the travel industry. We focus on two travel sectors – hotels and flights – in North America, APAC, and Europe. 

For hotel bookings, we started by assessing the share of online mobile hotel bookings on both direct channels and online travel agencies (OTAs) at a country level and then calculated the hotel mobile revenue by applying the percentage share to the hotel industry revenue. 

As per our analysis, China and Australia are leading the pack with approximately 35 percent of total hotel bookings revenue coming from mobile devices. However, only 44 percent hotel bookings are made online in China while the share of online bookings in Australia is as high as 80 percent, meaning that mobile is a much more dominant online channel in China than in Australia. U.S., Canada, India, and Japan are not too far behind, with mobile bookings accounting for approximately 20 percent of total hotel bookings. The average share of online bookings is around 45 percent for these countries. 

To estimate mobile flight bookings, we deduced mobile booking shares from mobile traffic shares at a regional level. Through this exercise, we found that shares of mobile traffic as well as mobile bookings are the highest for APAC, followed by Europe, and North America. 

We published last week our latest Skift Research report, Mobile Commerce in travel: A Global Perspective. Below, we share a snippet of the report.

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Putting a Number to it – Market Estimation 

While there is consensus that mobile accounts for a significant share of travel revenues and its share will continue to grow in the next few years, there is still a lack of industry-level estimates as to how big the travel mobile commerce market is. To fill the gap, we attempted to quantify m-commerce in travel with our own estimates. We focused on hotels and airlines, two of the largest travel sectors, for our estimates.

Hotels – Methodology and Results

The data used for this exercise is for 2019, as 2020 and 2021 witnessed limited travel with probably stop-gap travel behaviour, the effect of which we will touch upon briefly later in the report. As a first step, we broke down the process of booking hotels by channel and further by the device used to access that channel as shown in the chart below.

Exhibit 7: Hotel bookings process

Next, we estimated the share of hotel bookings made online at a country level based on secondary research, company filings, and our own estimates. For the ensuing country-level as well as region-level splits by channel and device, we mainly used STR data for hotel industry revenues, Similarweb data for direct channel vs. OTA splits and OTA device splits, and D-edge data for direct channel device splits. Our final estimates are tweaked to reflect our analysis of other proxy data. 

Exhibit 8: Hotel bookings by channel and device, 2019 


As per our analysis, China and Australia are leading the pack with approximately 35 percent of total hotel bookings revenue coming from mobile devices. However, only 44 percent hotel bookings are made online in China while the share of online bookings in Australia is as high as 80 percent, meaning that China’s online commerce is much more skewed towards mobile than in Australia.

U.S., Canada, India, and Japan are not too far behind, with mobile bookings accounting for approximately 20 percent of total hotel bookings, or approximately 50 percent of online bookings. 

Exhibit 9: Mobile hotel booking revenue share at a country level, 2019

Our estimates for the regional level mobile bookings are based on the assumption that the countries under analysis represent the regional trends. So when rolling up, mobile accounts for the highest revenue share in Asia Pacific, followed by North America and Europe, reflecting the country-level trends. 

Exhibit 10: Revenue share of mobile hotel bookings at a regional level, 2019

Another trend that is worth noting is how, in general, online travel agencies (OTAs) generate more mobile revenues than hotel direct channels. As shown in our estimate above, for instance, 80 percent of OTA revenues in China come from mobile devices and the number for direct channels is only 60 percent.

This disparity can primarily be attributed to a poor hotel mobile interface in comparison to an OTA’s and substandard consumer analytics at a supplier level which inhibits providing tailored services to the customers while OTAs immensely invest on customer analytics and provide very streamlined and intuitive filters to make the booking process super easy on mobile devices.  

However, there is great regional variance in both OTA dominance and OTA vs. direct mobile booking differences. Based on the transcripts of earnings call of Expedia and Booking.com, the two biggest OTAs in North America and Europe – the regions which are relatively less dependent on OTAs, around 40-50 percent of room nights booked were via a mobile device in 2019. On the other hand, as per the earnings call of MakeMyTrip, the biggest OTA in India which is now growing its presence in the broader APAC region, mobile bookings reached 78 percent for total hotel bookings across all its brands in 2018. The regional variation is clear here. 

Europe seems to be a bit of an outlier here. But it is noticeable that despite being OTA heavy, the overall mobile bookings share is low in the region, indicating an inherent consumer trend of travellers not being comfortable using mobile either on OTA or direct supplier websites and applications.

Exhibit 11: Direct and OTA hotel bookings via mobile, 2019

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Tags: airlines, customer journey, desktop bookings, direct bookings, ecommerce, hotels, mobile, mobile apps, mobile bookings, mobile commerce, online booking, online travel agencies, travel

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