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PhoCusWright’s
MOBILE HITS
THE MAINSTREAM:
Technology and Industry Trends
EXECUTIVE SUMMARY
Written and Researched by
Norm Rose and Cathy Schetzina
®
PhoCusWright’s Mobile Hits the Mainstream: Technology and Industry Trends
February 2012
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PhoCusWright’s Mobile Hits the Mainstream: Technology and Industry Trends
February 2012
PhoCusWright Inc.
1 Route 37 East, Suite 200
Sherman, CT 06784-1430 USA
+1 860 350-4084
+1 860 354-3112 fax
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PhoCusWright's
Mobile Hits the Mainstream:
Technology and Industry Trends
Executive Summary
Written and Researched by
Norm Rose and Cathy Schetzina
Edited by Colie Hoffman
PhoCusWright’s Mobile Hits the Mainstream: Technology and Industry Trends is
published by PhoCusWright Inc. The information contained herein is derived from
a variety of sources. While every effort has been made to verify the information, the
publisher assumes neither responsibility for inconsistencies or inaccuracies in the data
nor liability for any damages of any type arising from errors or omissions.
©2012 PhoCusWright Inc. All Rights Reserved.
Philip C. Wolf
Chairman
Carol Hutzelman
Senior Vice President
Bruce Rosard
Vice President,
Sales and Marketing
Lorraine Sileo
Vice President,
Research
PhoCusWright’s Mobile Hits the Mainstream: Technology and Industry Trends
February 2012
PhoCusWright thanks its sponsors for
PhoCusWright’s Mobile Hits the Mainstream: Technology & Industry Trends.
Without their active support, this research would not have been possible.
Sponsors
Accor
Akamai
Allianz (Mondial Assistance)
Hilton Worldwide
Kony Solutions
Netbiscuits
Orbitz
QuickMobile
Starwood Hotels & Resorts Worldwide, Inc.
Tourism Queensland
Tourisme Montreal
Travel Guard
Visit California
Page iv
©2012 PhoCusWright Inc. All Rights Reserved.
PhoCusWright’s Mobile Hits the Mainstream: Technology and Industry Trends
February 2012
About PhoCusWright
PhoCusWright is the travel industry research authority on how travelers, suppliers and intermediaries connect.
Independent, rigorous and unbiased, PhoCusWright fosters smart strategic planning, tactical decision-making
and organizational effectiveness.
PhoCusWright delivers qualitative and quantitative research on the evolving dynamics that influence travel,
tourism and hospitality distribution. Our marketplace intelligence is the industry standard for segmentation,
sizing, forecasting, trends, analysis and consumer travel planning behavior. Every day around the world, senior
executives, marketers, strategists and research professionals from all segments of the industry value chain use
PhoCusWright research for competitive advantage.
PhoCusWright enables clients to bolster productivity through superior staff training and education. Scalable
products, customized programs and cost-effective delivery improve the performance of thousands of travel,
tourism and hospitality employees worldwide.
To complement its primary research in North and Latin America, Europe and Asia, PhoCusWright produces
several high-profile conferences in the United States and Germany, and partners with conferences in Canada,
China and Singapore. Industry leaders and company analysts bring this intelligence to life by debating issues,
sharing ideas and defining the ever-evolving reality of travel commerce.
The company is headquartered in the United States with Asia Pacific operations based in India and local
analysts on five continents.
PhoCusWright is a wholly owned subsidiary of Northstar Travel Media, LLC.
PhoCusWright Inc.
1 Route 37 East, Suite 200 • Sherman, CT 06784-1430 USA
+1 860 350-4084 • +1 860 354-3112 fax
www.phocuswright.com
©2012 PhoCusWright Inc. All Rights Reserved.
Page v
PhoCusWright’s Mobile Hits the Mainstream: Technology and Industry Trends
February 2012
Section 1
Introduction
A
fter years of speculation about when and
how mobile would impact travel, the
mobile platform is now influencing every stage
of the travel life cycle. Mobile is truly a global
phenomenon: Smartphone usage now exceeds
50% in the U.S. and Europe, with adoption
increasing rapidly in emerging markets. Mobile
devices have hit the mainstream, with broadreaching implications for travel strategy.
In 2008, PhoCusWright completed a landmark
study on the future of mobile travel. At that
time, mobile travel was in its infancy – rudimentary mobile websites and an early wave of
iPhone apps featured only basic functionality,
failing to exploit the mobile platform. The
word “tablet” had not entered the vernacular,
as the iPad was still to come. While mobile
commerce had taken its first steps, mobile
travel bookings represented a tiny fraction of a
percent of the U.S. online travel market.
Much has changed in just a few years. Today,
the usability of mobile travel offerings has dramatically improved and a growing number of
always-on, always-connected travelers are using
their mobile devices to research, plan and book
travel in unprecedented ways. Travelers are not
simply shifting activities from the computer
to the mobile device – many are doing things
they simply would not be have been able to
do before. Mobile bookings, while still small
as a share of overall and online bookings, have
grown tremendously. Mobile is presenting
©2012 PhoCusWright Inc. All Rights Reserved.
unique opportunities for marketing and customer service, as well as distribution.
As mobile technology continues to evolve,
travel companies struggle to remain current
with quickly changing traveler expectations
and development best practices. With major
media and technology companies continually raising the bar for mobile innovation,
yesterday’s mobile enhancements are soon
outmoded. To provide fresh insight into the
trends and opportunities shaping mobile
travel, PhoCusWright undertook a second
comprehensive mobile study in 2011, assessing the size and dynamics of the mobile travel
marketplace within select markets in North
America, Latin America, Asia Pacific and
Western Europe.
This report presents select technology and
industry findings from the larger research
project with a focus on the U.S. market.
Consumer travel findings from the project
were published in Mobile Hits the Mainstream:
Leisure and Business Traveler Trends (January
2012).
Key Findings
nU.S. leisure/unmanaged business travelers
booked nearly US$2.6 billion via mobile
devices in 2011. By 2013, mobile will
account for 2.6% of all U.S. travel bookings.
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PhoCusWright’s Mobile Hits the Mainstream: Technology and Industry Trends
nIn mature markets, booking will not become
significant until the mobile user interface is
further simplified. Voice recognition will play
a major role. In emerging markets, however,
mobile bookings will grow rapidly as developing countries adopt mobile as their primary
booking channel.
February 2012
nPlayers from outside the travel space have the
potential to significantly disrupt the distribution landscape. Leading mobile platforms
(BlackBerry, Google, Apple) have or will
create native functionality specific to travel
needs.
nMobile enables unprecedented marketing
nSmartphone adoption tops 50% in the U.S.
and Europe while remaining below 20% in
much of the rest of the world. In the developing China and India markets, feature phones
continue to dominate, but smartphone adoption is projected to increase quickly over the
next few years.
and merchandising opportunities, potentially
made even more powerful by the ability to
exploit personalization. As push notification
becomes more personalized, the line between
an offer and a service will blur, leading to
higher conversion rates on mobile offers.
nA new era of interactive objects will be criti-
nWhile Japan smartphone penetration remains
well below 20%, the country’s private network continues to be a model for mobile
communications. Adoption of smartphones
(e.g., iPhone, Android) is growing, but
most Japanese consumers rely on advancedfunction feature phones with m-payment and
near-field communications (NFC)-like functionality.
nBusiness travelers are the early adopters of
mobile technology. In the U.S., 73% of business travelers own a smartphone, compared
to 52% of leisure travelers.
nTablet penetration is growing rapidly across
the globe, requiring travel companies to
provide tablet users with a more immersive,
interactive experience. Low-cost tablets (e.g.,
Kindle, Nook, India-produced tablets) will
spark the next wave of change, untethering
the planning process from the desktop and
becoming a primary means to connect to the
web for established and emerging markets.
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cal for tourism worldwide as travelers learn
to click on tags for information, special offers
and traveler reviews. Whether via Quick
Response codes, Microsoft Tags or NFCenabled stickers, the world around us will
come alive with information.
nMobile payment systems based on NFC will
not be fully deployed for 3-5 years. At that
time, the way travelers pay for goods and
services will change, allowing more instant
purchases and tailored offers.
Research Background
and Methodology
The objectives of Mobile Hits the Mainstream
include the following:
1.Understand what represents true mobile
innovation and who is driving it.
2.Anticipate how changes in devices and networks will affect development.
3.Identify nascent mobile technologies and
©2012 PhoCusWright Inc. All Rights Reserved.
PhoCusWright’s Mobile Hits the Mainstream: Technology and Industry Trends
assess their potential application to travel.
4.Size the current and projected mobile travel
booking volume in the U.S.
5.Understand U.S. corporate and leisure traveler trends and desired services for the mobile
device.
6.Identify strategic opportunities for suppliers,
intermediaries, corporate travel organizations
and destination marketers.
The study was conducted in the second half of
2011 and consisted of two concurrent phases:
1.Executive interviews/market sizing
2.Consumer research
The results presented in this report are primarily based on executive interviews, supplemented with mobile data from third-party sources.
To provide a more holistic view of mobile
travel dynamics, selected consumer research
findings are also included.
February 2012
results. Projections for 2011-2013 are based on
company interviews, consumer research and
market developments. PhoCusWright also considers historical growth and economic trends
when developing its forecasts. Estimates and
projections are for gross bookings – the retail
value of travel sold – after cancellations and
excluding ancillaries. Figures are presented in
US$ billions.
These are just a few of the findings from
PhoCusWright's Mobile Hits The Mainstream:
Technology and Industry Trends.
Purchase the full report here:
http://www.phocuswright.com/products/4107
Executive Interviews/
Market Sizing
PhoCusWright completed over 50 executive
interviews with mobile and travel technology providers, travel suppliers, online and
traditional travel companies, and corporate
travel organizations. Interviews analyzed
current mobile technology trends, current
mobile travel applications and future plans in
selected countries within North America, Latin
America, Western Europe and Asia.
U.S. mobile m-commerce sizing includes 1)
overall mobile bookings via U.S. online travel
agencies and 2) direct bookings for the U.S.
air, car and hotel segments.
Figures for 2010 are based on actual company
©2012 PhoCusWright Inc. All Rights Reserved.
Page 3
PhoCusWright Inc.
1 Route 37 East, Suite 200
Sherman, CT 06784-1430 USA
+1 860 350-4084
+1 860 354-3112 fax
www.phocuswright.com