While the US travel industry has fully adopted the Internet as a customer service and internal efficiency tool, it has been slow to adopt mobile technology.

Published: 20 Aug 2009

While the US travel industry has fully adopted the Internet as a customer service and internal efficiency tool, it has been slow to adopt mobile technology.

In general, the US has been slower than other parts of the world to adopt mobile applications, and the travel industry has been no exception. Travel by nature is mobile and the majority of travelers carry cell phones. While some large companies in the travel and hospitality space are experimenting with mobile, most have failed to take advantage of the unique characteristics of this medium. Overall, the industry is missing the opportunity to enhance customer loyalty and reduce costs, two very important factors in this ailing economy.

Beyond Flight Status Alerts

Today, most large US airlines and hotels have WAP sites. Airlines offer SMS flight status alerts and hotels are experimenting with the use of SMS for marketing. iPhone apps too are becoming popular, particularly among travel intermediaries. But there is so much more that can be done with mobile to communicate with customers, improve loyalty, and increase revenues.

Airlines, hotels and car rental companies can all use text messaging as a way of offering last minute promotions or upgrades to customers. For example, a few hours before flight time, a message may be sent to frequent flyer members asking if they would like to upgrade or to resort guests asking if they would like to make reservations for dinner. For guests that arrive at their resort prior to check in, an automated text could be sent to their phone when their room is ready. And then throughout their stay, they could receive messages with specials on resort services. Not only do all these use cases improve customer satisfaction, but they help companies manage and monetize inventory.

Reflecting on my recent trip to Disney, I can think of at least two occasions where these mobile use cases would have improved my experience and benefited the Disney resort where I stayed. On our first evening there, we tried to make dinner reservations and could not find a table anywhere nearby until 9 pm. A text message sent to my phone that morning suggesting that I click to call the concierge to make dinner reservations would have greatly helped me and the resort. Instead of ordering pizza to the resort, we would have enjoyed a nice meal at one of the restaurants (and the resort would have enjoyed my cash). Another example that comes to mind revolves around the greatly overpriced “character breakfasts” (i.e. $35 per person to have toast and juice with Mickey). I overhead one of the hotel employees saying that the character breakfasts were suffering from the recession and were mostly empty. A special offer texted to me the night before for a discounted character breakfast would have made both me and my kids happy. After all, the hotel can still greatly profit, even by charging “only” $20 for toast and juice.

The examples above focus on the use of mobile to communicate with customers. However, mobile is also a great tool for efficiently and quickly communicating with employees and lowering internal operating costs. While most major European and Asian airlines offer some mobile boarding pass capabilities, few US airlines have done so. The combination of functional websites, airport kiosks, and mobile technology allows airlines to greatly reduce the number of people they require to arrange travel and process customers and their bags at airports.

There are many other use cases that will enable internal cost savings. For example, hotels are experimenting with using SMS as a way to inform housekeeping staff that a guest has arrived or required a special item to be placed in the room. Airlines and hotels can use also use SMS to communicate schedule changes, log hours, and deliver time sensitive communications about emergencies related to the weather, political events, etc. in the destination country.

Benefits

The benefits of the above described mobile solutions are clear - improved customer satisfaction, lower costs, and higher profits. Although each company must conduct its own ROI analysis, below are a few benefits that are common across many travel and hospitality sectors.

Widespread Reach

The mobile phone has become an important communication channel for enterprises. Ninety five percent of travelers carry a cell phone. Sixty-six percent of mobile phone owners use SMS and fifteen percent access the Internet through their phones. Travel applications are amongst the most popular applications used by smartphone owners. Using SMS as a way of checking flight status and receiving travel related alerts is one of the more popular enterprise applications for all phone users. With the price of texting and mobile Internet access falling and adoption rapidly growing, the importance of mobile too will grow.

Improved Customer Satisfaction

Customers benefit from a more personalized travel experience. Real time updates allow them greater control over their entire travel experience. Using the mobile phone to check in, track lost baggage, or find out when a hotel room is ready results in greater time savings and convenience to the customer. Also, mobile coupons and notifications on last minute seat, car, or hotel room upgrades offer cost savings opportunities.

Cost Savings and Higher Revenues

The use of text messaging to provide real time information about flight time changes, gate information, and boarding status can lower costs related to flight delays. Given that U.S. airlines lose over $7 billion each year due to flight delays (according to the Air Transport Association of America), this could be a significant benefit. In addition, proactively providing information to consumers leads to lower customer support calls. On average, sending an SMS costs approximately $0.01, compared to $10 per call with an agent or $0.40 per IVR call. Similarly, mobile check in is cheaper than physical check in.

Higher revenues can be attained through higher yields and more effective advertising. With airlines, hotels and car rental companies facing lower yields, the opportunity to send out last minute deals via SMS will complement on-going Internet and email marketing programs. In addition, mobile coupons have higher redemption rates (10% according to Yankee Group versus 1.2% for paper based coupons). Recently, MGM executives announced that the use of mobile has allowed them to increase occupancy as well as keep guests on property for meals and entertainment.

The Road to Higher Profitability

The use of the mobile channel will result in substantial benefits to all sectors within the travel and hospitality industry. Ultimately, happier customers are more likely to be loyal, thus leading to higher revenues. And higher revenues combined with cost savings will lead to higher profits.

Airlines and hotels abroad have already begun realising these benefits, particularly in Asia. A number of recent announcements from U.S. travel and hospitality companies indicate that US companies are beginning to catch on. For example, Hyatt and Wyndham recently announced new mobile sites with functionality similar to their PC sites and American Airlines announced the availability of mobile boarding passes at additional U.S. airports.

Each company must assess their own needs and map the use cases and technologies that enable them to best accomplish their goals. As seen in the financial services sector, SMS programmes are likely to be adopted first (due to the higher SMS penetration rate). Over time, as use of the mobile Internet grows, mobile applications and sites can be combined with SMS to achieve the true potential of mobile – mobile payments, paperless travel (with boarding cards, passports, visas and immigration forms residing on the mobile device), and a truly customized travel experience.

(Contributed by Sonali Shah, director of corporate development and strategy, VeriSign Messaging and Mobile Media)

Mobile Strategies for Travel USA 2009

Mobile Strategies for Travel USA 2009 will be held as part of EyeforTravel’s Travel Distribution Summit North America 2009 to be held in Chicago (September 16-17) this year.

For more information, click here:
http://events.eyefortravel.com/tdsusa/conference/

or contact:

Helen Raff
VP North America
+44 (0) 207 375 7582 (UK)
helen@eyefortravel.com