APAC LEADS IN MOBILE

APAC continues to lead the push towards a completely mobile traveler lifecycle, according to Phocuswright.

While smartphone bookings soar globally, some countries continue to blaze their way as leaders in mobile travel. Asia Pacific (APAC) leads all markets in mobile booking adoption, according to Phocuswright’s Global Online Travel Overview Fourth Edition. The report provides and compares total and online travel gross bookings for six regions: the U.S./Canada, Europe, Eastern Europe, APAC, the Middle East and Latin America.

APAC mobile bookings are projected to grow from 24% of the online travel market in 2015 to 37% in 2017. That compares to both the U.S. and Europe, where mobile penetration is expected to be just 24% by the end of this year.

Electronic wallets from companies including Alipay in China and “Pay” in India, mobile payment solutions and call-to-book/partial online payment options have opened the floodgates for mobile transactions.

“In China, mobile-only discounts from intermediaries are fuelling smartphone bookings among the country’s massive subscriber base,” says Phocuswright’s senior vice president, research, Lorraine Sileo. “In India, online travel agencies are aggressively promoting app downloads as mobile has emerged as a new battleground for intermediaries.”

While travel sellers in Japan are not promoting mobile over other channels, suppliers and intermediaries have embraced mobile by enhancing their mobile web and app offerings.

Combined mobile gross bookings of China, India and Japan will reach US$105.9 billion by 2020, up 325% over 2015. In APAC, online travel agencies are at the forefront of mobile innovation, development, marketing and distribution relative to the suppliers.

Phocuswright’s Asia Pacific Online Travel Overview Ninth Edition provides market and channel sizing, and aggregate gross travel bookings of APAC-based travel suppliers, covering 13 APAC countries’ leisure and unmanaged business travel.

Phocuswright-MobileTravelGrossBookingShareOnlineLeisure.png“It is no surprise that China, where Weixin (WeChat), the world’s most advanced mobile messaging and commerce platform was conceived, also leads the mobile travel revolution globally,” said Phocuswright’s research analyst, Asia Pacific, Chetan Kapoor. “Mobile share of the Chinese online travel market will almost double between 2015 and 2020 to 77%, significantly dwarfing even the Western mobile markets.”

In APAC, online travel agencies are at the forefront of mobile innovation, development, marketing and distribution relative to the suppliers. In India, OTAs accounted for 88% of the mobile travel market in 2015, while their counterparts in China delivered 60% of the market’s mobile gross bookings in the same year. OTAs will remain the major force behind mobile bookings in APAC.

Phocuswright-MobileGrossBookingsAndOTAShare.png

AIRLINES LAGGING BEHIND

China’s airlines lag far behind OTAs in the technology department. But after treating web- and then mobile-based distribution as an afterthought, these state-owned behemoths have begun to take digital distribution seriously. They’re growing their in-house mobile teams, and optimisation of user experience and marketing are now strategic priorities.

The Chinese government’s early-2016 directive, calling for China’s state-owned airlines to sell at least half of all tickets directly by 2018 and avoid online travel agency (OTA) commissions, pressured airlines to get much more aggressive about selling online.

And they have a long way to go. In 2015, just 16% of overall bookings went through airlines’ websites. Airline call centers account for a low-single-digit share, meaning that just over one-fifth of bookings come through combined direct channels.

Phocuswright-ChinaAirlineOnlineChannelShare.pngChina’s airlines have been cutting commissions for years, and now only the biggest agents receive them. But even in a segment dominated by three airlines, distribution partners continue to play a key role.

Airlines need better tech to pursue state-mandated direct booking targets, while OTAs want to ensure access to content. Several OTAs formed alliances with airlines in the form of major investments.

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