Travel app trends set to revolutionize tourism industry
The rise in mobile internet subscribers worldwide has led to increased demand for travel apps, leading to companies mentioning travel apps most often in their filings, hiring activity related to digital payments, and an increase in travel app patent disclosures.
Below are the key industry trends GlobalData has identified that will impact the travel app theme:
Travel apps and points systems
Travel apps and loyalty schemes go hand in hand. Travel companies looking to attract customers through schemes such as rewards programs can increase conversion rates when customers are already using the app. After a customer uses the app to purchase a service or product, they can be rewarded with discounts or other perks and directly promote their loyalty programs that ensure repeat business for the company.
Most major travel companies operate rewards programs, and those popular with a particular age group often customize their app-based rewards programs to fit the needs of their customer base. According to Oracle's 2020 Consumer Survey, Millennials value exclusive perks like free shipping and personalized experiences the most, Baby Boomers are more interested in VIP treatment than any other generation, and Gen Z tends to value milestone rewards more than any other age group.
Subscription Model
Certain travel companies with strong app offerings are now moving to subscription services. Subscriptions and memberships are an attractive way for travel companies to build lasting relationships with travelers. Consumers who purchase subscription services make a commitment that goes beyond a one-time purchase. The value and convenience members enjoy can outweigh the monthly subscription or membership fee, as travelers gain access to instant savings, discounted accommodations, and personalized travel advice. The subscription model also allows app-focused travel companies to foster a relatively predictable and stable revenue stream.
App-based giant TripAdvisor launched its subscription program, TripAdvisor Plus, in March 2021 after a soft launch to a small number of U.S. consumers in December 2020. However, major hotel chains were unhappy with the initial model and had to revise it as of Q4 2021. For travelers, TripAdvisor Plus offers great rates at over 100,000 hotels, 10% off over 400,000 activities worldwide, insider discounts, and the ability to level up your travels with personal services, perks, and privileges for an annual fee of $99. The subscription service is only available in the U.S. as of December 2021, but is reported to be rolling out to other countries soon.
The story continues
The evolution of low-cost travel apps
Travel apps are widely adopted by tourism companies operating in the low-cost market. Low-cost companies attempt to shape traveler purchasing habits using pricing, distribution and marketing tactics that deviate from travelers' normal spending patterns and behaviors. Travel apps often encourage impulse purchases as app-exclusive offers are pushed to users who are active on the app but have not purchased a service or product.
Additionally, implementing a travel app is a cost-effective way to provide customization for budget travelers, an aspect of service that is not so much tied to the rise of lower cost. For example, many low-cost providers allow guests to purchase ancillary services or products after their initial purchase, generating additional revenue for the company and providing a more customized experience for customers.
The app also acts as a convenient way for travelers to store all their booking documents and itineraries in one place, and destination marketing organizations (DMOs) can also use the technology to suggest what travelers can do or see when they visit.
A seamless experience
Seamless travel apps have always been a key component of a traveler's journey, but their importance has only grown in the “new normal.” The desire for seamless travel experiences has increased during the pandemic, with travelers seeking easy-to-use platforms where they can get inspiration and information on where to travel and how to do so safely. From streamlining travel requirements and transactions to booking tours while on the road, there is an increased demand for travel apps that can incorporate all elements of travel into a one-stop solution with omnichannel connectivity.
The appetite for contactless technology offered by travel apps is strong among consumers around the world. According to GlobalData's COVID-19 Recovery Survey, in the new normal, 55% of respondents will pay for goods and services exclusively using their card or mobile phone instead of cash. The same survey also revealed that in the new normal, 60% aim to “start or continue” banking online.
Push Notification
Apps offer a distinct advantage to travel companies by offering the ability to push content in the form of push notifications to users who have downloaded the app. This feature, if allowed by users, gives businesses an easy way to promote products, last minute deals, and travel advice. This strategy can be promoted through email marketing, but it requires travelers to open their email app, find the email, and get the information. On the other hand, push notifications can also increase click-through rates and improve engagement from customers.
For the travel and tourism industry, the power of push notifications should not be underestimated. Many major budget travel companies, such as Ryanair, use push notifications to let app users know that they currently have flash sales going on. These notifications are sent in real time, so they also inform customers of any changes to departure times or travel advice from destinations they may be flying to.
Challenger App
App-centric Online Travel Agencies (OTAs) operate an asset-light business model that relies solely on web-based capabilities. This creates a low barrier to entry, making the sector vulnerable to disruption. New market entrants and fast-growing companies pose a significant threat as they can take market share from established players.
Hopper has experienced significant growth in 2021. Approximately 1.3 million U.S. consumers downloaded the mobile app in July alone, providing the OTA with a huge amount of data. This increased volume of data allows them to analyze purchasing patterns, demographic data, and social behavior of users to inform their marketing campaigns. By collecting more data to create relevant campaigns, Hopper is able to drive engagement, increase revenue, and improve customer satisfaction.
Hopper and Booking.com each accounted for 27% of travel booking app downloads in the second quarter of 2021. Hopper grew its market share by 8 percentage points quarterly compared to 2020, while Booking.com's share fell by 3 percentage points over the same period. Overall, however, Expedia Group's mobile apps dominated the downloads charts in the first half of 2021. This suggests that the growth of challenger apps such as Hopper will be monitored by companies such as Expedia Group and Booking Holdings.
This is an edited excerpt from the “Travel Apps – Thematic Research” report produced by GlobalData Thematic Research.
“Travel Apps: Industry Trends” was originally created and published by Hotel Management Network, a brand owned by GlobalData.
The information on this site is published in good faith and for general information purposes only. It is not intended to amount to advice on which you should rely and we make no representations, warranties or guarantees, express or implied, as to its accuracy or completeness. You should always obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on this site.
