Converting on mobile: Understanding the last-minute booking trend

June 21, 2016

Mobile now plays a huge role in the travel process with overall mobile bookings rapidly on the rise. A recent study by Criteo found that in Q1 2016, 27% of all global travel bookings were made via a smartphone or tablet. Freed up from the confines of the desktop, consumers can now look and book at a time and place that suits them. As a result, it’s becoming increasingly important for brands to understand mobile user context and how to target potential customers while they’re on the move.

This point is particularly pertinent to the growth of the last-minute booking trend. Mobile technology has effectively cultivated a delayed booking culture, where people are happy to finalize their travel arrangements far later than years previously. In fact, a significant number of consumers are booking hotel rooms in the days or even hours leading up to the start of their vacation. More than that, these last-minute bookers expect to find a deal, and they’re prepared to shop around to find one.

The explosion of the last-minute booking trend

In recent years, last-minute booking apps and OTAs have tailored their services to the specific needs of mobile users, fueling an industry-wide trend that continues to grow. Launched back in 2010, HotelTonight originally offered a same-day booking service that has since expanded to allow consumers to book rooms from up to a week out.

Other standalone apps have since launched, some of which have been designed to target a certain niche, last-minute customer. For example, One Night Standard markets itself to affluent customers by offering discounts at luxury hotels, with rooms often booked minutes before a person arrives.

Following on from the success of apps such as HotelTonight, OTAs such as Priceline, Hipmunk and Expedia have all beefed up their own same-day and mobile offers, enabling them to cash in on this highly lucrative growth area. In 2015, Booking.com also enhanced its existing same-day booking app with Booking Now, an iPhone app that makes it possible to book a room 48 hours in advance with just four taps.

Last-minute booking apps like this naturally offer an added convenience to mobile users when they’re on the move and in a hurry. But arguably, one of the main reasons OTAs have come to dominate this marketplace is down to the deals and discounts they offer consumers at timely points in the travel journey.

How OTAS are winning the battle for last-minute bookings

To incentivize last-minute bookings, OTAs have started devising tactical offers and rates that are specifically aimed at mobile users. At Travel Tripper, we’ve seen that OTAs will slash prices for hotels just a few days before arrival. Many times, they will do this via their loyalty programs, such as Booking.com Genius, Expedia+ , or Hotels.com Rewards. This allows them to break any rate parity rules that might be in place, as most OTA contracts stipulate that they can offer lower rates to “closed groups,” such as loyalty members.

This mobile marketing strategy has caught hotels off guard. Without a matching rate plan on their own website, hotels lose a significant chunk of last-minute booking business to OTAs simply because they’re not planning for this mobile booking behavior. As mobile offers and same-day offers continue to be seen by customers as the norm, hotels need to find ways of taking full advantage of this trend.

How to capture last-minute bookings on your mobile channel

Given that travelers do not use desktop and mobile in the same way or in the same context, it no longer makes sense to treat all customers in exactly the same way. Hotels need to find ways to segment this audience and offer last-minute mobile bookers the kinds of discounts and offers they’re actively searching for.

To achieve this and to effectively compete with OTAs, we recommend that hotels price strategically via their mobile channel. Through CRS tools like RezTrip’s dynamic pricing module, it’s possible to set rate plan rules that offer special offers and discounts only to mobile users.

For example, in the past we have recommended to clients that they offer a 24-40% discount on their most basic room, with a lead-time of two days, and only show the offer on the mobile booking engine. Other strategies include offering a mobile-only rate that takes 15-20% off the best available rate (BAR) and advertising that as a special offer von the mobile website.

As a result of our mobile-specific pricing and distribution strategies, hotels have been able to decrease the amount of same-day OTA bookings and shift that business back to direct business. Considering how low these prices are to begin with, saving on commission fees for last-minute bookings becomes all the more important.

Pricing flexibility in the CRS

To be able to capitalize on a mobile-specific distribution strategy, hotels need to have a central reservation system capable of highly dynamic pricing. This includes being able to set rates by factors such as geography, length of stay, booking window, date of booking, and device (such as desktop or mobile). Hotels should also be able to offer incentives—such as free Wifi and breakfast—that add value to the booking without reducing the rate further.

Once mobile customers realize that a hotel is competitive in price and also includes more value in the direct booking, they will be less inclined to book elsewhere. By understanding this last-minute mindset of the mobile user, hotels can adjust their revenue strategies to better optimize this channel.

Interested in learning more about mobile trends and strategies for hotels? Join our free webinar on July 14, 2016 hosted by Travel Tripper, Checkmate, and StayNTouch.