Hotelier 3.0: The Rise of the Smartphone

As we enter the age of the smartphone and m-commerce jumps to the top of the business agenda, Ioannis S. Pantelidis, senior lecturer in Hospitality at University of Brighton and columnist for hotel-industry.co.uk considers the pros and cons of smartphone Apps verses mobile-friendly websites.

If you are a hotel manager based in the city, chances are that you are getting the feeling that your customers are slipping away from your technology advancement efforts.

Smartphones are getting “smarter”, whilst laptops are replaced by palmtops. Even in resorts we see guests unable to unplug and stay away from their social media platforms or mobile applications.

Smartphones Penetrating the Market

Early estimates from Google suggest that 19% of all hotel queries occur through a mobile device. And mobile technology savvy consumers seem to expect their hotel to keep up with the technology developments at every stage of their hotel experience.

Besides the considerations for a better Guest experience, getting the conversion rates from browsing to reserving a room as high as possible is a hoteliers’ online nemesis. With mobile applications promising better conversion rates than hotel websites, the temptation to invest into the development of such an application can be quite strong. Consumers utilize their Smartphone more and more for habitual purchases (see this report by Deloitte, 2011). It may be happening more in retail but it is also on the increase in hospitality.

smartphone Apps Vs. Mobile-Friendly Websites

It is important to note that a large percentage of the devices used are smartphones with online browsing capabilities matching, and in many cases surpassing, those of early generation laptops. Could a hotelier avoid the hefty development costs of an app and still reach the Smartphone savvy consumer of the future?

Let me rephrase that question: Should a hotelier invest in a mobile application, a mobile friendly website or both?

As one may suspect, there is never a clear cut answer as it always depends on the marketing strategy that a hotel adopts after they adopt a tactic. For example, one would expect the development of a mobile app to be more cost effective for a hotel chain rather than an independent (as the chain has the potential to recover costs in a short span of time). However a small hotel could do wonders with a mobile app if (albeit a big “IF” ) they properly integrate it into their social media and traditional marketing strategies, whilst a large hotel chain could develop an application that flops if they expect it to work wonders without an effective marketing campaign.

Hypothetical scenarios aside, this article attempts to examine the pros and cons of developing applications versus Smartphone friendly websites without bias. The table below shows a list of points to consider that is not exclusive but may be helpful as a starting point.

Pros and Cons of Mobile Apps and Smartphone Websites

Pros and Cons of Mobile Apps and Smartphone Websites

How Much Does a Smartphone App Cost?

What I am suggesting in this article is to consider the development costs of a mobile application versus the conversion rates. Mobile apps cost thousands of pounds to develop and to get a really good booking engine you would probably be looking at around £10,000 to £15,000 – and that’s just for one type of mobile platform; a mobile app developed for android would incur extra cost when developed for the iPhone.

Developers charge anything from £80 to £150 per hour and it can take anything from 50 to 100 hours to complete your fully customized application; a semi customised app may cost far less. You could of course consider commissioning a developer abroad and half your costs – but unless you have someone recommended you could end up with an app that has a shocking booking engine that no customer would ever use!

So, for a small-medium hotel to break even it would require hundreds of reservations to occur through the app which could mean years until the costs are recovered … and by that time technology will have moved on rendering the app obsolete anyway!

Large hotel chains on the other hand have the economies of scale to enter the mobile commerce game with relatively less risk.

No matter the size of a hotel and its budget, it should (at the very least) attempt to become mobile friendly. Smartphone designed websites offer a relatively cheap solution that also offer the opportunities to develop booking engines that can be accessed over a browser.

M-Commerce: A New Era

Once you have conquered the peak of “mobile friendliness” start thinking “mobile commerce” – or m-commerce. In a couple of years we will have companies that offer their ready made hotel applications for your hotel at the fraction of the cost needed to develop them now (they already exist but the costs are still currently prohibitive for the small hotelier).

The model will be similar to what we see with Opentable currently in restaurants. However, I must point out that we have seen early attempts of similar models in hotels, but we have yet to see the market penetration of such offerings that even remotely resemble the success of similar schemes in restaurants.

No matter how we approach the hotel mobile debate, one thing is certain: hoteliers should be looking to become m-commerce, not just mobile friendly.

We are entering a new era of online consumerism; the era of mobile consumerism. Hoteliers who are ready to embrace the mobile consumer will reap the benefits of what is today a niche market. In the near future, the mobile consumer will become a mainstream segment and hoteliers that where early adopters will find themselves far better equipped than those who have yet to engage with this market segment.

By Ioannis S. Pantelidis

About Ioannis S. Pantelidis: Ioannis is a senior lecturer in Hospitality and Culinary Arts at the University of Brighton and is co-author of the best selling book, Food and Beverage Management. His PhD topic focuses on the personality of the hospitality consumer and technology acceptance. He has published and presented papers in numerous international conferences and established academic journals such as the Cornell Hospitality Quarterly.
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