Moves to scrap mobile data roaming charges have been swift and this is (or should be) a wake up call for the travel industry.
NB: This is a report by Pamela Whitby, editor for EyeforTravel.
The trend towards mobile is indisputable. As our research highlights, 63% of suppliers have seen an increase in mobile booking volumes since 2011.
Now, in what the European Commission is describing as the "most ambitious plan in 26 years of telecoms market reform", it may not be long before travellers in Europe start to expect far from their mobile devices, or indeed service providers.
The big question then is this: with roaming charges soon-to-be a thing of the past, which companies will be ready to meet the growing demands of today’s demanding road warriors?
Odiego, which has eDreams, GO Voyages, Opodo, Travellink and, most recently, Liligo in its stable, certainly sees the opportunities.
"While roaming today is a major blocker for connecting to travellers while they are on the road, we expect this to become less relevant or eventually irrelevant thanks to the upcoming legislation," says Andreas Schräder, group senior director for international, mobile and new ventures.
Under the EU proposals, mobile companies would be banned from charging for incoming calls from July 2014 and all other roaming charges would be scrapped by 2016.
The EU is also aiming to harmonise legislation, which would mean that companies would require just one authorisation to operate in all 28 countries. The result they say will be more competition, less red tape and a better deal for consumers.
However, while the EU believes that placing hefty price caps on roaming charges will encourage new entrants and greater investment in networks and services not everybody agrees.
The big mobile operators argue, for example, that roaming is a value-added service and so consumers should pay more. They also say that in an industry where margins are already squeezed, capping roaming charges will, in fact, inhibit competition.
Many believe the market is too immature and that pricing should be left to market forces, rather than in the hands of regulators.
The operators argue that they have already lowered prices, or introduced roaming packages – such as Vodafone’s 25MB for £2 ($3.20) a day - as a result of consumer demand.
While TripAdvisor will soon offer banner space on its new app to promote roaming packages like this, Nathan Clapton, vice president of its mobile partnerhips, points out that even 25MB has its limitations for road warriors.
Clearly having its app pre-loaded for 300 million Vodafone subscribers is a huge bonus for TripAdvisor, but just think what customers could do with its apps if data was no issue. Travellers would, for example, be able to find that unique back street restaurant, rather than settling for one on the main tourist drag.
For this reason Clapton thinks "its great that the EU has been pretty forceful" in pushing regulation through. It’s clearly what consumers want; the travel review site’s most recent survey of British travellers shows only too well how frustrating these charges are.
In this:
- 68% of UK travellers cite mobile roaming charges as their biggest frustration when travelling abroad, versus 47% the previous year
- 58% of users switch off data roaming when abroad (clearly a missed opportunity)
- 27% have been hit by an unexpectedly high bill on returning home.
Technology limitations
To address this, many travel brands had to develop apps that work totally offline.
For example, TripAdvisor’s city guides offer maps, neighbourhood overviews, reviews and ratings that all work without a data connection, although as Clapton points out, "it’s obviously going to be much better for the traveller if they can have access to data anywhere, anytime".
Schräder holds a similar view:
"In the past we worked on models that we could download destination relevant content to mobile apps and even HTML5 sites so that our mobile apps and websites became more relevant for consumers when they travel.
"But these respective solutions were not only inconvenient, they were also limited in functionality."
Relevant content depends on a number of factors, and very often these can only be determined in a real-life situation, which often requires some functionality that can only be provided online.
"For these reasons we also tried to establish solutions for our customers so that they could avoid expensive roaming charges," Schräder says.
However, while these solutions received a lot of interest from ODIGEO customers, only few actually chose to use them because they were inconvenient.
The sky is the limit
With close to irrelevant roaming charges, online businesses can now provide users with far more relevant content, insight and inspiration, and can introduce comprehensive, useful services and offers from local businesses.
"This actually creates the opportunity to transact travel-related local long tail content since now travellers are online when they travel," says Schräder.
"This together with some ongoing aggregation and consolidation of long-tail content on the supply side makes online intermediaries relevant during travel - where they have never been relevant before."
In other words, with roaming charges scrapped, far more people will be using their devices, and there will now much more opportunity for travel brands to sell a much wider range of niche services to more people – that’s the so-called long-tail theory, proposed by a former Wired editor, Chris Anderson in an article back in 2004.
No such thing as customer ownership
So will these moves impact who owns the travel consumer? According to Schräder, there is no such thing as customer ownership, but there is customer knowledge and customers do have brand preferences.
This presents a big opportunity. But why?
Because if a customer already prefers to book travel products with a particular intermediary, and the intermediary has comprehensive knowledge of that customer and an intelligent way to engage with them during travel, then it’s realistic to assume that intermediaries could be preferred over local providers.
Ivan Kozlov, a product manager for mobile platforms and applications at Russian metasearch engine Aviasales.ru/Jetradar, believes that users will start using internet-required mobile applications not only to plan their trips, but also during the trips, and that different last-minute purchases will become much more affordable.
"These changes will transform current applications and developers will feel more free to use cloud-based storage instead of local storage," he says.
Whichever side of the fence you sit on, the EU clearly means business and there is plenty of opportunity for development, particularly in the mobile transaction space. Research from Pew Internet reveals that 32% of US adults bank today using their mobile phones.
So transactions via mobile are only going to increase and not just for the last-minute.
Indeed, our research shows that the proportion of consumers using mobile to book travel has been growing year-on-year to a quarter of all travellers in 2013.
TripAdvisor is certainly seeing more bookings of hotels via mobile, and interestingly not just in the last minute. It seems only a matter of time before booking platforms become simpler and faster, and consumers become more au fait with booking via a wide range of devices.
This coupled with the cap on roaming charges and there is the perfect storm for mobile to really boost the travel industry’s bottom line.
Louvre Hotels Group's vice president for revenue management and distribution, Chinmai Sharmai, who will be speaking in Amsterdam next week, has this to say:
"Roaming legislation is a wake up call for hotel companies that are not investing in these channels as yet as the ones to benefit from this legislation will be the ones who already have the platforms developed to capture the increased user traffic."
NB: This is a report by Pamela Whitby, editor for EyeforTravel.
NB2: Schräder and Clapton will be speaking on behalf of EyeforTravel at the Mobile World Congress in Barcelona on 25-26 February 2014.
NB3:Eiffel Tower mobile image via Shutterstock.