Online travel booking is a highly competitive and rapidly growing market. According to the latest research, it is expected to reach $1,143.6 billion by 2023, growing at a CAGR of 10.8%.
While direct bookings offered by travel and hospitality providers continue to dominate the market (in 2015 this sector accounted for 57% of the total revenue), this trend is expected to decline within the next 5-6 years. The growing popularity of online travel agencies (OTAs) like Expedia will lead to a significant increase in the number of customers and, as a result, revenue.
The main reasons for that are clear:
- an easy and fast booking process
- safe payments
- a large selection of available travel options
- the ability to compare the options and make the best choice
That is why entering this market right now might be a great opportunity to get your piece of this pie. Thus, let’s take a closer look at the current trends and best practices for building travel applications.
1.1 The State of the Travel Tech Market
Founded back in 1996, Expedia is currently an undisputed leader in the online travel booking sphere. With over $72 billion in sales and almost $9 billion in revenue as of 2016, the company topped the list of the leading online travel agencies.
Source – Statista[dot]com
Yet, as with any successful product, Expedia has a number of competitors:
- Priceline Group. The company operates some of the most popular OTAs and travel booking platforms, including priceline.com, KAYAK.com, booking.com, and agoda.com.
- Tripadvisor.com is a leading travel information portal, offering independent user reviews and ratings of hotels, restaurants, and tourist destinations all over the world. In addition to that, the website has become an all-in-one travel planning service after it introduced its booking capabilities back in 2015.
- Skyscanner.net is a travel aggregator and metasearch engine owned by the Chinese travel company Ctrip.
Moreover, there are a number of products specializing in booking either hotels or flights, for example Google Flights.
While the listed solutions might slightly differ in their logic and business model, what they have in common is the number of core features. So, if you decide to build a travel booking app, then here is the ultimate list of functions to include.
1.2 Must-Have Features for a Travel Agency App
- Travel data aggregation. Be it a simple metasearch website or a full-featured OTA, you will need to get access to the information about flight schedules and fares, hotel availability and prices. In this case you will need to implement a number of integrations with third-party services via APIs. (We’ll get to that later.)
- Travel search engine. This is the heart of your travel app. Advanced filtering, autocomplete and smart suggestions, not to mention a flexible search, all of which represent the core value of your app.
- Online booking process. As soon as you have found a suitable travel option or deal, you need to be able to instantly book it. This includes filling out standard forms with your personal information.
- Payments processing. After confirming your personal info, you need to actually purchase the tickets or verify your payment method by using your credit card.
- Booking overview and management. After the booking or purchase is complete, the user might need to edit his/her information, change the dates (if it’s possible), or simply view the details about the upcoming trip.
- User profile. It proves to be handy for recurring users. As soon as you have made one purchase, the website will create a user profile and remember your personal info to speed up and simplify the booking process in the future. Thus, you will need to include a social login, booking history, and personal/payment data for autocomplete.
1.3 Advanced Capabilities to Differentiate Your Offering
To make sure your product stands out among the competition, consider adding some “icing on the cake”. The following advanced features might serve as a powerful competitive advantage for sites like Expedia.
- Fare price prediction and price drop alerts. For example, the flight fare comparison app, Hopper, has an ability to predict price movements and suggest better time to buy tickets. It also allows a user to set alerts for when the price goes down. This is a great benefit to differentiate your product from the competition.
- Personalization. By offering tailored deals and suggestions based on the user’s search history and preferences, you increase your user retention and build loyalty. Travel apps usually have lots of data to utilize. Take recent searches for example. If a user showed interest in a specific location or city, offer similar destination options with lower prices. Or save the latest searches and prompt the user to pick up where he/she left off.
- Real-time flight updates and self-service. Self-service and mobile travel apps are becoming increasingly popular thanks to the convenience and time savings they offer: No one likes waiting in line. Thus, many travel providers are adopting self check-in options, convenient seat updates, or are offering digital boarding passes. Moreover, you can send alerts about delays or gate changes to your mobile app to ensure the best customer experience.
1.4 Under the Hood: Integrations and the Tech Stack
There are two ways to build a travel agency app: by sourcing the travel data directly from the Global distribution systems (GDSs) or by participating in affiliate programs. The latter means using the APIs of other travel agencies.
To decide which one best suited for your project, you should weigh all of the pros and cons. Expedia’s API, for example, provides rich content options for properties, while GDS, such as SABRE, simply offers pricing info and some other details.
A good bonus is the fact that Expedia’s API is free to use while GDS’s typically charges a certain fee (usually per number of requests, on a “pay as you go” basis). At the same time, Expedia is only available for US agencies and you will need to get their approval of your website before you launch it using their API.
The tech stack of your travel app might differ depending on the platforms you decide to target. We recommend using native development stacks for iOS and Android travel application development. Thus, you will get the best possible performance, which is crucial for travel apps with extensive data usage.
Expedia was among the first companies to adopt the Kotlin programming language in their newly released Android app. Find out more about the pros and cons of using Kotlin for Android app development in our article.
Another option that may be an alternative to native app development and could potentially help save on development costs is building React Native apps.
There are many ways to monetize your travel app. Moreover, judging by the revenue of the leading OTAs, including Expedia, running a travel booking platform can be beneficial. Thus, thewe would like to outline some of the main monetization options to consider:
- Service fees and commissions. While this is the most popular monetization option, more hotels and airlines are promoting direct booking to avoid additional service fees. That is why this option will soon become inefficient.
- Partnerships and affiliate programs. You can either cooperate with other businesses in related spheres (like Expedia’s bet on Wingz, an Uber-like app for airport transportation) or build partnerships through affiliate program, by offering white-label solutions for other businesses (like Expedia’s API).
- Advertising. Introduce featured listings or add banners to your website/app. But remember, no one likes ads. So keep the number of promoted items reasonable and advertise only relevant services/products to add value to your product.
- Paid subscriptions. As an online travel agency, you can offer additional paid services to your customers. For example, personal travel assistant services, travel disruption management, or special bundle deals delivered weekly/monthly.
If you’ve been wondering or have even been engaging in research in order to find out how TripAdvisor makes money, we can say that it’s mostly through advertising. Bear in mind that, the majority of the successful products on the market combine two or more of the listed models.
While there are several Expedia alternatives, it is really hard to outcompete such giants like Expedia. Cloning websites like Expedia would be a bad decision: Why would anyone choose your app instead of an established and trusted provider?
That is why a winning strategy would be to introduce a unique benefit that other market players lack. Here are some ideas to consider as well as some best practices for building a travel website.
- Don’t forget about mobile. According to a recent study conducted by HotelsCombined, in 2016, mobile hotel bookings grew 67% in the U.S. At the same time, hotel searches went up 137%. This clearly indicates the importance of mobile apps in the travel sphere.
- Prioritize customer support. With regards to traveling, time often means money. That is why it is important to provide efficient and fast customer service. From travel disruption management (dealing with cancelled or delayed flights) to claims processing AI chatbots, which can be a real gamechanger and a powerful customer service tool.
- Focus on performance. Although dealing with huge amounts of data and multiple APIs can be hindering, travel applications still need to work fast. For example, Expedia ranks pretty low in terms of search speed with 5.4 seconds (as compared to 2.1 seconds for AirBnB) according to the PacketZoom research. Thus, prioritizing speed and performance can give you a competitive advantage over other OTAs.
Source – packetzoom[dot]com
- Capitalize on data. As an online travel agency, you will have access to vast amounts of customer data. Thus, being able to turn it into an advantage might serve as a good differentiator for your product. Some of the main use cases for travel data include advanced personalization and predictive analytics. As mentioned above, you can even try to predict future price movements and offer users the best deals available.
- Strive for simplicity. For travel apps and websites, it is a common mistake to “clutter” the UX with too many elements. Don’t overwhelm users with multiple tabs, advertisements, and suggestions. The booking process should be straightforward and include as few steps to checkout as possible (and a progress indicator for better visibility and understanding).
- Target local markets. The decision to launch your product with a focus on a certain location or niche market (like business travel, couples/family trips) might help you get initial traction without much risk. A niche market is usually less saturated so you won’t need to compete with the “big guys” from start. Plus, better targeting is always good for marketing.
Travel mobile app development can be a challenging and cost-intensive undertaking. That is why it is important to choose a reliable technology provider from the very beginning. By hiring skilled developers and product managers well-versed in the travel field, you are providing yourself with a higher degree of certainty that your requirements will be met, and the product will turn out to be successful.
How to get started?
The product discovery phase is the best first step you can take to lay a solid foundation for the development of your app. It includes a functional specification, UX/UI design, and a visual prototype that will give you a clear vision of the end product. On average, this phase takes 4-6 weeks.
The product discovery phase can help you:
- define a full scope of work and develop a roadmap for the project
- set a realistic budget for your MVP and plan your resources
- test the waters with your audience using a visual prototype
- craft a convincing investment pitch
- get to know your team
We at Eastern Peak have extensive knowledge in a variety of business domains. By pairing our business expertise with outstanding tech talent, we help companies and startups build successful products from the ground up. Contact our sales managers now to get a free consultation on how to create a travel website or mobile app.