The Battle for the Best Hotel Deals Is Raging on Your Phone

By Markets Fool.com

Hotel Tonight rolled out two new mobile-only rate-discount programs this week. This is the latest evidence that mobile booking is rapidly becoming the industry standard, rather than a quirky perk for millennials.

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Hotel Tonight, a private firm with more than $80 million in venture capital, pioneered last-minute smartphone booking in 2010. Now, the company faces competition from heavy hitters including Priceline property, Booking.com, and Expedia, each of which debuted their own mobile deal programs earlier this month. These new offerings are part of a long-term change in the way travelers book hotel stays, and the companies that stay ahead of the curve are the ones that will come out ahead.

Deals travelers won't find on their desktops
Hotel Tonight deals have always been mobile only, and the company makes the most of the technology. Its new Rate Drop program uses smartphone location services to offer same-day deals near a user's current location starting at 3 p.m. Last fall, Hotel Tonight expanded beyond last-minute deals to offer bookings up to a week in advance, and its new Bonus Rateprogram offers exclusive deals within that seven-day window.

Hotel Tonight's new Rate Drop feature pushes mid-afternoon deals based on user location.

Unlike Hotel Tonight, Expedia and Booking.com started with desktop booking services. But each company rolled out new features for their mobile apps earlier this month. Expedia spent $650 million last year developing two new tools for member hotels. They allow for real-time guest feedback, and participating hotels can push same-day deals to the Expedia and Hotels.com mobile apps.

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Booking.com, meanwhile, debuted a more direct challenge to Hotel Tonight with its new Booking Now mobile app that also customizes near-term offers by user location. Booking Now is only available in the U.S. at the moment, but the company plans to expand internationally to its 580,000-plus properties, compared to the 15,000 worldwide properties curated by Hotel Tonight.

However, Hotel Tonight has had years to expand its apps across Apple, Windows, and Android platforms. For now, Booking Now is only available for the iPhone. On the other hand, Hotel Tonight users must undertake "three taps and a swipe from app launch to completed booking," while Booking Now boasts only two finger taps to book a room.

The smart money is on smartphones
Competing on the number of times users have to tap their phone screens may seem overblown, but it is indicative of just how much is at stake in the mobile-booking market. American travelers spent more than $167 billion on lodging in the U.S. alone in 2013, and increasingly, they'll book those rooms on their phones and tablets. Globally, hotel revenues top $400 billion annually.

Mobile booking and other travel services dominate trend reportthis year from Skift, the international travel industry portal. Among the key points:

  • Smartphone ownership has grown explosively during the past five years.Back in 2009, just before Hotel Tonight launched, less than 20% of Americans owned smartphones. Last year, 66% did, and smartphone users are most definitely shopping and booking online. Forrester Research predicts that the overall U.S. mobile payment market, which was $52 billion in 2014, will be $142 billion by 2019. And 80% of all mobile travel purchases are hotel bookings, according to US News & World Report.
  • Mobile travel booking comes at the expense of desktop bookings.Skift CEO Rafat Ali writes in the trend report that 2014 will go down as the last year that desktop hotel bookings topped mobile bookings. From here on out, desktop bookings are expected to decline by up to 2% annually, while mobile bookings will grow "exponentially," with a projected increase of 40% this year alone.
  • Mobile booking's biggest players may not even be on the field yet.Right now, mobile-booking pioneer Hotel Tonight faces competition from Expedia and Booking.com. Expect more app improvements and deal programs in the future as the three companies refine their strategies. More deals and easier use will feed a cycle in which even more travelers adopt mobile booking as their standard practice.

As the market gets bigger, it may attract the attention of Amazon, Google, and Twitter, and their presence would reshape the space. Dennis Schaal of Skift notes that the Twitter pilot program buy button could be a fast way to book hotel rooms, and he raises the possibility of special Amazon Prime hotel deals as the behemoth grows its travel business.

Whichever company ends up dominating this market will have a big share in a very lucrative space -- one worth watching for investors in tech, retail, and travel as the mobile booking business evolves.

The article The Battle for the Best Hotel Deals Is Raging on Your Phone originally appeared on Fool.com.

Casey Kelly Barton has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Google (C shares), Priceline Group, and Twitter. The Motley Fool owns shares of Amazon.com, Google (C shares), Priceline Group, and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.