Last week Expedia – the world’s largest travel company – announced the acquisition of Mobiata to improve its position in the fast growing mobile travel market. Mobiata is a mobile travel app developer based in Ann Arbor, Michigan. Since its creation in 2008 Mobiata has developed several top selling mobile travel applications such as FlightTrack, TripDeck or HotelPal.
Keeping this in mind the acquisition clearly indicates the growing importance of mobile devices in travelling. State-of-the-art mobile phones such as Blackberry or iPhone and easy accessible high-speed internet connections at almost every location in the world have provided the basis for convenient mobile booking. Especially businessmen use their mobile phones to organize their travelling, look for restaurants and check the public transportation at their destination or simply check the departure time of their flight.
“With the pace at which mobile traffic to Expedia sites is exploding, we wanted the right team to help us address the sizable opportunity swiftly and successfully,” explained Dara Khosrowshahi, CEO of Expedia, Inc in a press release. “There’s simply no better company out there doing mobile travel apps with the same level of design sensibility and utility as Mobiata.”
One could ask why Expedia didn’t try to improve its own apps instead of acquiring Mobiata. Simply put, Expedia was confronted with a make-or-buy-decision. And it is pretty obvious why they decided to buy Mobiata: It would take a huge amount of money, skilled staff and time to develop an app that surpasses Mobiata’s apps and then even more time to gain the reputation Mobiata already has. So why should they try to compete with Mobiata when there’s no guarantee they’ll win the competition and when there’s the risk that one of Expedia’s main competitors acquires Mobiata and its knowledge?
Additionally, Expedia already offers a variety of services that can be perfectly combined with Mobiata’s apps to create a holistic approach covering every aspect of travelling, i.e., the time prior to the trip, during the trip and after the trip. In particular, Expedia’s TripAdvisor that provides information and personal reviews about hotels, travel destinations etc. and access to Expedia’s booking engine are highly suitable to complete Mobiata’s apps. So by acquiring Mobiata, Expedia ensures that all travel-related transactions can be made through its system. This might ultimately result in a higher market share and higher revenues for Expedia. The fact that some of Mobiata’s apps can also handle ancillary fees makes Mobiata an even more attractive acquisition.
Changing consumer behavior
According to Forrester, business travelers already want to shift tasks from their desks to their cell phones. Consumer behavior will probably change drastically: people will board a plane without having a confirmed hotel reservation at their destination, as they will take care of this on the way there. The cell phone can become the primary point of sale for goods and services additionally sold after booking. Thus, it is only natural for a company like Expedia to adapt to this development and foster its mobile offers by acquiring an innovative app developer such as Mobiata.
“I’m convinced that a huge benefit for the success of Mobiate was its 3rd party relationships with companies such as TripIt and Flightstats” Michael continuous. “So Expedia got qualified staff for high end mobile GUIs, good partnerships which also help with getting content which is not in the GDS, and the best selling mobile Apps altogether. It is an interesting package with great potential, however it remains to be seen, if all content provider will continue to provide their content as they also compete at the fingertip. TripIt and FlightTrack was a healthy competition – if TripIt however wants to compete with an ultimate bigger opponent Expedia and also if TripIts’ other customer such as BCD like this fact is unsure. An additional acquisition however might solve this problem.”
We are really excited to see what will come out of this acquisition. Hopefully, the Mobiata crew does not lose its entrepreneurial and innovational spirit and keeps on developing great travel apps that simplify travelling.
Image by pichtetw