World Panel
Viewpoint21 June 2019

Is Amazon the 'elephant in the (hotel) room'?

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Is Amazon the 'elephant in the (hotel) room'?

The Amazon / ClearTrip partnership is far from a revolution, but it's another tiny step Bezos' company took into the travel space. I think the time has come to address the elephant in the room: acquisitions. Rather than building from the ground up and launching its own products (remember the 2014' AMZ Travel fiasco?), in fact, the company now seems to prefer a different approach, partnership with existing providers. So why not acquiring them tout court? It's intriguing to speculate on who can be on Bezos' radar: trivago? Cheap but, honestly, what would be the added value? TripAdvisor? Mew. My two cents are on Expedia. Most of the OTA's infrastructures are already in AWS anyway, and -even though expensive- that's an investment Amazon can undoubtedly support. According to analyst Brian Nowak, our industry has -so far- "proven to be immune" from the e-commerce giant but, he continues, the annual profit figure of Amazon Travel could be estimated in over half a billion dollars. Juicy.

This viewpoint was created by
Simone Puorto , Travel Tech Journalist | Published Author | Consultant
Max Starkov
Adjunct Professor NYU Tisch Center for Hospitality, Founder & Director at NextGuest Digital
Supplier View

This is not the first time Amazon has tried to tackle the online travel space. Back in 2013-2015, Amazon attempted to do this “organically” twice with its ill-conceived Amazon Local and Amazon Destinations. 

Today some hoteliers would welcome another OTA player like Amazon to increase competition and lessen dependency on the OTA duopoly. Others would be fearful that a giant online player such as Amazon, with its reputation for customer obsession and 100 million Prime members and unsurpassed online retailing capabilities, would further erode the direct booking channel and hoteliers' “ownership” of the customer.

Overall, hoteliers should NOT be concerned by an organic entry of Amazon into the online travel space. It would take Amazon unsurmountable investments and time to build from scratch an organic OTA tech platform, secure global inventory supply, build industry expertise and relationships, and insert itself as a booking channel in the digital customer journey.

However, hoteliers should be really concerned if Amazon decides to buy an existing OTA player and creates a global online travel empire. Ex. Expedia could be one such acquisition target. In today's world, with $18.6 billion market cap, Expedia is “small potatoes” of an acquisition target for Amazon and its $924 billion market cap. 

Amazon knows better than any other player how to sell online. By integrating its retail offerings into Expedia's fabric, Amazon could change online travel and consumer experience forever.

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