World Panel
Viewpoint21 June 2019

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

share this viewpoint
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
Peter O’Connor
Director of the MBA in Hospitality Management at ESSEC Business School

Based on past behaviour, Amazon making acquisitions in the travel space is highly unlikely. Instead, it will do what it always does, initially partnering and then ultimately replacing the major players in the sector it wishes to attack. If history (e.g. Borders, Pets.com, Toys'R'Usand many more) is any guide, anyone who chooses to partner with the e-commerce giant will ultimately be replaced, praying mantis style, with an Amazon-branded version of their supposedly value adding service.

Those who operate exclusively in the virtual space, in particular, the meta-search engines, are most at risk. With, thanks to its addictive Prime service, Amazon's customer acquisition cost rapidly approaching zero, no one in the online travel space is well positioned to be able to compete when (not if) the company decides to get serious about travel. So why bother purchasing and trying to integrate travel companies when instead you can slowly bleed them to death?

see 8 more views
Advertisements