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
Linchi Kwok
Associate Professor at The Collins College of Hospitality Management

When almost every hospitality and tourism company is trying to get “bigger” through acquisition or partnership, why shouldn't or can't Amazon get into the market by acquiring or partnering with the existing players? Amazon may also find it an excellent time to buy when OTAs are experiencing some difficulties in negotiating new contracts with hotels.

Amazon can become more than just another OTA in the market, however. Being one of the biggest e-commerce sites, Amazon has already had in-depth business insights about consumer behaviors. The gaining popularity of Amazon's Alexa in hotels would further allow the company to collect and analyze more valuable consumer data that are specific to their hotel stays or a trip. The business intelligence Amazon has about travelers' behaviors will enable the company to compete directly with the existing players in the market. So, Amazon may still gain good competitive advantages in the market even as a late entrant.

Another example is while it may sound odd when Amazon is going to end its restaurant delivery service, the company wants to focus on fresh-food delivery with Whole Foods instead. If the company find efficient ways to tackle the challenges of delivering fresh food, it can get back to the restaurant food-delivery business soon.

I guess the question now is which area will this elephant wants to get into first. What do you think? 

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