Amazon is reportedly the latest e-commerce giant planning to break into the online travel business through Amazon Travel.
SELECTED HOTELS TO START
Amazon reports that the initial roll-out of Amazon Travel would feature a curated selection of hotels within a few hours’ drive from New York, Los Angeles, and Seattle. The service will likely go live around January 1.
The hotels would generally list their properties at rack rates, but would be free to discount, one hotelier said.The properties would get notified by Amazon via email of bookings, hoteliers said, and they would update calendars on the extranet.
amazon travel – attractions to signing up
Hoteliers would receive their payments from Amazon for the stays in two installments and could obviously attempt to negotiate a lower commission than the standard 15%.
The hotelier who hadn’t yet signed up for the Amazon Travel service after being approached by an Amazon sales representative two weeks ago said he was giving “heavy consideration” to participating.
“First and foremost, it’s Amazon.com,” said the hotelier, adding that most of the hotel’s bookings currently come from its own website, although the resort also displays its inventory on Booking.com.
The hotelier said Amazon had used TripAdvisor ratings as part of the criteria for selecting properties to participate, and would only use a few properties per destination, and they would have to be rated four stars and above.
Amazon would round out the content on Amazon Travel with editorial about attractions and other things to do in the destination. At least initially, Amazon would focus on hotels, and not flights or other travel products.
Another hotelier from one of the two properties that had signed on said Amazon has a huge customer database to leverage, and that would be one of the attractions of signing up.
Amazon did not respond to a request for comment.
Amazon’s mission is to create a marketplace for retailers who might have a difficulty finding customers, and a high-profile section of Amazon.com in the form of an Amazon Travel would offer such a marketplace for independent and boutique hotels who don’t have the marketing power of big hotels chains or online travel agencies at their disposal.
Amazon potentially has an advantage over some online travel agencies and hotel booking sites because of the immense amount of data — i.e. Big Data — at Amazon’s disposal. Amazon could pair information about a traveler’s intent with retail offers such as a GoPro camera to use while hiking or boating in Washington State
Amazon will take an industry standard 15% commission on bookings through Amazon Travel, and editorial content of local attractions will be displayed alongside featured hotels on its website.
The report says Amazon has selected potential hotel partners based on ratings of at least four stars and above on TripAdvisor and would limit the number of properties it features per destination.
It suggests Amazon will focus on independent hotels that do not have the online presence of major hotel groups.
It is likely to be an attraction for hotels due to its mega-marketing power, global reach and big data capabilities.
Amazon gets about 65 million visitors every month to its US website
COMMENTS FROM SALON PARTNERS:
This is about technology enabling non-industry specialists (eg. Amazon) to capture a large chunk of our industry’s backbone (ie. reservations). It also shows that Amazon’s mega client base should be able to beat just about any industry specialist (look at lastminute .com who were sold a few days ago by Sabre for £120m, having previously been bought by them for £600m).
“The success of Amazon’s diversification in to travel and on-line bookings will depend on three things:
- The willingness of the hotel industry to give them “inventory”, and the quality of their backend system to enable reservations and payments easily. Being technology experts, one cannot see Amazon getting this latter part wrong.
- The acceptance by end users that Amazon is THE place to look for hotel rooms.
- The reaction of existing players in the market.
So far, we do not have enough visibility on how much inventory Amazon will offer. The start point appears to be relatively conservative – but what customers want is choice (and you get that in every other category of products that Amazon sell). Will hoteliers view it as “yet another OTA that I have to keep up to date on with inventory”. The key will be scale – will Amazon partner, or as it would appear at present will they build their own sales force and network of hotels?
For the consumer, Amazon is a trusted name and providing the booking system is sufficiently intuitive and the purchase process as easy as say booking.com, there is no reason why Amazon cannot succeed. Again it will be about scale and choice.
Price does not appear to be the issue – either at the consumer end nor at the trade/commission end. Although many hoteliers would be glad to see some price competition in the OTA market, this does not appear to be the strategy. We’ll all be watching this space over the next 6 to 12 months to see what the impact really is – but wouldn’t bet against Amazon succeeding…… “