Amazon Travel to Compete with Expedia, Priceline

Travel Photo with Orange HatOnline travel industry news source, Skift.com,  is reporting Amazon’s entrance into the travel market. So far, it’s but a toe in the water for Amazon, with offerings only near major US cities and a handful of independent hotels with good reviews reported on TripAdvisor.com. Nonetheless, for those of us in the travel industry, having a new distribution opportunity from an entity with the might and muscle of Amazon is pretty big news, and something definitely worth watching as it unfolds!

Facts:

  • Who:
    • Independent hotels with good TripAdvisor ratings, with only a few places per city.
    • By Invitation Only. Amazon Travel is inviting a few independent hotels and resorts to participate. There is no online sign up area.
  • Where:
    • near major US cities, including New York, Los Angeles, Seattle, Boston and Dallas
  • When:
    • January 1, 2015
  • Why:
    • 15 percent commission vs. the average 25 percent rate paid to Expedia.
    • There are about 20 million members in Amazon Prime. Hotels can give special deals to Amazon that undercut the deals that they give to all OTAs, because these specials deals are offered just to Amazon’s Prime Members.
  • How:
    • Amazon already offers local deals at its local.amazon.com website; these travel deals are supposed to be another offering in that area of Amazon.
    • Pretty rudimentary booking procedures. Booking notifications will be via email, and hotels need to update their calendars on the Amazon extranet site.
    • Amazon gets paid first, then will pay the hotel in two payments, less its 15% commission

Stats for comparison:

  • Booking.com (owned by Priceline) has over 550,000 properties, including over 210,000 vacation rentals globally.
  • Expedia has over 300,000 hotels globally.
  • According to Seeking Alpha, Amazon has
    • 20 milllion Prime Members
    • Over 230 million active user accounts
    • About 80 million people using its website to shop each month

Amazon has ventured into the travel arena in the past:

  • With Expedia in 2001, when they partnered in an online travel store. This foray ended in a nasty breakup between Amazon and Expedia.
  • With SideStep (later acquired by Kayak) in 2006 which allowed searches in Amazon’s travel store for flights, hotels, car and vacation packages.
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