Amazon has come an awful long way since Jeff Bezos launched the company out of his garage mainly as a seller of obscure academic books. The company celebrated its twentieth anniversary this year, and now boasts an operating income of over $74 billion per annum. Needless to say, Amazon has become the world's largest retailer, and is continually branching out into new niches and industries in an attempt to grow its revenue and satisfy investors.
Despite the massive success and diverse product range of Amazon, the company has hitherto shown little interest in participating in the tourism industry. But recent reports indicate that Amazon.com is poised to launch its own travel service, which will centre around the booking of independent hotels and resorts near some of the world’s premier cities.
Amazon Travel to go live
Amazon Travel will go live sooner than many people might have expected, with reports indicating the first bookings will be available from 1st January next year. The service will apparently feature a carefully curated selection of hotels initially, which will be situated within a few hours' drive of the US cities of New York, Los Angeles, and Seattle.
According to interviews conducted with hoteliers that have signed up for the Amazon Travel scheme, the retailer is intending to utilise the merchant model that Expedia and Hotels.com have implemented with great success. This new site will apparently attract commission for Amazon of a standard 15 percent for prepaid bookings; thus Amazon is effectively undercutting Expedia, for example, which currently charges 25 percent commission.
According to interviews with hotels that are initially involved with the project, Amazon has used TripAdvisor ratings as part of the criteria for selecting properties to participate. At this point in time, Amazon is clearly being very selective about the hotels that it allows to participate in this fledgling site, as it will include only a few properties per destination for the time being, all of which must have achieved a star rating of four and above.
In addition to the basic hotel booking facility, Amazon will also be providing editorial content regarding tourist attractions, and activities which tourists can participate in within the supported destinations. It has been emphasised that Amazon will be initially focusing merely on hotels, and not flights or other travel-related products. However, given that its obvious rivals in this field all offer flights and other tourist-related offers, it seems inevitable that if this initial Amazon Travel site is a success that the company will expand into other arenas as its tourism venture develops.
Despite the fact that this is launching in a matter of weeks, Amazon has remained pretty quiet on the matter thus far. When contacted to comment on the creation of Amazon Travel, the corporation has declined to comment. This is very much in line with the low-key launch of Amazon Travel, and it is evident that this is a venture which the retail giant is handling carefully and cautiously.
However, Amazon has been recruiting pretty aggressively with the intention of filling positions related to travel on a permanent basis. Amazon has posted employment ads for travel market managers for Amazon Local in Boston, New York, San Francisco, Los Angeles and Dallas, and it will be interesting to see in what direction this business develops in the future.
Amazon to target independents
Evidently, Amazon is attempting to create a marketplace for retailers in the hotel industry who might otherwise find it difficult to attract customers. A high-profile listing in a massive retailer such as Amazon.com could offer a significant marketplace for independent and boutique hotels, who typically have a struggle to compete with the established chains that now dominate the hotel industry.
While Amazon has not explicitly run a travel business before, it is nonetheless worth pointing out that it has dabbled with collaborations in the industry. Amazon established partnerships with Expedia in 2001 and SideStep in 2006, and these experiences have perhaps emboldened the hierarchy of the company to investigate opportunities in the travel niche.
Future European focus?
It is thought that Amazon’s attempt to target the independent niche could pay particular dividends in Europe, even though the service is launching in the United States. The US hotel market is almost completely dominated by powerful chains, but independent hotels enjoy greater commercial success in the European continent, and this could eventually lead to a widespread launch of the service in Europe.
Competing with dedicated tourism and hotel booking services will not be easy for Amazon. A major company such as hotels.com has achieved its success by focusing on that one singular market. But the ability of Amazon to excel in numerous industries - for example, Amazon Web Service remains by far the dominant player in cloud computing - suggests that its attempts to establish a position in hotel booking shouldn't be underestimated.
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