What does Amazon’s recent move mean for the travel industry?

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A potentially positive disruptive force, another player set to erode hotel margins or the new best friend of the ‘indies’? Tell us what you think in the comments box below and you stand to win a free EyeforTravel conference pass in your city of choice

In what heralds another non-traditional player wading in for a slice of the pie, last week our friends at Skift learned that Amazon is poised to launch its own travel service. The move would allow users to book independent hotels and resorts at major cities at cost of 15% commission to hotels. According to ETC-Digital global travel sales will reach $830 billion by 2017, and this move by the world’s biggest online retailer is a clear indication that there is still everything to play for in travel distribution.

According to ETC-Digital global travel sales will reach $830 billion by 2017
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This week Tim Gunstone, EyeforTravel MD has been at Smart Travel Analytics, Europe: “With acquisitions by booking.com, such as the property management system Hotel Ninjas and digital marketing system Buuteeq, now bedding down and players like Amazon entering the fray, my view is that the whole hotel supply chain is about to change,” he says (more on Tim’s readings of the STA Amsterdam in the coming days!).

Ed Perry, Senior Director, Performance and Revenue Optimisation at WorldHotels agrees: “Indications that Amazon may enter the travel space have certainly led to increased dialogue about travel distribution and how the distribution landscape is evolving every year.”

In 2015, Perry also believes that hoteliers will feel less dependent on any particular channel and will have greater room to align themselves with specific partners that provide the greatest distribution value.

But will one of those partners be Amazon? With its massive online and increasingly loyal customer base, is it on course to become the next big disruptor in online travel?

According to Skift, to date three independent hotels have signed up for the Amazon service and one more is considering it. Clearly there is a long way to go.

Amazon approached Viceroy, a boutique and luxury hotel management company, to participate in its new model a few months go. It seemed exciting, says Viceroy’s Jason Antony, Assistant Vice President, Digital Engagement, but the commission Amazon was asking for was similar to that of Groupon. “My discomfort [at the time] was again exclusive offers, which put our hotels out of parity with our travel partners and the high commission,” he says.

Although Antony is still not sure entirely sure how Amazon can pass savings on to customers, while making it easier to do business with hoteliers (something booking.com already does), he believes the online retailer does have the potential to be a disruptor. But only if, and this is a big if, they somehow lower the bar for hoteliers, in a similar way to how they have made shipping and fulfillment easier for retailers.

A view from somebody who isn’t an hotelier comes from Mattias Borg, chief executive of Guidepal, city guides handpicked by locals and friends. He believes that Amazon’s move shows what great potential there is for the travel. “Right now we are working closely with Amazon to get our apps out on their app store,” he says.  

Amazon’s apparent focus on the ‘independents’ is certainly interesting and undoubtedly it has a captive audience so if it gets the model right it could be on to something. But what exactly?

What do you think? Will Amazon be the next big disruptor in travel distribution? Tell us in the comments box below for your chance to join us at an EyeforTravel event next year

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