March 12, 2018

Amazon could disrupt online travel industry next, Morgan Stanley says

Amazon's focus on selection/service, pricing, and frictionless payment that drive conversion and stronger user economics also translate directly to travel, the firm's analyst writes.

The analyst said Amazon has more than 300 million consumers who could spend money on a potential travel offering. Morgan Stanley estimates online travel companies such as Booking and Expedia spend about $620 million a year each to acquire their global hotel room inventory, which is not a large investment size for Amazon.

Morgan Stanley thinks that Amazon's entry into travel could change hotel-commission rates, as well as volume growth and market share - although any entry into the sector would take time.

For Google, Amazon Travel might be good news in the near term, given that it would add a "deep-pocketed and competitive spender" to the travel search market, one of its big categories. But over time Amazon could pose a threat to Google's own travel business, especially as voice search and Amazon's Alexa assistant proliferate in consumers' lives.

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