March 14, 2018

Amazon’s influence on OTAs


Amazon knows how to improve website user experience and conversions, how to upsell and cross-sell, and how to be efficient at low margins. By integrating its retail offerings into Expedia’s fabric, Amazon could potentially change the online travel consumer marketplace.

Some hoteliers would welcome another major OTA player like Amazon to increase competition and lessen dependency on two and in some markets, on a single OTA. Others would be fearful that a giant online player such as Amazon, with its established reputation for low cost and reliable service, and its “sticky” loyalty membership and online retailing capabilities, would further erode the OTA vs. direct booking status quo and affect customer ownership in a negative way.

Overall, hoteliers should NOT be concerned by an organic entry of Amazon into the online travel space. As mentioned above, it would take Amazon unsurmountable efforts and resources to build an OTA type of retail travel product from scratch.

However, if Amazon decides to buy an existing OTA player and build a global travel retail empire on this new acquisition’s platform, then hoteliers should be concerned. For example, Expedia could be one such acquisition target. In today’s world, with $17.4 billion market capitalization, Expedia is on the smaller size, especially compared to Booking Holdings’ market cap of $105 billion.

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