'Everyone wants to be the Amazon of travel,' said Andrew Scheivachman, during the company’s most recent call last month, 'but who would do it better than Amazon themselves?'.

That’s pretty much the industry-wide consensus: that Amazon’s entrance into travel booking has the potential to shake up distribution like no other. The company has tried to enter the space before but failed to get any real traction. Still, most experts think it’s just a matter of time before they’re back in the game.

But why didn’t it work the first go-round for Amazon? And when the e-commerce giant undoubtedly tries again, how will their entrance take shape? Will they be supplier friend or foe?

Those were the questions at the heart of Skift’s research report and the subsequent dial-in call. The insight should help hoteliers understand how their business could be affected by Amazon becoming another third-party distributor.

Here are five takeaways about Amazon’s entry into the travel space:

1/ The Amazon experience is still desired.

It’s true that many hotel brands, operators and tech companies are trying to emulate Amazon’s best attributes – personalized recommendations, tailored sort order and one-click payments. While it might begin to sound like marketing fluff, those e-commerce best practices that have proven to work in other verticals are still mostly missing in travel.

2/ What happened the first time?

Dennis Schaal, executive editor of Skift, said in its first attempt to list hotel inventory, Amazon was charging a 15% commission to mostly smaller independent hotels.
The rates were competitive, but Amazon failed to “scale it up,” he said.Schaal said a second attempt to enter the travel vertical is definitely on their radar. “But do they have to be in everything? That’s the question.”

3/ Amazon’s entry will come with plenty of challenges.

Like any new entrant into the hospitality vertical, the first step is gathering inventory and getting rooms online. Getting to a property count of someone like Expedia, who’s been at it for decades, is really tough to replicate.

Plus, Amazon might have superior technology in some areas, but connecting to hotel inventory has always been a challenge for outsiders.“Having the technology to have this type of inventory is difficult,” said Skift Research Senior Analyst Seth Borko. “Amazon’s sweet spot is selling commodities out of warehouses, which is a lot different than selling vacations and once-in-a-lifetime experiences.”

Also, in a recent survey, consumers showed somewhat of a distrust over whether they would book travel on Amazon. In fact, 42% said they would be “very unlikely” to.Lastly, in addition to competing with the entrenched OTAs, Amazon would also be facing new competition from Google, which has ramped up Google Flights, Google Hotels and increased its spend in travel advertising.“Amazon would have some catchup to play,” Schaal said.

4/ Here’s how Amazon will overcome those challenges.

The challenge for many leisure-focused hotels or OTAs is that people take vacations only once or twice a year, Schaal said, which is why each are branching out and becoming more about travel experiences, adding things like ride-sharing and gym memberships.

Amazon can really solve this problem, Schaal said, because it is already involved in many of those verticals and has a user base of people who visit the site around three times a month, on average.Amazon has much higher direct traffic than the average travel distribution site, and with Prime members driving revenue at Amazon, Borko said, all that revenue is going back to customer experience in the form of shipping.Will consumers trust booking travel on Amazon?

Millennials will, Schievachman said, adding that hotels could benefit from Amazon’s move to add more display ads and their push into voice search with Alexa.“I don’t think many companies out there are good in personalization,” Schaal added. “Amazon is not perfect, but they’re among the best.”

5/ Would Amazon build or buy its travel product?

While it seems more likely that a big splash by Amazon would come by way of acquisition, challenges remain there as well.
Amazon’s largest acquisition to date was Whole Foods, at a cost of $13.7 billion. Schaal speculated that TripAdvisor could come within that range, but a company like Expedia would fetch more like $25 billion.He shared some concern over the current anti-trust environment as well, adding that President Trump dislikes Amazon CEO Jeff Bezos.

Andrew Scheivachman is the Business Travel Editor at Skift

Jason Q. Freed, Managing Editor at Duetto
Jason joined Duetto as Managing Editor in June 2015 after reporting, writing and editing hotel industry news for a decade at both print and online publications. He’s passionate about content marketing and hotel technology, which leads to unique perspectives on hotel distribution and revenue management best practices.

www.duettocloud.com