In case you missed it, Amazon, possibly the biggest ecommerce website in the world, has entered into the hotel distribution game. It has recently started contracting hotels in the US. Are we looking at a shake-up of the domination of the hotel distribution landscape by a few big global players?
Amazon’s sales teams have started approaching hotels within driving distance of New York, Los Angeles and Seattle. Hotels which sign up now, are offered a lower commission rate than those that wait to incentivize early adopters.
On reaching out to Amazon I was informed that at this time they are only sourcing US hotels, and international product is not yet on the radar.
Let’s see what will happen in the New Year when Amazon launches its hotel booking service. Hopefully this will disrupt the hotel distribution landscape and shift the balance away from powerhouses like Priceline (Booking, Kayak, Agoda, Priceline, etc), Expedia (Expedia, Hotels.com, Venere, Trivago, etc) and TripAdvisor.
More competition could put pressure on the control the big players have on the market, and hopefully help curtail distribution costs, which have been rising faster than revenues over the last few years. Amazon seems to be starting off with the merchant model used by the likes of Expedia and Hotels.com but with a considerably lower margin of 15%.
There is also mention that Amazon will invoice the hotel for commission, following the model of Booking.com.
If Amazon gets it right we might be looking at a game changer in the hotel distribution landscape.
That said, what’s next? eBay?
eBay another of the world's largest ecommerce websites has actually been in the hotel booking game for a bit longer. But it has never gone main stream. It has been offering hotel vouchers through the Cultuzz platform.
Vouchers however at a fixed rate, is simply not the most popular with hotels in the age of dynamic pricing. Nor is travel prominently featured on its website.
Just thinking out loud: With its store in store principle, eBay could make a great candidate to enter into the metasearch game, allowing hotels and OTAs to compete on price to gain bookings.
Looking at other large shopping websites, I can’t help but wonder who else will be entering into this high margin business next year … BustBuy.com, Walmart.com, Target.com, Macys.com, Costco.com ? And let’s not forget Apple and Google of course...
I am looking forward to a bit of disruption in the hotel distribution landscape in 2015.
NB: Shadow image via Shutterstock.