The partnership between Amazon and Indian travel firm ClearTrip, announced earlier this year, revealed some of Jeff Bezos' vision for disrupting the travel industry. While this is not the first time that Amazon has made a foray into travel, the approach is radically different.
The company’s travel experiment in 2015 did not work, but that did not stop Amazon from thinking about travel. Its reentry into the online travel business could have far-reaching consequences for all.
Now, it's back with the full force of new partnerships with existing providers. It generated a massive buzz with the launch of a superapp strategy in India, which will be a one-stop booking platform for travelers.
This started with flight bookings to India — a complex but cash-rich market. Analysts predict that Amazon Travel's annual profit figure could be over $500 million dollars. This figure is based on having an Amazon hotel booking business approximately half of the size of Expedia Group.
An OAG study showed that 44% of travelers would happily book on Amazon. The online retail giant has already signed an agreement with Meliá Hotels International.
Amazon has an estimated 300 million engaged customers. With better ad marketing efficiency, Amazon's profits could soar higher than all other players to as high as $1.5 billion. Expedia Group and rival Booking Holdings spent a combined $10.6 billion on marketing and sales in 2018. In comparison, Amazon spent a fraction of that figure on travel.
Analysts predict that Amazon's sheer size will allow it to implement hotel commissions and leverage its Prime membership to kick-start a profitable experiment. Over time, it will be able to drive more repeat and direct travel traffic.
Meanwhile, fellow tech giant Google has made quite an impact with its suite of planning and booking tools. MMGY Global's 2019-2020 Portrait of American Travelers study shows that it came second only to Expedia, whose numbers dipped by 67%.
It announced that Google Travel, its streamlined platform, will be more comprehensive than an average booking site. It will converge Google Hotels, Google Flights, and other frequently used tools like Gmail, Google Maps, Google Calendar, and Google Search. The platform is designed to keep trip research, suggestions, bookings, and itineraries in one place.
For now, it seems that the two tech goliaths could dominate the online travel arena. Expedia Group and Booking Holdings will see two onslaughts, which will be hard for them to overcome.
Neither Google nor Amazon holds any flight or hotel inventory, so what's their edge? They both have massive user bases and they are swimming in big data, especially behavioral data. The tech-giants have keen e-commerce strategies and deep pockets. Their size and stances may look similar, and Google seems to have a head start. However, analysts feel that Amazon's efficient and effective digital strategies will prove to be the primary disruptor in the long run.
