Amazon.com, Inc. (NASDAQ:AMZN) is reportedly in the midst of launching a divergently different service by the New Year, Amazon Travel.
Exclusive news report by industry media Skift quoted Amazon officials as saying that the company was, “poised to launch its own travel service, featuring booking at independent hotels and resorts near major cities.” In the initial phase the service would be a limited version and would offer ‘curated selection’ of independent hotels around the region of NYC, Seattle and LA.
Amazon’s Travel Service Model: 15% commission from hotels
Amazon Inc. (NASDAQ:AMZN) would operate its Travel Service on a 15% commission basis from hotels. The latter retain the right to set prices and upload inventory as available. Industry experts believe that this would allow hoteliers to list at rack prices and hold room for discounts as well.
Amazon’s impact on the online booking industry
Amazon.com, Inc. (NASDAQ:AMZN) foray into unchartered online traveling booking industry is expected to feel the impact in the long run.
Industry experts opine that the current service range which Amazon will offer, as of Jan 2, 2015, will be limited and will not be as disruptive or hold the same impact as Amazon’s entry into the publishing industry.
Big players of the online booking industry, Priceline (NASDAQ:PCLN) or Orbitz (NYSE:OWW), nor, the ever popular Expedia (NASDAQ:EXPE) are not expected to feel the heat of Amazon’s entry into their domain in the near terms. Currently, all of these players have bigger fish to fry, as Google Inc. (NASDAQ:GOOG) continues to impact bottom-lines with its new online booking services.
As Amazon.com, Inc. (NASDAQ:AMZN) is currently targeting independent hoteliers and boutique hotels the market segment, is definitely different from the big player segment. Most independent hotels do not have much spending budgets on advertisements and will benefit from Amazon’s massive network and clientele base by opting for cross-sell and bundle services.