Amazon this week started enabling customers to book hotel rooms through its “Destinations” site, as the world’s biggest online retailer looks to benefit from the resurgence in travel spending by getting into the hotel distribution space.
On Amazon Destinations, part of the Amazon Local site, users can browse for nearby hotels and local getaways from a list of regional destinations near the top of the landing page and a “sales and special offers” section toward the bottom. For example, Los Angeles-area users are presented sections on Santa Barbara, Palm Springs and the California Central Coast.
According to Phocuswright, U.S. online bookings will rise 11% this year, to $53.1 billion, about 37% of total U.S. hotel bookings. Online bookings been a source of contention as hoteliers, to avoid paying distribution costs to online travel agencies (OTAs) such as Expedia and Priceline Group, have attempted to persuade customers to book directly on hotel websites. The OTA share of U.S. hotel bookings will have risen to 18% from 15% between 2012 and 2016, Phocuswright said. (Phocuswright is owned by Northstar Travel Media, which also owns Travel Weekly.)
Henry Harteveldt, analyst with Atmosphere Research Group, said hoteliers might welcome the entry of Amazon as a well-established online sales channel capable of competing with the OTAs
“Hotels want some additional players with clout to come into the market to have leverage against the big boys like Expedia and Priceline Group,” Harteveldt said.
Either way, the launch was a modest one. This week, Amazon Destinations had one hotel listed in Los Angeles proper and none in New York or San Francisco, though it did list five hotels in Seattle, the company’s home base.
Harteveldt said Amazon was wise to take it slowly and make sure its systems work properly, though the site’s simplicity and limited connectivity to other goods make it look “pretty much like an OTA in 2002.”
That said, Amazon’s expertise and broad product offerings position the online giant to rapidly expand its hotel bookings if and when it commits more resources to the site, according to both Harteveldt and Chris Anderson, associate professor at the Cornell School of Hotel Administration.
“There’s not much marketed yet besides rooms, but I see a potential upside here for bundling,” Anderson said.