Amazon.com, Inc. (NASDAQ:AMZN) is reportedly preparing to enter the hotel booking business with new service being added to the site that would allow hotels to upload pictures, room details, pricing, etc to Amazon’s hotel booking site for customers to peruse and book. Amazon is reportedly not interested in partnering up with big hotel chains at this time, but rather a focus on independent hotels that are located in New York, Seattle, and Los Angeles. Amazon has said the new service will launch January 1, 2015 and once a customer has booked a room, Amazon notifies the hotel of the booking and keeps 15% commission.
Amazon.com, Inc. (NASDAQ:AMZN) believes they can make a successful run at the crowded hotel booking industry due to their large customer base and their competitive pricing goals. The company also hopes to take a more niche approach to the business by focusing on independently owned and operated hotels, which is certainly a gamble, but could work out to their favor. However, with other names in the space such as Orbitz Worldwide, Inc. (NYSE:OWW), Expedia Inc (NASDAQ:EXPE), TravelZoo Inc. (NASDAQ:TZOO), Priceline Group Inc (NASDAQ:PCLN), Tripadvisor Inc (NASDAQ:TRIP), Trivago, Kayak, Travelocity, etc, can Amazon make a competitive move for a nice market share stake?
Amazon’s half-hearted approach
While Amazon.com, Inc. (NASDAQ:AMZN) is the largest online retailer and one of the most widely recognizable websites in the US, I struggle to really understand why Amazon seems to be taking a half-hearted approach to their entering of the hotel booking industry. Amazon is only covering independent hotels in only 3 major cities, compared to their competitors above, who can search for independent and large-name hotels pretty much anywhere. It just seems to me that if a company enters a crowded industry, you want to make a splash and really attack the competition, establish yourself as a viable member and it just doesn’t seem to me that this is the way Amazon is taking it. Granted, nothing is official till the results from the website are shown, to me it would have made more sense to cover more cities at the very least. New York and Los Angeles are two of the largest cities in the US, but where is the diversification? Also, how competitive will Amazon be able to be when it comes to pricing compared to its vast number of competitors? According to Fox News, “the properties would reportedly be listed at published rates (most expensive), but discounts would be available”. This language does not sound like competitive pricing to me, at all. This adds to my questioning of how Amazon got into the business.
Overall, Amazon.com, Inc. (NASDAQ:AMZN) is the largest online retailer in the US. They have significant market share and strong reputation with online consumers and it certainly makes sense why they would enter the hotel booking industry. However, to only enter 3 markets, independent hotels only, and list prices at “published rates” sounds quite disappointing. We will have to wait and see results before coming to any official conclusions.
Disclosure: No positions