April 5th, 2018
This view is part of our deeper analysis entitled Going Prime: Assessing Amazon's Disruptive Potential In Travel, where we look at the global travel ecosystem in the context of Amazon.
No delusions, a move into hospitality and guest services would be a far cry from Amazon’s track record in e-commerce and tech. Then again, most didn’t anticipate a Whole Foods acquisition. The company's size and appetite for seemingly disjointed verticals warrants a deeper look at different scenarios and points of entry for Amazon into travel, beyond the most obvious.
Our sources indeed hinted that Amazon never entirely disbanded its travel team, following a short-lived attempt with its Amazon Destinations product back in 2015. Linear thinking points to a potential Expedia or TripAdvisor acquisition, as a way to get back into hotel distribution. While we agree that the company intends to make a comeback into the sector, we question whether online travel would be the big move that launches Amazon into the travel category.
A lot has happened in the world of travel and hospitality since 2015. Airbnb established urban rentals as a mainstream accommodations category rivaling traditional hotels. The space remains fraught with regulatory challenges that play out on a place-by-place basis. However, the overwhelmingly positive consumer response to rentals in all of their various manifestations e.g. professionally managed and primary home rentals, exposed a revolution in how and where we travel.
Here we see the rentals management space as an unlikely, albeit interesting angle for Amazon. Companies like Vacasa, Turnkey, Stay Alfred, Sonder, Under the Doormat and others are making a run at professionalizing and consolidating the space. These companies go beyond Airbnb's marketplace model by vertically integrating property and revenue management functions with housekeeping and guest services. While still small, the pace at which these players have managed to aggregate supply should be noted.
Amazon is a modern-day enterprise behemoth with the means to buy its way into just about any industry. In 2017, travel and tourism's direct, indirect, and induced impact accounted for a US$8.3 trillion contribution to global GDP. Clues to understanding Amazon's potential in travel lay at the intersections of this massive visitor economy. These opportunities could stretch beyond e-commerce and distribution.
In Going Prime: Assessing Amazon's Disruptive Potential In Travel we dig deeper into these and other elements that support the business case for Amazon as a future force in the travel space.
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