Amazon, which boasted record-breaking sales during this week’s Prime Day event, made headlines for its travel-related offerings, something of a novelty for the company.
While the impact travel deals made on Prime Day results is unclear, the handful of offerings from big name brands including Carnival Cruise Line, Tripadvisor’s Viator and Southwest Airlines begs a slew of questions.
What does the future of travel look like in relation to Amazon? Will the platform become a major player in the industry? And if so, in what form?
“There’s so much speculation about what Amazon could do, because it knows so much about our buying habits and because it has great recommendation technology,” said Lorraine Sileo, senior analyst and founder of Phocuswright Research.
These ideas aren’t new. There has been speculation for years about how and when Amazon might enter the travel sphere – and if it would be successful doing so.
But this week’s highly-publicized Prime Day deals shed new light on the matter – and industry opinions on how things could progress from here vary.
There’s so much speculation about what Amazon could do, because it knows so much about our buying habits and because it has great recommendation technology.
Lorraine Sileo – Phocuswright
Industry veterans wary of Amazon’s travel future
Travel industry veterans aren’t convinced Amazon is the next great travel search or sale tool.
“I just think it’s a little static and random at this point,” Sileo said.
“Travel is so complex, and Amazon is … not really into owning the product that it sells, right? … It’s a marketplace. So I could see it becoming a bigger marketplace and offering more,” Sileo said. “Does that make it more like a metasearch? It’s so hard to envision exactly what they have in mind. … For travel, I don’t think this is giving us too much of a glimpse.”
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Unless Amazon can create a sense of personalization when it comes to offerings, Sileo doesn’t think deals from an assortment of companies will usher Amazon into a seat at the table when it comes to travel retailing.
“Until they’re able to really do that personalization, it’s not anything more than I would get from … like Costco Travel,” Sileo said, noting she could snag a deal there too.
Max Starkov, a hospitality and travel technology consultant, looked back at Amazon’s past endeavors in travel.
He cited two points: In the 2010s, Amazon tried to enter the travel space with what Starkov called “ill-conceived” Amazon Local and Amazon Destinations – both of which are now defunct. And in 2019, Amazon launched its partnership with ClearTrip to offer flight search and booking in India.
“Especially during its first two attempts, Amazon vastly underestimated the complexities of the online trade marketplace,” said Starkov.
He pointed to inventory management as an obstacle.
“Amazon underestimated the complexity of travel and hospitality technology, which consists of many moving parts: old legacy systems that are poorly functioning, co-existing with next-gen apps and promising AI and blockchain implementations,” said Starkov.
He continued: “Despite all of its retailing prowess and innovation, Amazon has no idea how to manage ultra-perishable inventory, such as that of travel inventory. Unlike books or socks, you cannot store travel inventory in … highly efficient automated warehouses.”
Starkov believes Amazon has missed “their one and only chance” to enter the travel space when it opted not to acquire Orbitz or Travelocity. Both Orbitz and Travelocity were acquired in 2015 by Expedia Group.
“Unless Amazon acquires Expedia with its $18.5 billion market cap, I don’t see Amazon entering the travel space organically, though many hoteliers would love to have another player in addition to the current duopoly,” said Starkov.
Participating brands on working with Amazon
Selling on Amazon seems to appeal to brands given Amazon’s built-in customer base, which gives travel brands a way to meet consumers where they are.
“Consumers are interested in unique experiences, and this Prime Day offering puts cruise vacations in front of a targeted audience that we want to reach,” Amy Martin Ziegenfuss, chief marketing officer of Carnival Cruise Line, told PhocusWire ahead of the Prime Day event.
She called Amazon a “great partner” and noted the cruise line had worked with the company on other activations – so joining together on Prime Day marked a step forward in their working relationship.
Viator, which is also partnering with Amazon to sell through Alexa, had a similar perspective.
Laurel Greatrix, vice president of brand and communications for Viator, told PhocusWire partnering with Amazon is one of “thousands” of avenues Viator is taking to reach travelers where they may already be shopping as they aim to bolster distribution.
And Southwest, ahead of Prime Day, also expressed positivity as the “first airline partner” of Amazon.
“Amazon’s Prime Day event draws consumers looking for travel deals and inspiration, and we’re inviting Prime members to enjoy Southwest’s service with a discount on our already low fares as a way to win more customers and drive bookings,” said Jennifer Bridie, vice president of marketing communications and strategy at Southwest Airlines.
The participating companies did not offer comments after the close of Prime Day sales.
While Amazon’s recent venture into the travel space with its deals this week has made waves, there have been other times it has sought opportunities to dip its toe into the industry.
In 2020, for example, the company launched virtual tours. And Amazon partnered with India-based flight-booking platform, MakeMyTrip in 2021. MakeMyTrip did not offer comment on its experience when asked.
While experts aren’t sold on Amazon becoming a regular player in the industry, not all are ruling out its potential entirely.
Despite her qualms, Sileo said it’s important to keep an open mind about Amazon’s potential as a travel seller.
“Maybe it’s [the] start of something interesting,” said Sileo.
