Amazon Destinations to Put Expedia on Alert - Analyst Blog

“Get your motor runnin’; Head out on the highway”—Amazon Destination is here.

Yes, the rumor that Amazon.com Inc. AMZN is going to enter the travel booking space is absolutely correct. The Seattle-based e-commerce giant is ready to take on the travel market with its new platform.

Amazon Destinations 

The platform currently resides in Amazon’s “Local” portal, where you can select a new “Destinations” tab to book trips to the Pacific Northwest, Southern California and the Northeast.

With its latest offering Amazon is focusing on destinations that are near you, ones that can be easily driven to -- basically local getaways (it will provide maps, accommodation deals and information about restaurants at popular weekend getaways).

Why Local Getaways?

Amazon told Skift, “Interestingly, more than 40% of all U.S. domestic leisure trips are short-term getaways of 1-3 nights, and many of these trips are to nearby, drivable destinations.”

Tom Cook, Amazon’s spokesperson, said that the company believes that local getaways have been underserved by other hotel sites.

Amazon Local and other sites like Groupon GRPN already offer getaway options. However, what sets Amazon Destinations apart is the fact that it instead of giving heavy discounts on hotels it will offer the full retail prices. According to Skift, “This is in an effort to provide the best hotels that are always available.” It also sheds light on the fact that Amazon is focusing beyond just offering super-cheap prices.

Amazon Travels the Path Already Taken

According to the World Travel & Tourism Council, in 2014, travel and tourism spending totaled $458 billion in the U.S. alone -- reason enough for Amazon’s growing interest in the money-spinning travel market.

Seasoned online travel agents include global players like Expedia Inc. EXPE and Priceline Group Inc. PCLN. On the other hand, at this point Amazon is a small player in the hotel-reservation market. However, it has always been a game changer, and it does have the resources to scale up quickly.

Bashar Wali, president of boutique hotel operator Provenance Hotels, told WSJ that Amazon “has an intimate knowledge of its customer’s spending habits and preferences. That could allow us to collaborate with them on special offers that could be well-targeted.”

Amazon is also going to be very competitive about its pricing strategy. Amazon spokesman Cook didn’t reveal what Amazon would charge hotel owners for rooms booked via its service. However, he did say that the pricing would be competitive (other online travel agents usually charge 10%-25%, according to WSJ).

To ensure quality, Amazon claims that all the properties offered via Amazon Destination have been handpicked.

Amazon’s Journey Ahead

Amazon has always been a game changer. It has already changed the face of the retail industry. Whether it will take the online travel industry by storm or not, only time will tell.

Till then, “Get your motor runnin’; Head out on the highway.”


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