In late October, Alibaba, China’s largest ecommerce company, launched Alitrip, which will become the first fully electronic OTA for the Chinese lodging market. Weeks later, news broke that Amazon was reportedly planning to enter the hotel-booking space, and all of a sudden the world’s largest online retailers could soon be selling hotel rooms.
Is this good or bad for the hotel industry? In the near term, options beyond the duopoly of Expedia and Priceline can’t be a bad thing. More competition means better pricing. But longer term, if these tech giants are transacting room inventory at a magnitude larger than traditional OTAs and on their terms, the bargaining leverage of brands, and worse, independent hotels, will be even less than in the OTA world we now live.
That’s not even mentioning the potential end-to-end travel experience Google is capable of offering or TripAdvisor’s Instant Booking feature. The next wave of disruption will be driven by these tech giants and not traditional OTAs.
The natural temptation for hoteliers may be to ignore these new entrants, but that could be a dangerous move. If Amazon is committed, it’s hard to believe the company valued at more than US$150 billion won’t succeed. Amazon will need two things to make this work: consumer engagement and hotel inventory. They already have the first part, but can they get the second?
If I were a hotelier, I’d work with these retailers to collaborate so they don’t become expensive discount channels. If the industry doesn’t engage them, they’ll find rates and inventory from other places — like Expedia— and become just another source for room nights.
This won’t be a positive for the industry, but if hotels and brands work to build a true marketing partnership that is mutually beneficial, it could be.
Patrick Bosworth, Duetto, San Francisco