Morgan Stanley's Brian Nowak: Amazon could disrupt online travel

Morgan Stanley's Brian Nowak: Amazon could disrupt online travel
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22 March 2018 (Edited 22 March 2018)



According to analyst Brian Nowak, one reason Wall Street firm Morgan Stanley values Amazon shares as highly as it does - target price of $1500 - is the retailer's potential for getting significant profits from the travel sector.

Nowak told clients in a note:

"Amazon's focus on selection/service, pricing, and frictionless payment that drive conversion and stronger user economics also translate directly to travel."

Further, says Nowak, Amazon has more than 300M customers who could buy travel from them, and travel companies like Booking.com and Expedia buy about $620M worth of hotel-room inventory annually - which wouldn't be a big investment for Amazon. And with a travel business only half the size of Expedia's, Amazon could reap $600M a year in profits.

As of September 2017, Amazon had 90M paying Amazon Prime subscribers who were spending an average of $1300/year with Amazon. The other 200M+ non-Prime Amazon customers spent an average of $700/year. From a hotelier's perspective: if I can sell to those Amazon customers - an essentially self-selected captive audience - directly through Amazon, do I still need OTAs?

Stay tuned.


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External Article: https://www.cnbc.com/2018/03/09/amazon-could-disrupt-online-travel-industry-next-morgan-stanley-says.html


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