Online retailers Amazon.com’s and Alibaba’s plans to expand into the hotel booking space could change the way hoteliers do business, sources said.

Two major online retailers, Amazon.com and Alibaba Group, plan to elevate their online hotel booking games to cut their own slices of the profitable travel pie.

Amazon Travel, expected to go live around 1 January, will feature booking at independent hotels and resorts near major cities, according to reports.

Alibaba, China’s largest e-commerce company, in October announced its online travel business Taobao Travel will become an independent business and brand named Alitrip. The platform will provide plane tickets, vacation packages and services for hotel booking, visa applications and tour guides.

Neither Amazon.com nor Alibaba returned requests for comment by press time.

“We believe the travel market is a fierce market for Chinese people,” said Yong Zhang, Alibaba’s COO during the company’s first earnings call, which was webcast, in October. (Alibaba Group went public in September in the largest global initial public offering in history, raising $25 billion.) Zhang said the company beefed up its services on the Alitrip platform in an effort to get more Chinese consumers to travel.

Alitrip will focus on four strategic areas, among which mobile and service offerings are its top priorities, according to a news release.

Alitrip and Amazon Travel are not the first heavy hitters breaking into the hotel distribution space. Search engine giant Google in 2011 launched Google Flight Search and Google Hotel Finder and has refined continuously their offerings and approach ever since. Apple has been hovering as well, with reports long circulating of plans to infiltrate the booking space.

Insiders weigh in

“It might be a refreshing thing for the industry to have another player (Amazon.com) in (the distribution space) that is very well known,” said Edward Perry, global senior director of social media, OTA partnerships and innovation projects at Worldhotels. “You have more leverage when you have the audience that Amazon has.”

Perry believes the platform won’t be an “immediate success,” but over time it will change the way hoteliers do business.

Regarding Alibaba, he said, “It’s just a wait-and-see approach, but I think (Alitrip) will be successful.”

While it’s difficult to compare the two given the unique nature of the Chinese marketplace, Perry said both Amazon.com and Alibaba must find a differentiator that resonates with their core customers to be successful. “Having the statistical analysis of its customers, the companies then need to develop products along with other hotel partners.”

There is a similar land grab taking place in China, said Jesper Palmqvist, area director of the Asia/Pacific region for STR Global, sister company of Hotel News Now.

“Everyone is battling to gain shares via product and strategic alliances,” he said.

For example, Alibaba recently acquired a 15% stake in the Chinese software company Beijing Shiji Information Technology. Shiji is one of the largest property management system and central reservation system operators in China, Palmqvist said.

The purpose of that acquisition? “To connect with the system of hotels and restaurants so that the merchants at the hotels and restaurants can supply their inventories on a real-time basis,” Zhang said during the company’s earnings call.

Hotelier benefits

Alibaba’s Beijing Shiji investment will allow hoteliers who partner with Alitrip to sell their inventory more efficiently, Zhang said. Alitrip’s mobile app also will play a significant role in helping connect Chinese consumers.

With Alibaba’s third-party online payment solution Alipay, the Alitrip platform could make significant waves in China’s OTA space, sources said. But it would mean that Chinese hoteliers need to more strongly adopt the OTA model, which has been a struggle in the country.

According to multiple news reports, Amazon.com intends to use the merchant model that major OTAs such as Expedia and Hotels.com used when launching their platforms. However, Amazon.com, whose founder, chairman and CEO Jeff Bezos has long championed profitability via razor-thin margins, plans to take a lower cut (around 15%).