How Cloud Services Help Expand Amazon's Role in Travel – PhocusWire
Travel insiders have long wondered when, or how, Amazon might flex its online muscle to follow other retail giants and non-travel brands into the sector.
Yet such speculation misses the fact of the company’s growing behind-the-scenes role in travel, mostly through Amazon Web Services, a subsidiary that provides on-demand cloud computing platforms and applications on a pay-as-you-go basis.
AWS’ importance to the larger company’s operations was clear in an earnings report this month when Amazon said revenue from its cloud unit beat analysts’ expectations by increasing 12% year-over-year in the second quarter to reach $22.1 billion. Of Amazon’s $7.7 billion in operating profit, 70% of it came from AWS.
As the largest cloud provider in a field that includes Google Cloud and Microsoft, Amazon – through AWS – has a significant toehold in the travel industry even without selling travel packages or booking rooms and flights, with cloud customers including Travelport and ATPCO.
Another is Trip.com, which reported significant improvement in its air ticket booking system and major cost savings after migrating more than 400 of its international business microservices to AWS.
That partnership has led Trip.com to develop a joint innovation lab with AWS, focused on five topics: artificial intelligence, flight business, hotel business, international business and cloud technology.
“The innovation lab aims to make travel more accessible and provide the ultimate experience for travelers, using the latest technology, renowned experts and leading researchers from Trip.com and AWS,” Chen Zhang, executive vice president of Trip.com Group, said when the partnership was announced in April.
Meanwhile, Amazon said it has signed up travel brands including Lonely Planet and Ryanair for Amazon Bedrock, its service for building generative AI applications on Amazon’s cloud computing platform. In June, AWS built on that foundation by announcing a $100 million investment in a generative AI innovation center to work with customers on building and deploying AI solutions.
To gain a greater understanding of the company’s activities in the travel sector, we spoke with Massimo Morin, the global head of travel at AWS and a 25-year veteran in the travel industry. Our conversation has been edited for clarity and brevity.
I read that you said travel “is an industry that thrives in complexity.” Could you elaborate on what you meant?
If you fly, for example, the whole system that you are touching – for getting your flight ticket, for getting the reservation, going to the airport — you might not realize [how complex it is]. Many of these systems are still running on mainframes. … You have all these processes and procedures in place [with] legacy technology behind the scenes … but its original purpose is no longer there. So they trying to transform. The challenge that travel companies and airlines have is that expertise. The first thing is having people that know the new technology, but also having people that understand the old technology – why did we do it in that way? So that is the complexity that the industry is living on. If you think about it, you book your ticket, you go to the airport, you get the reservation, you get the taxi, the security, the check-in, the baggage, the gate, the plane, the pilot, the crew. You see there are a lot of bits and pieces that need to go right. And we don’t usually give them enough credit for the amazing job that they do.
Can you offer an example of how outdated technology affects the way companies interact with customers?
It starts with even very simple things [like] when you call an airline and spend countless minutes, hours, on the phone because they cannot actually transfer the call and they have to put you on hold. They cannot call you back, and they cannot understand who you are when you call and connect your phone number with your reservation. So they can say, “Hey, Derek is actually the person that is calling. Let me call him back because he’s traveling in a month, so he can [afford to] wait and I can [speak with] somebody else that is traveling tomorrow.”
They can’t do that [with the legacy technology], but with modern technology like Amazon Connect, they can do it today. The technology enables you to prioritize the queues. [And] you can have different types of support depending on your frequent flyer status or how much you spend and things like that.
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