Uber as Next Travel Powerhouse? Highly Doubtful

Online Travel This Week

What is the first thing people do when planning that dream vacation? Is it to figure out which car or train will take them from the airport to the hotel? Well, not exactly — or let’s say, never.

Keep that in mind when you digest the news that rideshare and food delivery company Uber plans to add flights to its UK app later this year, and hotels at some unspecified date after that. As one earlier step in its product expansion, Uber’s UK app likewise intends to tack on national rail and coach transportation this summer.

A travel industry veteran, who didn’t know about the announcement but heard rumors of some “big Uber travel news,” when appraised of the company’s plans said, “That’s it? That’s all?”

In the same vein, feel free to disregard or be skeptical about Uber’s statement that it “plans to become a one-stop shop for door-to-door travel.”

Despite the CNBC headline, “Uber looks to create travel ‘superapp’ by adding planes, trains and rental cars,” does Uber CEO Dara Khosrowshahi, the former CEO of Expedia Group and still a board member, just toggle a switch, and Uber becomes the next Expedia, Booking Holdings or Airbnb?

I recall Khosrowshahi’s reaction in 2014 after Skift broke the news that Amazon was launching a hotel booking business in the U.S., and everyone was speculating that the Big Two in travel at the time, namely Booking and Expedia, would quickly become the Big Three.

Khosrowshahi said he welcomed Amazon as a competitor, but added that Expedia’s nearly two decades at the time of building a hotel business and the accompanying relationships that entailed would likely keep it competitive.

Amazon abruptly ended its U.S. hotel business a year later in October 2015 without explanation, and since then Amazon in 2019 entered into a series of online travel agency, accommodation and ground transportation partnerships in India for flights, lodging and buses, but that has not been particularly impactful.

If Uber intends to create a superapp strategy that includes ground transport, food delivery, retail goods, flights and hotels, then it only needs to look at superapp Grab in Southeast Asia to see the challenges. Grab added hotels from Booking.com and Agoda to the Grab app a few years ago, and it has been inconsequential. For example, Grab’s accommodations business was so small that the word “hotel” went unmentioned in Grab’s 2021 earnings announcement and analyst call on March 3 this year.

Uber sees adding various transportation modes to its UK app as a logical evolution of its Go anywhere, get anything strategy, but admits that hotels is a departure.

Uber hasn’t revealed specifics about its flights and hotels plans other than to say it won’t be handling any traveler complaints about flight cancellations or hotels with dirty bed sheets, so presumably the bookings would take place on the still-unidentified partner sites. It wouldn’t be hard to imagine that Khosrowshahi texted Expedia Group CEO Peter Kern or grabbed a drink with him and discussed obtaining Expedia flights and hotels inventory for the Uber app.

However, Uber recorded close to a $500 million net loss in 2021, and adding flights, with their tiny single-digit commissions, would hardly tip Uber into the profit column. Hotels come with higher commissions, but Uber doesn’t intend on starting from scratch to develop hotel or short-term rental relationships around the world, and hence will only be sharing revenue with partners.

Sure, Uber has big brand recognition, lots of money to spend on marketing, and a CEO who has worked in the travel industry and its periphery for two decades.

But Uber would have a daunting fight changing consumer behavior in travel planning, or even putting enough focus on travel, given its multifaceted ground transport, delivery and retail businesses, to make a real go of it. Would-be superapps have had very little impact in travel.

As far as Uber becoming “a one-stop shop for door-to-door travel,” look at the multibillion dollars and years-long efforts Booking Holdings is investing into its connected-trip strategy.

So-called multimodal businesses, which attempt to integrate everything from ferries, planes and taxis into trip-planning, have a checkered track record.

This door-to-door travel stuff is not for the proverbial faint of heart.

As a recent Wall Street Journal article phrased it about Uber’s pending foray into flights and hotels, “Ride-hailing company isn’t becoming an online travel agent — it just wants people to spend more time on its app.”

In Brief

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