AI platforms are eating Booking’s cake. For some time now, it has been clear that some change will come to hotel distribution. AI is going to be disruptive to the current OTA paradigm. But how? Markus Busch the editor of what is one of the best hotel newsletters published a pretty detailed breakdown that I link to below. (That’s saying something since I built my own and co-founded 10 Minutes Hotel)
Here is my take:
The data: Searching on OTAs is not fun. Conversational search with a bot to refine one’s choice and set one’s own requirements is just a lot better. Travel is expensive and infrequent – a high risk household purchase. AIs are adding check-out and payment to their platforms as is seen with UCP and ACP (big win for new acronyms). Online travel is one of the most mature e-commerce categories OTAs are a solid choice.
This data is slightly in favor of AIs but OTAs still hold a strong position (maturity + risk management).
Some possibilities:
1. OTAs will probably build their own AI chat systems. They have the most structured and accurate data. But will people want to switch? It would need to be a lot better not just a bit. For example complete itineraries with risk guarantees.
2. OTAs could become just the plumbing, I’ve said this before. As above they have the best data. They could provide ARI to the AIs. Plus most AIs don’t want to deal with cancellations, complaints, refunds etc. Google has already proven this.
3. AIs get the data from elsewhere, such as GDS, but GDS would need to leapfrog OTAs here and rapidly provide clean data feeds and rethink their models. GDS missed the internet, could they come back now?
4. AIs become metasearch platforms for search. Just pay per click or similar model. Basically number 2 above.
5. There’s an outlier option where AI bots could empower a whole new gig economy of personal travel assistants who use the bots on customer’s behalf, manage cancellations, refunds, rebookings etc. Being just a call away. Anyone can now afford a personal travel assistant.
Each has their own consequence for market values. Plumbing is B2B, markets value those less as they become a commodity. As I noted in the data part above, OTAs still have a solid position with maturity and customer risk management. Paradigm shifts are harder in stable and mature markets but usability factor is not in their favor.
Article from Markus (worth a read):
https://lnkd.in/e2K_qQgK
And btw, subscribe to my newsletter 🙂 https://lnkd.in/eHP5ida2
PS: Yes, the image is AI generated just in case you weren’t sure. PPS: I know « AIs » are not a thing but for the case of this post, it was easier to just call them that.