The AI illusion in hotel sales
Many hotels are currently pinning great hopes on artificial intelligence:
Will it reduce dependence on OTAs and strengthen direct sales?
A recent analysis by Morgan Stanley reaches a different conclusion: Generative AI will not weaken online travel agencies (OTAs) such as Booking Holdings – but rather strengthen them.
Whilst many market participants expect AI-powered travel assistants to complete bookings directly within AI interfaces in future, thereby bypassing OTAs, the analysts argue otherwise:
AI will transform inspiration and search – but transactions, payment processing and customer data will remain with the established platforms.
The key points of the analysis
AI as a traffic driver for OTAs
Early findings suggest that AI agents do not drive users away from OTAs – but rather towards them.
AI inspires, filters and plans. Yet when it comes to making a booking, users still end up on the major platforms.
The result: OTAs remain key booking hubs.
The Merchant of Record remains a complex role
The role of Merchant of Record – that is, responsibility for payments, processing and customer service – is operationally demanding.
Every transaction entails risks:
- Payment processing
- Refunds
- Customer support
- Liability issues
Tech giants such as Google and Meta have so far shown little interest in taking on this responsibility.
Consequence: The operational risk remains with the intermediaries – a structural advantage for OTAs.
Data is the real competitive advantage
Whoever holds customer data controls:
- Repeat purchase rates
- Personalisation
- Cross-selling
- Price optimisation
Large OTAs possess enormous amounts of data and algorithms that have been optimised over many years – a strategic moat that new AI interfaces are unlikely to overcome in the short term.
Market leadership remains stable
Booking Holdings continues to be seen as a key player in global distribution.
Morgan Stanley has raised its valuation – partly because the feared disruption from AI is currently being overestimated.
What does this mean for hotels?
This is where it becomes strategically important.
1. AI does not replace distribution – it transforms the customer journey
The key question is not whether OTAs will disappear.
Rather, it is how the inspiration and search phase is changing.
This creates new challenges for revenue management:
- Will your hotel appear in AI-powered recommendations?
- Is your content structured, complete and machine-readable?
- Are your rates structured in a logical and consistent manner?
2. OTAs remain a major force – and may even grow stronger
If AI drives additional traffic to OTAs, the existing dependency could become even more pronounced.
For hotels, this means:
- Professional OTA content management is becoming even more important
- Rate parity and pricing strategy must be managed consistently
- Conversion on OTA detail pages is becoming increasingly important
3. Having your own data strategy is becoming a decisive factor
If OTAs retain control over their data, building up their own customer data becomes a strategic necessity.
Key strategies include:
- Active use of CRM systems
- Professionalising newsletter strategies
- Strengthening loyalty programmes
- Expanding personalisation on their own website
The key question is: Who owns the relationship with the guest?
4. Don’t panic – but maintain strategic clarity
A disruptive shift in travel commerce driven by AI is not expected in the short term.
However, this does not mean that hotels’ position will automatically improve.
On the contrary: those who remain passive run the risk of being perceived merely as interchangeable inventory within the new AI ecosystem.
Conclusion
Agentic AI is not an ‘OTA killer’ – but rather a booster for existing platform structures.
For hotels, this means:
- Distribution remains platform-driven
- Data continues to grow in importance
- Visibility in the AI-powered discovery process becomes crucial
- Strategic revenue management becomes more complex
The crucial question is therefore not: “Will AI replace Booking?”
But rather: “How does my hotel position itself in an AI-enhanced platform economy?”
