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ON AI TRAVEL BOOKING
How could hotel booking be disrupted by agentic AI?
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| Many travelers book trips using a process that looks something like this: First, they type “best all-inclusive Caribbean beach resort” or “Paris hotel good for families” into a search engine to find inspiration. Then, after much further research (which can take weeks and involve dozens of different sources), they go to either a hotel’s website or to an online travel agency (OTA) to book a stay.
Travel companies—including hospitality companies and OTAs—have worked to embed themselves deeply within this process. They use search engine optimization (SEO) and search engine marketing (SEM) to ensure they appear high up in search results. They package offers attractively on the internet pages that are under their influence.
This process is now changing, however. There is already evidence that consumers are beginning to treat gen AI portals such as ChatGPT as “everything windows”—single points of entry to launch any inquiry or handle any task. This could diminish search engines’ role in providing travel inspiration and information. And if AI agents become able to reliably execute the full travel booking process with little human oversight, the role of OTAs and hotel apps and websites—as well as tour operators, traditional travel agents, and countless other elements of the travel business—could also be disrupted.
The future hotel booking process for travelers could look more like this: First, the traveler tells an AI agent, “Plan me a three-night stay in New York City at a cool downtown hotel that has a trendy bar and lets me use my loyalty points.” Then, after some helpful chatting with the agent to refine choices, the traveler sits back and lets the agent handle the entire process—from finding the right room to executing the booking. This traveler may never encounter a search engine’s paid results, a hotel website’s gorgeous photos, or an OTA’s massive breadth of offerings, and may not even be aware of which channel the booking was executed through.
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| | | “What’s the most powerful way to earn a traveler’s trust in the age of AI?” | | | | |
| | | | | Copilot commerce: In this scenario involving targeted AI assistance, gen AI portals and AI agents become supporting tools but don’t take over the process. OTAs and hotel websites are still the main points of entry for booking, but they incorporate gen AI to make the existing process more conversational and efficient. Travelers remain at the wheel—evaluating options, making decisions, and executing the booking themselves. The fundamental role of OTAs and hotel sites (and the basic economics of the value chain) are not materially changed. | | | | | | | AI-powered experience curation: This scenario finds OTAs using their deep data on travel behavior to build powerful AI travel tools. OTAs leverage their established payment systems, advanced fraud detection tools, and real-time access to millions of available hotel rooms across countless brands. They shift from being aggregators of hotel room supply to becoming deeply involved orchestrators of customer journeys—using proprietary AI agents to sift through a galaxy of data and push relevant, curated offers to travelers. These AI agents can make booking a one-touch process for consumers and strengthen the relationship between the OTA and the traveler. | | | | | | | Direct-booking renaissance: Supplier-created portals (such as hotel websites and apps) develop compelling, AI-powered features, allowing them to remain a favored entry point for travelers. Leaning on their first-party customer data and relationships and superior operational knowledge, hospitality companies are able to invent hyperspecialized hotel booking tools that use AI to create a delightful booking experience that improves customer acquisition and retention. | | | | | | | Agent takeover: In this scenario—which would remap the travel distribution system—travelers overwhelmingly initiate hotel discovery and booking through an AI portal. The traveler’s AI agent negotiates and transacts directly with a hospitality company’s or OTA’s agent, although it’s not yet clear which would be favored, or how these channels’ economics would be affected. Traditional marketing, SEO, and SEM would fade in importance, and tactics that shape content to be maximally visible to and interoperable with AI agents would become crucial. | | | | | A variety of factors could determine which of these scenarios—or a mix of scenarios—comes to pass. The regulatory environment surrounding AI, the ability of players to access data, the level of consumer trust in AI agents, and the ultimate capabilities of the technology could all help determine how the future plays out. Evolutions in social media, interactive video, and voice-controlled interfaces could also shape the path forward.
Despite this uncertainty, hospitality players and OTAs can begin preparing now to avoid being overtaken by events. Among the questions they can ask themselves: What will be the best way to win consumers’ attention in the AI-centric future? What’s the most powerful way to earn a traveler’s trust in the age of AI? Could offerings and operations be redesigned now to integrate gen AI and AI agents, ensuring there is no lag as the industry evolves?
One possible approach is to boost traveler traffic by becoming a primary data source and execution engine for AI agents. Another avenue is to integrate with social media channels—imagine a seamless process in which a potential customer views a travel influencer’s video, envies the influencer’s stay at a Bali resort, and asks agentic AI to book a similar itinerary directly through the social media app.
Experimentation, rapid iteration, and employee upskilling can all help enable innovation. Partnerships and collaboration with a range of tech companies could prove vital. But it’s also imperative, while getting the tech side of this right, to keep travelers’ excitement and wonder at the heart of any strategy.
| | | —Edited by Seth Stevenson, senior editor, New York | | |
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| | | | Jules Seeley is a senior partner in McKinsey’s Boston office. | | |
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