Hotel Groups Bet on Loyalty Programs to Fend Off AI Agents and Online Travel Platforms

Global hotel groups bet on customer loyalty to beat online and AI agents

Major hotel groups are intensifying efforts to get customers to book directly, as they seek to save on commissions paid to online platforms and prepare for the rise of artificial intelligence "agents". Marriott, the world's largest hotel company, last month said its Bonvoy loyalty programme, which registers all customers who do not use intermediaries, had almost 260mn members by the end of September, up 18 per cent from a year earlier. Rivals such as Hilton, Hyatt and Wyndham Hotels & Resorts have also boosted direct bookings by using technology and more attractive perks. Hilton has made it easier for customers to reach elite loyalty status and agreed partnerships, including with MSC Cruises' luxury division Explora Journeys, that enable members to spend points outside its portfolio. Operators have long complained about the fees imposed by online travel agents (OTAs) such as Expedia and Booking.com, which typically take a cut of between 15 per cent and 25 per cent, and see the push for direct sales as crucial to taking fuller advantage of the arrival of advanced AI. AI "agents" -- autonomous bots capable of arranging travel for users -- could provide hotel groups a cheaper alternative to online travel agents. But they could also divert business away from the big brands by making customers less conscious of brand recognition. "Generative AI is shifting travel planning from traditional search into more conversational and agent-led environments. So that makes building relationships [with customers] a bit more strategic and important," said Chema Basterrechea, chief operations officer at Radisson Hotel Group. Boosting direct bookings could help Radisson capture more guest data and offer "a much more personalised experience" that encourages repeat business, Basterrechea said. Marriott's chief financial officer Leeny Oberg said at a conference this month that bookings made through AI channels "could potentially be cheaper than the OTAs". Hotel groups have long worked with online travel agents because they provide access to incremental business, but hope that more robust ties with customers will reduce the share of bookings done through them. "You don't want to rely on Booking and Expedia: they're expensive channels and they're extremely hard to defend your position on," said Bernstein analyst Richard Clarke. Hilton's efforts to lure more direct bookings include offering access to a £650 football-themed suite, decorated with boots and memorabilia, at its hotel at the official training ground for England's national teams. Guests can even get a training session with a qualified coach. Geoff Ballotti, chief executive of Wyndham, said that tools like ChatGPT and Gemini presented "a unique opportunity for us to continue to reduce our dependency on OTAs". The company's own AI tools were already "driving more direct bookings", he added. Glenn Fogel, chief executive of Booking Holdings, which owns Priceline and Booking.com, said OTAs were "absolutely" in competition with hotels' in-house loyalty programmes that sought to promote more direct bookings. "You're just one click away from going to another way to do your booking, so you've got to always be providing better service because people like [Marriott] Bonvoy and people like Hilton Honors are very powerful." But Expedia's chief commercial officer Greg Schulze said there was "space for all of us" in the $3tn travel industry and argued that his company's technology platforms added "complementary value", especially for smaller operators that are not part of the big chains.

Hotels Challenge AI Agents and Booking Sites With Loyalty Programmes

AI agents said to stop hotels from forming relationships with customers Major hotel groups have always been competing with online travel agencies (OTAs) for customer bookings, but a new competitor has now entered the arena. With more and more companies offering agentic artificial intelligence (AI) tools that can book a hotel online, hoteliers are reportedly intensifying efforts to win over customers -- and their modus operandi is loyalty programmes. As per the report, multiple hotel groups are offering more incentives and easier loyalty status bumps to increase their share of direct bookings. Hotels Reportedly Do Not Want Customers to Use AI Agents for Bookings Hotels and OTAs are ecosystem players with both serving the same goal of helping individuals make bookings, which means they are not traditional rivals. However, the two compete for the same pie, which is customer bookings, and there are two main reasons for it. According to a Financial Times report, booking platforms such as Expedia and Booking.com charge fees of between 15 and 25 percent, which is a big margin for hotels to lose out on. But the fees are only one part of the problem. The second, and more important aspect, is customer data. Both parties need direct access to customer data to provide personalised experiences, which ensures that they get repeat business. So, to compete with OTAs' discounts and incentives, hotels have always relied on their loyalty programmes. However, with Google, OpenAI, and other AI platforms offering agentic tools that can book hotel rooms online, the competition has grown fierce. AI platforms offer ease of access with text or voice as the primary interface and a helpful agent that takes care of the manual labour. But hotels are reportedly intensifying their efforts to ensure that customers make their bookings directly with them. As per the report, Marriott has revealed that its Bonvoy loyalty programme has gained nearly 260 million members by the end of September, witnessing a YoY growth of 18 percent. Hilton has reportedly made it easier for customers to reach the elite loyalty status. The hotel group has also focused on expanding partnerships to open more avenues for members to spend their points. Similar strategies have reportedly been implemented by Hyatt and Wyndham Hotels & Resorts. "Generative AI is shifting travel planning from traditional search into more conversational and agent-led environments. So that makes building relationships [with customers] a bit more strategic and important," Chema Basterrechea, Chief Operations Officer at Radisson Hotel Group, told FT. However, not all hotel groups look at AI agents as a threat. Wyndham's CEO, Geoff Ballotti, told the publication that tools offered by platforms such as ChatGPT and Gemini offered hotels an opportunity to reduce dependency on travel agencies. Interestingly, the report highlighted that the company is leveraging in-house AI tools to drive more direct bookings.

Hotels Swap Online Travel Agents for AI Agents | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. And so the world's biggest hotel companies are working to get consumers to book directly, to help save on commission to online platforms, the Financial Times (FT) reported Saturday (Dec. 27). The hotels also view the push for direct sales as crucial to taking fuller advantage of the arrival of advanced AI, the report said. "Generative AI is shifting travel planning from traditional search into more conversational and agent-led environments. So that makes building relationships [with customers] a bit more strategic and important," Chema Basterrechea, chief operations officer at Radisson Hotel Group, told the FT. Basterrechea added that increasing Radisson's direct bookings could help it collect more guest data and provide "a much more personalized experience" that drives repeat business. The report noted that hotels have long teamed with OTAs because they offer access to incremental businesses, but are now hoping that they can strengthen ties with travelers and reduce their need for online travel agents. "You don't want to rely on Booking and Expedia: They're expensive channels and they're extremely hard to defend your position on," said Bernstein analyst Richard Clarke. This is all happening at a time when consumers are pivoting toward using agentic AI to plan their trips, as PYMNTS Intelligence research has found. That data shows that nearly 25% of consumers would be comfortable letting an AI agent plot their travel. That's noteworthy, because travel is a high-stakes, multitransaction category that ties together flights, hotels, ground transport and activities. Costs are often high, and flexibility can be limited. "As that comfort level rises, travel platforms are responding by deploying agents that plan itineraries, execute bookings and manage trips across suppliers in real time," PYMNTS wrote last week. "As a result, travel commerce is shifting away from search-led workflows toward agent-led execution."