Online Travel Platforms Embrace AI to Stay Competitive in Evolving Market

Online travel platforms prepare for rise of artificial intelligence 'agents'

The world's largest online booking platforms are preparing for the advent of artificial intelligence "agents", signing partnerships with groups such as OpenAI in an effort to counter technology capable of arranging travel for customers without tapping their services. Booking.com and Expedia are taking steps to deploy new AI-enabled features underpinned by models from OpenAI to automate services and launch new tools, including trip planners. Airbnb has rolled out an AI-enabled customer service agent to handle customer queries, while it plans to launch more "agentic" functions on its platform next year. The moves come as makers of AI agents -- autonomous bots that can take actions on behalf of users -- develop technology designed to make travel arrangements for users based on their unique preferences. This could upend the $1.6tn global travel market, allowing more hotels and airlines to be accessed directly. That would disrupt the business model of dominant online travel agents that rely on the commissions and fees they can charge those businesses. "We don't have to do what OpenAI, Google, Grok or Meta are doing . . .[all of whom] are having to invest incredible amounts of money to build these models," said Glenn Fogel, chief executive of Booking Holdings, which owns the Priceline and Booking.com platforms. "Our belief is that as long as we . . . work closely with them that we will be able to participate in a way that provides a great return for our customers and our partners," he added. Start-up Anthropic in late 2024 began rolling out an AI agent dubbed "computer use" that can take actions in browsers, while rivals including OpenAI and Google launched their equivalent this year. The technology's potential has been heralded by the hotel sector, which has long complained about fees -- that can range between 15 and 20 per cent -- imposed by online travel platforms. HOTREC, a European hotel industry group, said AI agents showed "clear potential" to reduce hoteliers' reliance on OTAs but warned that it could also replicate what it described as a "dependency cycle". The lobby group argued that existing online platforms operate by using opaque ranking models and offer its members limited visibility around the return made on fees they charge to boost the visibility of properties. Max Niederhofer, partner at Heartcore Capital, an investor in travel start-ups such as GetYourGuide, said agentic AI would help widen the possible range of providers that travellers use to find properties. "Fundamentally, [OTAs] are parasitic . . . If [hotels] don't have any commission to pay, that's 20 or so per cent they can use to give [customers] other things like a better room," he said. "Online travel agents' 'take rates' are at risk." A senior executive at a global hotel chain said Booking and Expedia had spent more time in outreach in recent months amid concerns that AI tools would cut them out of the process when customers sought to book accommodation. "There was a natural inclination and still is among investors that travel loses in an AI first world," said Eric Sheridan, analyst at Goldman Sachs, who noted that concerns about the technology were weighing on online travel agents' share price alongside soft US consumer demand. Booking and Expedia have tracked closely with the performance of the tech-heavy Nasdaq Composite this year, but have not posted the same astronomic performance seen elsewhere in the wider tech market. Airbnb shares are down nearly 6 per cent this year. OTAs have sought to damp these concerns by highlighting the customer support infrastructure and vast datasets including user preferences and a ready-made inventory of properties that underpin their services. They argue that replicating this would constitute a significant time and resource drain for major technology companies. "We have a lot of data on travel behaviour [that shows] what our travellers want," said Jochen Koedijk, Expedia's chief marketing officer. "What sells and what doesn't sell. That's the really big value proposition. It's not easy to build an online travel agency." Yet Fogel acknowledged that the nascent technology still fed into his own "paranoid view of the world". "You're always worried that you're going to fall off the map," he added. Booking.com reached an agreement with OpenAI in 2023 to build an array of tools including an "AI Trip Planner" that utilises the start-up's models. The planner uses Booking's own property, pricing and availability data to fine-tune the model to its customers' needs. Rival Expedia integrated OpenAI's models in the same year and is already deploying the ChatGPT maker's "Operator" agent system. Airbnb chief Brian Chesky told investors in early August that the platform would become "more personalised and more agentic" next year. "It will not only tell you how to cancel your reservation, it will know which reservation you want to cancel. It can cancel it for you . . . It can start to search and help you plan and book your next trip," he said. Unlike ecommerce group Amazon, major online travel agents have not blocked scrapers designed to pull content for AI-enabled search engines and agents such as Operator and Perplexity's Comet browser. Fogel said Booking Holdings would not rule out the possibility of blocking scrapers in the future. "We believe at this stage of development it is good to have conversations . . . This doesn't mean that we won't block in the future," he said. OTAs maintain that agentic AI is still early in its development. Researchers found late last year that OpenAI's GPT4 model was able to successfully complete complex travel planning tasks only 0.6 per cent of the time. "I am not foolish enough to say that I'm not worried about it," said Fogel. "There's no such thing as a moat."

Travel Platforms Embrace AI to Avoid Being Replaced by AI | PYMNTS.com

As the Financial Times (FT) reported Tuesday (Sept. 9), this means forging partnerships with companies such as OpenAI to gain a foothold as artificial intelligence (AI) offers travelers a way to arrange trips and lodging. According to the FT, Booking.com and Expedia are deploying new AI-enabled features using models from OpenAI to automate services and launch tools such as trip planners. And Airbnb has debuted an AI-powered customer service agent to handle customer queries, with plans to roll out more "agentic" functions on its platform next year. The FT notes that these moves are happening as AI agents, autonomous bots that can perform actions on a user's behalf, can now make arrangements for travelers based on their preferences, a potential threat to the $1.6 billion travel industry and to online travel agents. "We don't have to do what OpenAI, Google, Grok or Meta are doing . . .[all of whom] are having to invest incredible amounts of money to build these models," Glenn Fogel, CEO of Booking Holdings, which owns Priceline and Booking.com, told the FT. "Our belief is that as long as we ... work closely with them that we will be able to participate in a way that provides a great return for our customers and our partners," he added. Meanwhile, Kayak CEO Steve Hafner spoke with PYMNTS earlier this year about his company's plans to launch AI agents to help customers with everything from searching for trip ideas to completing checkout. "One thing Kayak hasn't done as well as search is booking," Hafner said. "We've had to hand people off to airline or hotel websites or online travel agencies to complete the booking. With agentic AI, we can actually facilitate that without the consumer ever having to leave the Kayak experience." That interview came in the wake of a PYMNTS Intelligence report, "At Your Service: Generative AI Arrives in Travel and Hospitality." Research from that report showed that 52% of customers expect AI to help with interactions, while 44% think it will improve guest engagement. "Despite these advances, experts caution against overusing AI in customer-facing roles. While generative AI can offer efficiency, it can result in robotic and impersonal interactions, which may alienate customers," PYMNTS wrote. "It is essential for businesses to integrate AI in a way that enhances human interaction rather than replacing it entirely."