Will AI Start Making Your Hotel Reservations?

Artificial intelligence is poised to transform the $640 billion global hotel industry by streamlining the booking process and shifting the economics of travel marketing. Currently, the industry spends up to $85 billion annually on marketing and third-party commissions, with online travel agencies (OTAs) charging fees as high as 30%. AI agents can drastically reduce these costs by directing travelers toward direct hotel bookings, which cost brands only 5%. Analysis shows that AI-powered searches direct users to official hotel websites 97% of the time, rising to 100% when loyalty program preferences are integrated. This shift could boost hotel EBITDA by 0.1% to 0.5% for every 1% of bookings moved away from third-party platforms. While OTAs maintain advantages through inventory scale and fulfillment, hotel brands are positioned to leverage loyalty data to capture higher margins, with significant financial impacts expected to materialize by late 2027.