Tech Explained: Here’s a simplified explanation of the latest technology update around Tech Explained: Debating the Impact of the Shift in Technology in Simple Termsand what it means for users..
As AI becomes increasingly effective and efficient, the lodging industry, like all segments of the U.S. economy, has become increasingly savvy with its applications for everyday business needs. For the hotel industry, that focus takes on many aspects, including operations, consumer outreach, purchasing, social media, customer problem resolution, and reservations. While all these areas are ripe for applying AI, one area that has received scant attention is how AI disruption may affect online travel agencies (OTAs) and their current business model.
Currently, about 20 percent of all hotel bookings are made through an OTA. In terms of actual daily bookings, that translates to about 325,000 room reservations made using one of the OTAs every day. That percentage has remained relatively stable over the past several years as the OTAs have managed to maintain their share of the market despite an ever-increasing number of hotel guests making their reservations online. The accompanying chart highlights U.S. hotel bookings through each of the seven rate categories year-to-date through October 2025.
A very recent survey of soon-to-be holiday travelers conducted by Deloitte determined that GenAI adoption in travel planning was expected to reach 24 percent this holiday season, up from 16 percent in 2024 and 8 percent in 2023. All surveyed generations increased their use of GenAI technology, particularly millennials (31 percent) and Gen Z (30 percent) travelers. It seems clear that the usage of GenAI will only continue to increase in the coming years.
Future Implications
So, the question is, as AI becomes more integrated in all aspects of a consumer’s decision-making process when it comes to travel and choosing a hotel, who capitalizes on this dramatic shift in technology—the OTAs or brands and the hotels? Currently, there is a debate in the hotel industry, including investors, brands, and owners, about how this may all shake out. Generally, there are two schools of thought. The first is that the OTAs will be significantly weakened by the creation of the AI platforms, while the second is that the OTAs will be better positioned than they are now. There are compelling arguments on both sides of this debate.
Supporting the view that the ever-evolving AI platforms will negatively affect the OTAs is the point that younger and more sophisticated travelers may be more attracted to the AI platforms as they potentially “re-learn” where the best travel deals are. If this turns out to be the case, it may not be a stretch that the hotel (and airline) booking landscape enters a stage not unlike what happened 20-25 years ago when the OTAs first came into existence. In addition, should some of the AI platforms begin to create some sort of loyalty programs for both individual consumers as well as bulk buyers, that may shift booking patterns as well.
The view that AI will enhance OTAs’ standing is supported by the fact that OTAs are well entrenched in the hotel booking world with over two decades of data and industry learning that they can use to their advantage. In addition, they already have great name recognition and are especially useful for the infrequent traveler as well as for independent and small chains that have come to rely on the OTAs for a significant portion of their demand base.
As hotels struggle to generate sufficient revenue to help offset the increasing operational costs they are experiencing, a reduction in the fees paid to the OTAs for acquiring the customer would be most welcome. Over the next few years, we will find out how all this shakes out and who will be the biggest winners in the hearts and minds of the consumers.