The rise of Online Travel Agencies (OTAs) like Booking.com and Expedia was fueled by the internet’s ability to rapidly share information, build efficient digital platforms that aggregated a vast array of hotel choices and provided a streamlined booking experience. These platforms scaled to massive success, acting as intermediaries and earning commissions for each booking, which sometimes limited or even shut down hotels' ability to interact directly with guests or control the booking experience fully.
How do I know?
- In 2002, I was part of the team that built the first vacation package booking engine (remember EuroVacations?)...
- In 2006 I was tasked with building and launching the first OTA for train travel (Rail Europe)..
This model is now on the brink of extinction. Artificial intelligence is transforming the industry by providing even more powerful, data-rich interactions. AI tools like deep learning virtual assistants, dynamic pricing engines, and personalized recommendation systems can now anticipate guest needs, answer queries in real time, and deliver an experience that's tailored to each individual traveler.
Even hotels with limited budget, can deploy AI to connect the dots between their legacy systems... or start structuring their data to be ready when AI time has come...
Unlike OTAs, which scale a vast inventory of products to package and price it according to a rule engine, AI-driven hotel platforms use their data first to foster direct relationships with guests, enhancing not inventory but personalization at scale (AI will make every hotel guests VIP's) therefore boosting loyalty.
For hotels, this shift presents a powerful opportunity to regain control from the jaws of OTAs. By implementing AI solutions, hotels can improve their direct booking channels, make tailored offers to new and past guests, and employ dynamic pricing that competes with OTAs. But that's not all: AI enables hotels to analyze guest data effectively, offering insights that optimize marketing campaigns and predict peak booking times (the airlines call it yield management...). As AI-powered virtual assistants become more commonplace, guests are increasingly willing to bypass OTAs for direct interaction with hotels, which provides exactly the experience, information and pricing they are looking for:
1. Scaling VIP guest relation
Deep learning virtual assistant enable instant, personalized guest interaction at scale. What used to be an oxymoron (how do you scale personalisation?) is now common place. Remember that AI is doing well what humans are doing badly (computing large numbers fast, remembering the most intricate details of a map). Humans are bad at responding 24/7 to inquiries in multiple languages but it is a breeze for AI to do and guests love it...
2. Data-Driven Personalization
AI systems analyze data to provide insights on guest behaviors, preferences, and booking patterns. This allows you to offer tailored packages and promotions, making guests feel valued while driving up conversion rates. In practice, it takes a couple of questions to a deep learning AI to figure out the next step according to the rules set by the hotel.
3. Optimized Marketing campaigns with Predictive Analytics
AI takes the guesswork out of marketing (I want to reach the same type of clients that are leaving raving reviews online) by predicting guest behavior based on past interactions. You can identify when and how guests are most likely to book, enabling targeted campaigns that maximize your marketing ROI.
4. Dynamic Pricing for Revenue Optimization
AI can automate and optimize pricing strategies in real time by evaluating demand, local events, and competitor pricing. This way, your pricing stays competitive in your destination and seasonality, increasing direct bookings without compromising your margin.
5. AI-Enhanced Guest Experience
Beyond booking, AI continues to improve the guest journey with tailored recommendations for activities at the destination, upselling opportunities, and more. This further boost guest satisfaction but also opens new revenue streams through direct and timely interactions.
At this point you are probably thinking : OTAs will not roll over and let that happen...
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With data scale and sophistication they could also predict traveler behavior more accurately and personalizing recommendations at scale, something individual hotels struggle to match.
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Resource Investment: OTAs can invest heavily in AI-driven R&D, developing sophisticated algorithms for dynamic pricing, customer service, and search optimization. Hotels, particularly smaller ones, often lack such resources.
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Customer Reach and Loyalty Programs: They leverage AI to keep users engaged through tailored deals, rewards, and loyalty programs—keeping more customers within the OTA ecosystem.
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Advertising and Targeting Power: OTAs use AI-driven insights to create highly targeted advertising campaigns, driving traffic and bookings from multiple channels to drawn any other signal to rise above their noise...
True...But they have one fundamental flaw: They will always remain the middle-man depending on hotel commissions to make all the above happened. Once the steady stream of commissions is disrupted by AI driving bookings directly to hotels, OTAs will become obsolete, just like the main street travel agencies they replaced in the 2000's...
Conclusion: Ring for AI!
In a previous article, I wrote about AI fulfilling César Ritz vision of perfect hospitality. Actually, AI will not just fulfill his vision, AI will expand the realm of hospitality, especially where it is impossible to manage an hotel with human staff : the deep sea or the moon...
Finally, check the stories of these hospitality executives that rung for AI early—and saw impressive results: https://www.quicktext.im/blog/category/case-studies/