Hotel booking ‘front door’ is changing with AI

Generative and agentic artificial intelligence (AI) could shift the hotel distribution balance, and suppliers stand to benefit.

At The Phocuswright Conference in San Diego, Richard Holden, former general manager of Google Travel, Stephen Kaufer, founder and former CEO of Tripadvisor, and Sanjay Vakil, CEO and co-founder of DirectBooker, discussed how AI is changing the “front door” of hotel booking.

According to Holden, AI is likely to change travel aggregators' power and position. "I do think new front doors are going to be created here," Holden said. "From a supplier perspective, that's an opportunity to change the dynamic that's existed for the past 20 years.”

In many ways, Holden said suppliers were outmaneuvered by online travel agencies (OTAs) in terms of maximizing entry points with travelers. Now, there's an opportunity for suppliers to connect with consumers more directly.

Vakil said that conversational interfaces—the AI-powered chatbots—are making a difference as they gain popularity among travelers; the interaction is happening in one central location like ChatGPT.

“What you see happening today on Google—we used to talk about this—people would visit 40 different websites before they actually booked their hotel. They had questions. They need to get those questions answered,” Vakil said. “You can help people find that information within the conversational UI and have that in one flow and not have to wonder what tab that information was on.”

That’s part of the “deep transformation” that’s happening with agentic and generative AI, according to Vakil, who added that the best answers to those questions often come from suppliers as opposed to intermediaries. 

“The intermediaries have worked really hard to create a corpus of data that's very efficient to walk through and find information on, but it's pretty thin,” Vakil said. 

All that said, Kaufer cautioned that it's difficult to dislodge aggregation created by players like OTAs, many of which are working with AI engines already. 

“They're just a natural first-in, but the question is, certainly with DirectBooker, [is there] the ability to give the AI engines exactly what they want? Which is instant best availability, inventory, all the extra information, maybe additional rates that the OTAs do not have," Kaufer said.

The conversation also covered funding, past ventures, the AI bubble and more.

Watch the full discussion below, moderated by Chris Hemmeter of Thayer Investment Partners.